Argumentative Essay: The First Auto Insurance In America

In 1730, the most disastrous fire Philadelphia has ever witnessed ravaged through storefronts and homes on Fishbourn’s Wharf--and from its ashes arose a mighty empire that continues to exist today: the insurance industry (“Philadelphia”). It was this fire that ultimately led Benjamin Franklin to form the first American insurance company in 1752 to be named the Philadelphia Contributionship (“Invented”). This would be an incredibly successful endeavor that would insure homes across Philadelphia against fire hazards for centuries to come, and it would eventually lead to the trillion-dollar era of insurance companies. Everyone has heard of insurance, the most prominent of which being auto insurance, as all Americans who own vehicles are required by law to have it.
In essence, car insurance companies are basically paid by their customers to take on the risk of a car accident, damaging, or theft because most people do not have enough funds to cover such losses (Hussain). At their source, these companies make money from premiums that they are paid by customers and from earnings from investing those premiums (Hussain). By the same token, the main way in which auto insurance companies lose money is when their customers file a claim, which is sent to that company by a customer stating that their car has been damaged and that they would like for that company to cover the damage. At the end of the day, these three aspects of car insurance companies often determine if they succeed or not. Therefore, the driving force behind the success of auto insurance companies is their risk management in those three areas: in setting premiums, paying claims, and making