Homeowner Insurance. The old adage “necessity is the mother of invention” could well be used here in addressing homeowner insurance. In reading various articles on insurance, it is interesting to note the insurance industry did not come into existence by government mandate but by private entrepreneurs seeing a need in the marketplace and filling it.

In 1666 “The Great Fire of London” destroyed more than 13,000 houses. People realized insurance was not just a convenience but a necessity if they were going to be able to recover from such a devastating event. By 1681 economist Nicholas Barbon along with associates established a fire insurance company “Insurance Office for Houses” to insure brick and frame houses.

Again, without government intervention, these early insurance companies established their own fire departments. They distributed “fire insurance marks” to their customers who would then display those marks prominently above their main door. This was a rather flawed system because rival fire brigades would often ignore burning buildings once they were discovered to have no insurance with the responding fire brigade company.

Eventually the insurance companies agreed to supply money and equipment to a municipality charged with providing fire prevention assets and firefighters to all fires. Fire stations evolved from this mutual agreement between municipalities and insurance companies–with the funds to operate them coming from the insurance companies and the manpower and other assets being provided and maintained by municipalities. Most fire departments eventually became a function of the governing body, thus eliminating the favoritism shown by brigades who tended to favor saving insured buildings to those without any insurance at all. Additional information on the evolution of fire insurance industry can be found at “The World’s First Fire Insurance Company” retrieved 2012-12-17.

Marine Insurance. By the end of the 17th century, London’s growing importance as a center for trade was increasing the demand for marine insurance. Sailing ships were opening markets far beyond the shores of any particular country, and the value of commodities being shipped demanded something be done to protect ship owners and merchants against catastrophic loss. A Mr. Edward Lloyd opened a coffee shop (Lloyd’s of London) on Tower Street in London which became a popular “watering hole” for ship owners, merchants and ship captains; valuable shipping news was exchanged. It also drew in those who were wishing to insure, and those willing to underwrite, the seagoing ventures.

The process was rather simple: the party wishing to insure placed his items to be insured on a docket which was given to the party willing to insure who then looked it over. The parties would agree upon the value of the cargo, establish a premium to be paid, and after doing so placed their signatures under the agreement, thus underwriting the docket. If the cargo made it to its destination, the insurer and insured both counted it as a profitable venture with the charged premium being added to the price of the product. If it did not make it, then the resources of the insurer was used to keep the merchant afloat by reimbursing him for the previously agreed-upon value.

This marine (on the water) insurance for commodities was eventually expanded to cover inland marine (off the water) commodities moving across country.

Jumping across the Atlantic, we find the first fire insurance company to underwrite fire insurance was formed in Charleston, South Carolina, in 1732. Benjamin Franklin is often referred to as one who helped popularize and make standard the practice of insurance. He helped found the Philadelphia Contributionship for the Insurance of Houses from loss by fire in 1752.

Insurance companies offering homeowner insurance and inland marine insurance are almost too many to list. Just in our little town of 6000, over twenty venues are plying for our personal insurance needs. It is beyond the scope of this narrative to attempt to describe the health insurance, disability, most commercial insurance, or long-term care insurance. Just about anywhere you would go in the free world, you will find someone wishing to insure something and someone willing to insure that something. It would be a gargantuan task to try to enumerate the many types of insurance available and the consequent companies marketing them. Articles to follow will address many of the types of insurance which have spun off the early casualty policy which covered was so limited.