It seems like every several years, there will be a new startup company that would, later on, turn into a major disruptor within their respective industry. There's Uber for the transportation industry, there's Airbnb for the lodging and hospitality industry, and of course, there's Netflix for the entertainment industry.
Each of those companies has brought a major shift in perspective within their industries. They change the customers' experience and force the old player to adapt to their new standard. Such disruption would inevitably occur following the advancement in technology.
The latest disruption comes from a company called Root, Inc and they are on the path to change the car insurance industry forever.
Root car insurance is a company that brings new and arguably better ways to approach the car insurance industry. They manage to find a way to create an individual and personalized insurance policy for each customer based on the analysis of their driving style.
What Root Car Insurance has done is brought advanced data analysis into the archaic insurance industry. They took advantage of the technologies that have been available to most people, such as the internet and smartphone, and utilize it to revolutionize the industry. We do a full review on Root Car Insurance and find them to be one of the best around.
Root Inc. was founded in March 2015 by Alex Timm and Dan Manges. Since the very beginning, both of the founders were set off to revolutionize the insurance industry. With a deep knowledge of big data analysis, Root Car Insurance manages to convince the investor to put a tremendous amount of capital into their young business.
As the result, by 2018, Root Car Insurance became the first startup insurance company, other than health insurance companies, that are valued at more than $1 billion which earn them the title of a "Unicorn". To spread their wing even further, Root Car insurance decided to go public in October 2020.
Their IPO manage to raise around $724 million at $27 per share. That number is way higher than other insurance companies, like Lemonade and SelectQuote, that also have their IPOs in 2020. Root Car Insurance's revolutionary way seems to be unstoppable and inevitable now.
- Liability coverage. This type of coverage is for when you are involved in an accident and it is your fault that the accident happened. Root Insurance covers any damage caused by that type of accident that involves any bodily injuries and property damage to the other party.
- Collision coverage. If you caused an accident and there's damage to your car, this is the coverage that would take care of any of that damage. It doesn't even have to be a vehicle-to-vehicle accident, if you crash onto a tree and damage your vehicle, you would still be covered by Root Insurance.
- Comprehensive coverage. Comprehensive insurance covers any damage to your car that was caused by anything other than an accident. This means natural events like flooding, animal-related accident, or even any damage caused by car theft.
- Medical coverage. If you or your family members are injured in a car accident, Root Insurance would cover any medical cost that may result from the injuries so that you won't have to pay for the hospital bills out of your pocket.
- Uninsured motorist property damage. When you got into an accident with a driver who's uninsured or underinsured, Root would cover any damage or injury to you and your car.
- Rental car coverage. If your car is totally damaged after an accident, Root Insurance would cover the car rental fee so that you can still do your regular activities while your car is being repaired.
- Free roadside assistance. If you're having a problem while on the road, like in need of a tow truck or a jump-start, you could simply call Root's roadside assistance from the app and they will come to you as soon as possible.
- The lowest price in the market. By giving the price based on the customer's driving habit, Root Car Insurance manage to avoid bad drivers that often caused an accident in the first place. This kind of customized pricing allows them to give the lowest price on the market, especially to good drivers.
- Easy claim. If you need to file a claim on your insurance, all you need to do is simply open up the Root Insurance's app and file your claim there. You could also call their toll-free number and they will process your claim immediately.
- Ease-of-use. The whole process with Root Car Insurance, from registering to filing a claim, is done through its intuitive mobile app. Sure you can call them or even come to their office, but the app should be enough for all of your insurance needs. With this method, everything is only a click away from you.
When you want to use Root's car insurance, all you need to do is simply download their mobile app and register as a new user. You will then be put into a driving trial period for several weeks where they will monitor your driving habits through the app.
Whether you are accepted or not, or how much you need to pay each month depends on your driving habit. Root Car Insurance encourages a good driving habit by giving a good driver a much better rate with a lower monthly cost. This business model is both beneficial to the customers and the company.
For the customer, they are guaranteed to get a fair price because the amount that they have to pay is based on how they use their car. For good drivers, they will also be guaranteed to have the best deal because the company could afford to give a lower price since they don't have to insure high-risk bad drivers.
For the company, by not giving insurance to bad drivers who often caused accidents way more than those who mindfully drive their cars, they could avoid an unnecessarily big claim from those drivers. That means they could drive their cost down, offer a lower price to the customers, and earn more profit.
There are lots of good and new things, offered by Root Car Insurance that, as I stated above, prove beneficial to both the costumers and the company. What they've done is setting a new standard in the car insurance industry that might impact both older and newer companies.
But they are not perfect. There are still areas where they're either lacking or downright worrying. The first one is availability.
When I write this article, Root Car Insurance only available in thirty states. That means, not only there will be people that couldn't get to use their service, but also those who already join them only have coverage in those thirty states, which certainly put a heavy limitation on those who need to frequently travel out of states.
The second thing is continuous tracking. To get the information on the potential customer's driving habit, Root Insurance would track your movement for several weeks with their app. That is a very efficient way to get that information but at the same time, it's also rather worrying because the tracking never stops.
During those weeks, the app would continuously track your movement, whether you're driving or not. You might be in the passenger seat, you might be on a plane, you might even be on your house, and the app would still tracking you. To some, it becomes a matter of privacy breach, and that is worrisome.
With the way they approach the car insurance policy, there's no question that Root Car Insurance is the new disruptor to the well-established industry. They brought a lot of new things to the table and their solution seems to benefits both the company and the customers.
But as I've said in the previous section, there are still some things that could be improved regarding their services. There are still some solutions yet to be found to polish their idea even further. They're also still a relatively young company, so there's a lot of things that could change in the future.
But for now, I think Root Car Insurance is a breath of fresh air and the pros are certainly outweigh the cons.