A Brief History of Home Insurance
Posted on March 25, 2011 by Ian Fletcher
The current, up-to-date idea of home insurance cover is very precise and can be simply broken down into two related yet distinctly separate areas, namely building insurance and contents insurance. The home insurance cover that refers to the earlier, building insurance protects the structure of the house and the fixtures and fittings of a household while the contents insurance includes all the items inside the home. Simply put – all the possessions that are transported from one place to another when moving house can be described as contents.
Home insurance hasn’t always been this organised a process, traditionally it wasn’t always so well calculated and precise however there are different centuries in history and regions throughout the world that have aided in making the basics for today’s modern insurance model.
People have always chased an active approach to spread costs of sudden losses and tragedies, a willingness to help others in their time of need. In some nations throughout history, and still today friends and family would have often come together to provide another family with help and support in difficult times and despite this being an ideal, it is believed that these conducts established a proper arrangement.
Furthermore, a form of marine insurance was thought to have transpired within the coastal communities of Palermo and Genoa in the 13th century and separate insurance contracts began developing in Italy in the 14th century.
Within England, Friendly Societies began to emerge in the 17th century. A similar concept to the aforementioned Greek and Roman benevolent funds, these involved a regular payment into a fund which paid out following certain hardship circumstances.
Fire was the most commonly feared hardship was fire, and in particular losing your house to a fire. In the 17th Century, English homes were built using timber joists and wooden floors which would support the thatched rooftop. Despite these materials being excellent in terms of keeping their occupants warm and dry, they were also seriously flammable. No example shows this clearer than the Great Fire of London in 1666, when a large number of homes were burnt down. On this occasion the fact, that houses were built so close together meant that the fire could transfer quickly between properties.
Following the Great Fire of London there was a much more careful construction of houses and one of the people involved in the reconstruction was a local entrepreneur, Nicholas Barton. He understood the significance of having a form of insurance against having ones house destroyed by fire, the fire brigade. A fire headquarters was set up in London in 1681; it was funded privately through insurance contributions, early home insurance cover.
Later on, in the 1700′s Edward Lloyd opened his coffee shop in London to all merchants, seamen and ship owners alike. The focus of debate within these proper coffee houses was shipping and all related topics and shipping business was carried out in Mr Lloyd’s premises. When a ship owner scheduled an important journey he would make an effort at a crude kind of insurance by requesting related business men to financially support his scheme by plainly signing their names under the written strategies for the journey and the list of cargo. The other businessmen signed their initials for a share of the profits and the insurance business of Lloyd’s of London was born. Incidentally this also shows the development of the term underwriting (literally underwriting the voyage and cargo).
More recent developments within the insurance industry include the growing trend to use insurance comparison tools like MoneySupermarket when searching for contents or tenants insurance.