3 Ways Traditional Insurance is Bulls**t

We'll call it straight. Root exists because traditional insurance is broken. It's needlessly complex, clumsy, and straight up unfair.

The thing is: unless you're an industry insider, it's often tough know exactly why insurance isn't working.

That's where we come in. Here are some of the ways car insurance today is B.S.


It’s B.S. because it’s based completely on demographics.

Until recently, there's been no way to give you a rate based on what really matters: how you drive. So insurance companies took their best guesses based on your category—your occupation, marital status, education level, and credit score.

You get the picture: They put you in a box and your box determines your price.

This approach is outdated and often deeply unjust.

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Who deserves to be rated based on their neighbor's accidents? Did your brother really become a better driver the day he got married?

Demographics are helpful in their proper place, but relying only on a customer's category to price insurance is unfair, unnecessary, and leaves a lot of people out in the cold.

It’s B.S. because shopping for it is awful.

As it stands now, you have basically two choices when purchasing traditional car insurance:

Choice A: Find an agent. (In other words, how everyone bought insurance 50 years ago.)

The problem? Simple economics. Agents work on commission. The more they sell you, the more they make. And that means that you'll often end up paying more for insurance products and add-ons that don't actually make sense for your situation.

Purchasing insurance from an agent is also inconvenient and time-consuming. We live in an Amazon world—who wants to take the time anymore?

Then there's Choice B: Fight it out for yourself online. But there's a reason no one wants to do that: shopping online for car insurance involves lengthy forms, invasive questions, confusing terms, and hours of frustration.

(And forget about all the shiny ads for comparison shopping websites. They exist for one reason only: to gather your data and sell it—usually to insurance agents.)

Insurance shopping is twenty years overdue for massive innovation. It's one of the worst consumer experiences still available in 2017.

It’s B.S. because they can raise your rates for no reason.

Price optimization is a particularly unfair practice of traditional insurers. It happens when insurers look at the customer base and use their data to predict who is least likely to cancel their policies even if their price goes up. Then they charge those people more.

To be clear: this is a price increase that has nothing do with changes in risk or behavior fluctuations—they just do it because it's possible.

Insurance companies often create complicated legal structures to allow them to do this legally. And they even do research to determine the maximum amount they can raise prices without inciting a mass exodus. They know their numbers.

The good news? Price optimization is now illegal in some states. And regulators are doing their job and cracking down on this practice wherever they find it.

But wouldn't it be nice if traditional insurance companies just did the right thing in the first place?


There you have it: some of the many reasons that car insurance needs to change. Now.

(Need more reasons? Check out 3 More Ways Traditional Insurance is B.S.)

The good news? It's 2017. None of these problems need to be the way that they are. We have the technology and the knowledge to make car insurance better—to get rid of the B.S. and deliver a fantastic product.

That’s why, this summer, we’re talking about what fair insurance actually looks like.

We're calling out the nonsense and laying out the Root plan to make car insurance an absolutely incredible experience. (Because it's about time.)

Join us.

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