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How startup tech car insurers are disrupting the traditional market

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While customers may be ecstatic about the new car they’re about to drive off the lot, shopping for car insurance doesn’t quite garner the same level excitement. But times are changing as emerging startup tech companies are taking the insurance industry by storm. Being educated on all the various options can empower you to help your customers determine what’s best for them and improve their car shopping experience.

New technology development is making its way into the car insurance industry, creating a more modern experience for car owners to insure their vehicles. Many insurance companies are implementing online services, mobile apps and tracking devices (officially known as telematics devices). Tracking devices are installed in cars or used via a mobile app to track policyholders’ driving habits so they can earn a discount for good driving.

Insurance companies are using tracking devices to compete in the market, but some companies have better programs than others. Clearsurance, the leading online publisher of insurance consumer data, analyzed consumer reviews to find out which of the most popular companies have the best tracking devices. Check out our blog examining the best car tracking device programs.

While traditional companies like Progressive, State Farm and Allstate have implemented these programs, here are a few startup companies who have taken car tracking technology to the next level. Metromile and Root are both startup tech car insurance companies that each put their own spin on the technology to create a unique car insurance company.

Metromile

Metromile is an insurance company like no other in which customers pay per mile rather than having a set annual or six-month premium. Customers pay a low, flat base rate per month and then a small amount for the miles they drive each month. The base rate starts at $29,but is determined by a number of more traditional factors like driving history, type of vehicle and customer’s age. The number of miles driven each month is measured with the Metromile Pulse device, which plugs into the vehicle’s OBD-II port.

Customers who live in the city or don’t drive a lot of miles annually could see significant savings by switching to Metromile. The Metromile website claims that customers can save an average of $611 per year on car insurance with Metromile. If a customer drives less than 2,500 miles in one year, they could save up to $836, but even if they drive 9,000 miles in one year, they can save up to $223.

There’s also a useful app available to all Metromile policyholders with tools that allow them to track the miles driven and monitor their car’s health. Metromile is currently available in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington, but is continuing to expand.

Root

Root’s approach to car insurance is unique in that its rates are determined based on how a customer drives. Root insurance utilizes technology to determine if it will insure a driver based on a test drive that all customers are required to take before they can be offered a quote. Root is trying to make the car insurance industry fairer based on the idea that good drivers deserve better insurance rates. It’s doing this by offering insurance rates that are heavily influenced by driving behavior.

For a customer to see if they qualify for Root Insurance, they download the Root app and take a two- to three-week test drive that analyzes their driving. During the Root test drive, drivers are measured for their braking, hours driven, how smooth and safe turns are taken and consistency of ease on the gas and brakes. Once the test drive is completed, Root analyzes the driving behavior to determine if they can offer the driver effective auto insurance. Customers eligible will receive a quote from Root and will be able to customize their coverage before buying a policy.

Root says drivers can save up to 52 percent on car insurance by switching to Root. The insurer is currently available in 20 states and is launching in additional states soon.

Metromile and Root Insurance are able to create a more customized insurance experience for people with a personalized price depending on their use and driving behavior. These companies have also created quicker insurance processes by operating mainly through an app. Customers are able to submit claims quicker through a streamlined process.

While these companies aren’t a good fit for all customers, some drivers would benefit from hearing about these new tech insurers. These companies don’t have the advertising budgets of companies like Geico or Progressive so they aren’t nearly as well-known, but they are highly rated by consumers and may be perfect for some of your customers.