The first car insurance policy was sold in 1897 to protect a driver from the cost of hitting horses or people.

Gilbert J. Loomis bought the first car insurance policy on February 1, 1897, in Dayton, Ohio. At that time, there were fewer than 100 cars in the entire United States. There were no stop signs, speed limits, or traffic lights to keep people safe.The policy cost Loomis $7.50 and provided $1,000 in coverage. This money would pay for property damage or injuries if Loomis crashed his car. One year earlier, a driver in New York City had been arrested for hitting a bicycle rider, which showed that cars were dangerous.Insurance companies use math to figure out how much to charge for a policy. In 1897, they did not have data on car crashes yet. They used information from horse-drawn carriage accidents to guess the risks of driving a car.The Travelers Insurance Company issued this first policy. By 1925, Massachusetts became the first state to require all drivers to have insurance. Today, companies use computers and large amounts of data to set prices, but the goal is still to protect drivers from high costs after an accident.