Why is Root insurance so cheap?

 Root Insurance is often cheaper than traditional insurance companies due to its usage-based pricing model, which leverages telematics. Here's why Root's rates are generally lower:

1. Telematics-Based Pricing: Root uses a mobile app to track driving behavior, such as braking, speed, and phone usage, during a trial period. Safer drivers are rewarded with lower premiums because Root focuses on insuring lower-risk individuals. This model allows them to avoid high-risk drivers, who typically drive up costs for other insurers.

2. Selective Underwriting: Root’s technology enables the company to reject drivers it deems too risky, thereby maintaining a pool of safer, lower-risk customers. This selective approach helps keep premiums low for qualified drivers.

3. Mobile-First Operations: Root operates primarily through its app, reducing operational costs associated with traditional agents and brick-and-mortar offices. These savings are passed on to the customers.

4. No Credit Scores or Demographic Factors: Root primarily bases premiums on driving habits rather than factors like age, credit score, or location, which can drive up costs in traditional insurance models. By focusing solely on driving behavior, Root often offers lower rates to individuals who might otherwise be penalized by traditional underwriting models.

These factors combine to make Root Insurance more affordable, especially for drivers with excellent driving habits

​(Canine Journal)​(Investopedia)