The History of Insurance

Although insurance, as we know it today, only came into existence a few hundred years ago, a type of insurance for merchants has been in effect for thousands of years, both in Europe and in China. It is known that in China, when a merchant sought a loan in order to ship goods, if the shipment of goods included hazardous rivers, the merchant would pay extra in order to be compensated for any merchandise that may be lost in transit. It is also recorded in the Code of Hammurabi, developed by the Babylonians in 1750 BC, that merchants could pay extra on their loans to ensure that the loans would be cancelled if the merchant’s freight was lost or stolen whilst at sea. The first known insurance contracts that, whilst still only applying to merchants but not necessarily involving loans, are from Genoa in 1347 AD. These insurance contracts could involve several merchants who would band together to compensate any one of them that lost their freight. Insurance that involved anyone other than merchants did not come into being until after the Great Fire of London in 1666 destroyed more than 13,000 buildings, after which time it became possible to insure buildings and almost immediately 5,000 buildings were insured. Merchants were of course at this time still insuring their freight and it was in 1680 that Edward Lloyd opened up a coffee house in London for the specific purpose of introducing merchants to wealthy landowners who were prepared to insure them.

It is from these beginnings in 17th century London that the multi-billion dollar insurance industry grew from. Of course today it is possible to insure more than just buildings or freight as you can now insure almost any aspect of your life, including your life or death. Perhaps the type of insurance today which most people are aware of is car insurance. Every car on the public roads is required, by law, to be insured and so the owners of those cars must pay insurance premiums and those insurance premiums may increase if any claims for damages are ever submitted. This means that an owners premiums may go up, even if they did not cause the damage as it was caused by a mechanic whilst taking the car on a test drive. Of course, car owners thought this a little unfair and so that prompted the emergence of motor trade insurance. This is an insurance policy that a motor trade professional can take out to insure any vehicle they may be dealing with, so as not affect the owner’s insurance in any way, were some damage to happen to the car whilst in the professional’s possession. There are different types of professional in the motor trade industry and so they should look carefully at the different trading insurance options so that they get the correct type of coverage for their particular work. This often means that a motor trade professional may have to look or an insurance company that specializes in motor trade insurance.

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