This is Why Traditional Car Insurance is Unfair (Part II)

Thursday July 5, 2018

This is Why Traditional Car Insurance is Unfair (Part II)
  (Source:Root Insurance Co.)

Have you read Part 1?
Why Traditional Car Insurance is Unfair To You

Awesome. We're not quite finished. Here are more ways traditional car insurance is less than fair.

It's unfair because shopping for it is bad. Really bad.
The old way: As it stands now, you have two choices when purchasing traditional car insurance:

Choice A: Find an agent.

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. Who wants to take the time anymore?

Then there's Choice B: Figure 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 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 one of the worst consumer experiences still available in 2018. It's twenty years overdue for massive innovation.

The Root way: Enter massive innovation. Root is app-based insurance. No agents. No hassle. You can sign up in under a minute, and you can choose your coverage right in the app. Easy -- it's a word you won't hear with insurance the old way.

It's unfair because so much money goes to advertising.
How many insurance mascots can you think of?

Auto insurance spends more on advertising than any other industry in the US. And that money is coming from somewhere. (Hint: your pocket.)

If you're a Geico customer, for example, about 6 percent of your policy check is going to their $1.1 billion annual ad spend.

Essentially, ordinary families are paying for all those car insurance mascots, celebrities, spots, and massive Super Bowl media buys. And that doesn't seem fair.

The Root way: A good product sells itself. You can't get a better endorsement than satisfied customers telling their friends about you. That's why you won't ever see Root spending your dollars on egregiously expensive Super Bowl ads. There's a better way.

It's unfair because they can raise your rates for no reason.
The old way: 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.

Yes, you read that correctly. 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?

The Root way: Doing things the right way. Root doesn't engage in the practice of price optimization-they don't believe in it. Their rates are never arbitrary. You drive and Root gives you the rate you deserve.

Okay, by now you've got the picture. Had enough of unfair insurance?

It's time to try it the Root way.

Download the app and get started now.

Disclaimer for savings: Based on national reviews reported by actual customers.
Disclaimer for coverage: Coverage is available in the event of a covered loss. Exclusions may apply.
Form 1. Not available in all states.
ROOT is a registered servicemark of Root Insurance Company, Columbus, OH.

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Fair Car Insurance sponsored by Root

This story is part of our special report titled Fair Car Insurance sponsored by Root. Want to read more? Here's the full list.

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