Personal Finance

This Car Insurance Company Is Revolutionizing the Industry

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If you haven’t heard about Root Car Insurance yet, listen up. The three-year-old auto insurance company is using app-based technology to change the game for good drivers across the U.S. Unlike conventional insurers, which exploit good drivers to subsidize the bad ones, Root grants policies only to safe drivers. This revolutionary approach enables them to undercut just about every other form of auto insurance on the market, saving drivers up to $1,200 a year!

How It Works

Here’s the deal: After completing their lightning-fast sign-up procedure, you’ll be prompted to download Root’s app, thus commencing a trial period that typically lasts two to three weeks. Ultimately, your rate depends on how safely you drive during this tryout. After two months, you either make the grade or you don’t, in which case you’d have to find a conventional policy.
The app runs in the background using GPS to track basic metrics like speed and braking. It also gathers data on driving habits such as the time of day. For example, it’s riskier to drive late at night compared to the same route during daylight hours, so the app takes that into account. Curiously, Root’s app determines whether you’re driving as opposed to riding your bike or taking the train. Based on driving patterns, it can even differentiate when you’re a passenger in someone else’s vehicle.
Root strives for transparency and considers the individual’s driving habit rather than stereotyping based on demographics. While most traditional car insurance companies examine factors you might not even be aware of, such as your credit score (only California, Hawaii, and Massachusetts have outlawed this practice so far), that’s not the case with Root. That makes it a great option for anyone concerned about their creditworthiness as well as for teenage drivers, who traditionally receive expensive policies for a variety of reasons.

The Perks

One of Root’s considerable perks is roadside assistance, which is included with each policy. They’ll reimburse you for three incidents (up to $100 each) every six months, whether you need a tow, a jump start, or just help recovering keys you’ve locked inside your vehicle.
The app makes it simple to file claims and dredge up your insurance card—no more rifling through your glove box. Ready to join? Root takes it a snap to switch over, too. They will handle the cancellation of your current policy and even seek a refund for unused months.

The Catch

So what are the drawbacks? Well, Root is not for everyone. For example, if you must drive in the wee hours, you may be penalized. Nor does it cover motorcycles. On the other hand, though, if you can avoid riskier practices, Root can actually be a helpful nudge to be more mindful about safety on the road.
Of course, you also have to enable the app to track your driving, although—frankly—most smartphone users already share a ton of information about their habits. Root promises to not sell your data (you can learn more about their privacy policy here.)

The Takeaway

Based in Columbus, Ohio, Root Car Insurance is still making its way into major markets like the San Francisco Bay Area. However, that should prove no problem: The company raised $100 million dollars, raising its valuation to $1 billion in 2018. Our assessment? Root is poised to overtake conventional car insurance throughout the U.S.—it’s time to jump on board.