Insurance Startups Changing How You Buy Car Insurance
Traditional car insurance base driver’s rates on a number of factors. There is usually a very long and detailed questionnaire, that ask questions like number of eligible drivers in the house, how long have you been driving, your current zip code, your age, the number of accidents, number of any moving violations, do you rent or own your home, job title, highest level of education, the number of miles driven etc. Now you may ask yourself, what do all these questions have to with getting my car insured? Traditional care insurance companies take the answers to all these questions and load them into an algorithm to determine the risk factor of you having an accident. Based on those answers, or the results the algorithm uncovers, traditional car insurance companies will decide to insure you or not insure you, or give you a higher rate. The bottom line is traditional car insurance is based a combination of many factors, but the most important factor is demographics and driver’s history.
Today there are new insurance companies, or startup insurance companies that are trying to redefine the way car insurance coverage is determined. These new insurance companies are scrapping those long drawn out questionnaires and they are attempting to take a different, fairer approach in determining car insurance coverage. These new companies are implementing usage based insurance (UBI) or sometime referred to pay how you drive (PHYD) and pay how you drive (PHYD) plus mile based auto insurance. These new methods are based on vehicle type, the time you actually drive, the distance traveled, and where you travel.
Overall these new startup insurance companies are classified as disruptive insurance companies. They are using technology in order to find ways to save the consumer money. These insurtech companies are helping customers create a personalized, a la carte experience to insurance. Most of them create one platform and acts as an insurance broker. Some of these start up insurance companies offer policies that are as low $12 a month, for pretty good service.
Root software, was founded by Alex Timm of Ohio. Root insurance bases car insurance coverage by using an IPhone application. The Root insurance application allows the user to scan a picture of their driver’s license, and the application can, uses an accelerometer to determine an applicant’s driving behaviors. Root has been able to offer premiums as low as $12 per month.
was founded in New York City in 2014. Sure. offers a personalized insurance plan for drivers. Sure. creates a customized insurance policy that is specific for the individual needs. Sure. helps customers with managing and selecting insurance policies. Sure. approach is to create a personalized plan. Sure. provides one platform for customers to manage and track policies in the case of an accident. Sure. is partnered with well established insurers, come of which has been in the insurance industry for more than 100 years. Some of their partners include Nationwide, Chubb, Markel and QBE among others.
MetroMile car insurance offers coverage based on the number of miles you drive, and they offer different types of coverage, unlike traditional insurance companies. Metromile offers four different types liability insurance of various protection. Metromile was founded in 2011 by David Friedberg amd Steve Pretre, in Redwood City California.
The Zebra car insurance creates customized car insurance based on the needs of each person. Zebra gathers information about the driver and the type of car they drive and offers quotes for the customer to choose from. Zebra offers over 1,800 products offered from more than 200 companies. Zebra was founded in 2012 by Adam Lyons, in Pittsburgh, PA.
Insurify car insurance harness the emerging power of data analytics to find the ideal insurance coverage for each customer. Insurify is analytical platform that analyzes data from an array of sources and create a model specifically for the driver. Insurify was founded in 2013, by Snejina Zacharia and Giorgos Zacharia.
Jerry car insurance is a modern car insurance broker. Jerry is a platform that utilizes technology to identify potential coverage and makes them available in one place. Jerry uses technology to do the tedious work of quote comparing. Jerry was founded by Art Agarwal Chief Executive Officer, Musawir Shah Chief Technology Officer, and Lina Zhang Vice President of Operations.
Gabi insurance is a free service that has integrated modern technology tools with traditional insures. Gabi uses data analytical algorithms to shift through data sources to create a personal insurance product that is in the customer’s best interest. Gabi insurance was co-founded by Vincenz Klemm, Head of Operations.
Go.insure leverages modern mobile technology tools to make getting insurance a lot easier. The customer has to take a picture with an IPhone and the app returns a quote in about 60 seconds to be considered in real time. Go.insure is virtually paperless, and eliminates the need of paperwork. Go.insure uses what they call snap it, tap it, buy it and allows you to focus on life.
Compare.com, is a platform that compares the nearly 400 different car insurance companies. Compare.com essentially lets the user select from quotes, that are listed by price and the user can then select the lowest price and click purchase. Compare was founded in 2012, by the Chief Executive Officer and President, Andrew Rose.
Goji is the largest online car insurance in the country. Goji provides a single place to compare car insurance quotes, and avoid the hassle of visiting various web sites, and talking to various insurance brokers. Goji was founded Matt Coffin, the Chairman of the company.
Pros of these startup companies are:
- Much more affordable than traditional insurance
- Less paperwork
- Personalized insurance based on the individual’s specific needs and driving behaviors
- Not penalized for past driving history
- Much more flexibility in selecting insurance options
- Not penalized based on demographics
- Leverages technology to create a more comprehensive insurance experience
- Adapted to modern way of doing things, much more efficient in the selection process.
Cons of these companies are:
- No direct interaction with insurance brokers themselves, because the communication portion is streamed lined to only include the policy coverage details.
- Some require you to install a device on your car to gather information on driving habits and behaviors (privacy issues)
- Most savings are experienced by drivers that drive less than 10,000 annually, drivers are required to pay more if they go over the 10,000 mile mark.