Root, an auto insurance startup centered around telematics, closed a $51 million venture financing designed to fuel expansion into more states and enable further investment in its core technology.
Redpoint Ventures led the Series C round, though Scale Venture Partners also participated along with existing investors Ribbit Capital and Silicon Valley Bank Partners.
Root’s coverage is now available in 12 states: Ohio (where it is headquartered), Montana, Utah, Arizona, Texas, Oklahoma, Louisiana, Mississippi, Illinois, Indiana, Kentucky and Pennsylvania. Approval is pending in: Oregon, Alaska, North Dakota, Iowa, Arkansas, North Carolina, New Mexico, Maryland, Delaware and Washington, D.C., according to the company’s website.
Plans call for being “nearly national” by 2019, Root said. The company debuted in 2016, launching with $7 million in initial funding from venture capital firm Drive Capital. Munich Re, Odyssey Re and Maiden Re are providing reinsurance, and Silicon Valley Bank backs Root’s reserves.
Root rewards good drivers with cheaper insurance rates based on their use of the company’s app and its telematics/smartphone-related technology that helps measure driver behavior. Once the app is downloaded, potential customers do a test drive over two to three weeks, depending on driving frequency. Root provides a quote, based on driving behavior the app collects, such as hard brakes, aggressive turns and mileage driven. In the end, drivers can save up to 52 percent on premiums. After they sign on to Root, they can request cancellation of their old policy through their mobile phone, the company said.
When Root launched in October 2016, CEO and co-founder Alex Timm described Root’s telematics-based approach and business model as “enabling us to get the best drivers much, much better rates than currently on the market, which we feel is the rate they deserve.”
Last July, Root expanded into rental car coverage via a partnership with ridesharing firm Lyft. For policyholders with short-term needs for alternate transportation after an incident, Root offers a choice between a rental car or a comparable amount of Lyft credits for free rides.