With the advent of cars and other automobiles in the late 19th century, the inevitable after-effect – car collisions and road accidents also came into the picture. The rise of automotive collisions made it clear that, unlike other infringements, which depend on personal responsibility, there were high chances that automobiles will have to be governed by laws. This was because there was no way of making sure that even though the mistake was scrutinized the victim of any road accident would be able to collect from the person who commits the infringement.
Following this, Massachusetts and Connecticut came with the first financial responsibility and compulsory insurance laws. Connecticut’s 1925 financial responsibility law made it a mandate that any vehicle owner involved in a collision with damages of more than 100 Dollars to prove “financial responsibility to satisfy any claim for damages, by reason of personal injury, to, or death of, any person, of at least 10,000 Dollars.” This initial financial responsibility need only made vehicle owners present their financial responsibility after their first collision. Massachusetts also came up with a law to address the problem of accidents, but theirs was a compulsory insurance policy and not a financial responsibility law. This needed automotive liability insurance as a prerequisite while going for vehicle registration.
Until 1956, after the New York legislature passed their insurance law, Massachusetts was the only state in the entire United States that required drivers to have insurance before registration. North Carolina followed this suit in 1957 and later in the 1960s and 1970s several other states passed the same compulsory insurance laws. Since the starting of automotive insurance schemes in 1925 almost all state has adopted a mandatory insurance scheme.