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Should You Switch to Digital Insurance in 2022?

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Anonymous hands using a digital tablet to surf the net for better deals.

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You’re probably familiar with online banks that offer many of the same services as a traditional bank with better rates and lower fees. This is because online banks do not have the overhead of a financial institution with branches. The same goes for digital insurance – many of the best providers can provide the same – or better – coverage for less.

Read: If Your Credit Score Is Below 740, Do These 4 Moves Now

The question is, should you switch to digital insurance? This guide reviews some of the best online-only insurance companies and whether digital insurance is right for you.

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Advantages and disadvantages of digital insurance

Take a quick look at how digital insurance works versus traditional coverage.

Advantages

  • Often cheaper
  • Easier to buy coverage online
  • Most tasks can be done online 24/7 or through the mobile app, including filing and tracking complaints
  • Complaints can be processed faster
  • Coverage details can be more transparent since the information is available online

The inconvenients

  • May not offer as many coverage options
  • No face-to-face consultations
  • Not available in as many states as some of the major traditional providers

What is Digital Insurance?

Digital insurance is another term for online-only insurance. Some companies use a lean business model, providing an app for most services, along with a phone number, email address, or live chat option.

In many cases, digital insurance companies rely less on humans and more on technology to provide quotes, perform underwriting, perform risk analysis and even process claims. There are advantages to InsurTech – the process is often faster and less expensive since labor hours are not involved.

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Who is digital insurance for?

Digital insurance is ideal for people who are tech savvy and comfortable managing their needs through a website or mobile app. Fortunately, most tech-focused insurance companies have well-designed apps and platforms that make the experience seamless and easy to understand, even for someone with no knowledge of how insurance works. insurance.

People with simple coverage needs are the best candidates for digital insurance. If you need a standard home insurance policy or basic car coverage, digital insurance is ideal. However, digital insurance may not be able to underwrite more complex situations requiring additional endorsements or additional coverages.

Types of digital insurance companies

Although digital insurance is relatively new compared to traditional providers such as State Farm and Allstate, there are a variety of digital insurance companies serving the major types of coverage. They understand:

Digital car insurance

Most car insurance companies have adopted some form of digital car coverage these days. For example, many large traditional car insurers offer discounts when you download their app that tracks your driving habits. However, some digital auto insurance companies operate only online or through the mobile app. They are:

  • Metromile: Rewards are based on the number of miles flown. Low-mileage drivers might benefit the most.
  • Root: Premiums are based on an insured’s driving habits. Drivers with a safe driving record are able to save the most on premiums.

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Digital Home and Tenant Insurance

When it comes to digital home insurance, one company does it best — and that’s Lemonade. The provider offers different coverage than other insurance companies. It’s a peer-to-peer model powered by artificial intelligence to provide the most affordable coverage possible and nearly instant claims reimbursements.

Groups of insureds are placed in a shared pool. Most of the premiums they pay go into the pool and are available to cover claims. According to Lemonade, the company only takes a small portion of premiums to cover its operating expenses and donates any unused funds that remain in the pool to the charity of each policyholder’s choice. Therefore, anyone looking for standard home or renter’s insurance will likely save on coverage and have access to quick refunds if something goes wrong.

Digital life insurance

InsurTech has also reached the world of life insurance, making no-exam term life insurance easier and cheaper than ever. Customers can skip the health exam and get a policy right away, which can benefit some people who would typically struggle to get coverage from a traditional life insurance provider.

There are a few digital life insurance companies:

  • Grant: Offers short-term and long-term plans with terms of 10, 15, 20, 25, and 30 years, for people between the ages of 18 and 60. Policies are available up to $1.5 million.
  • Haven Life: Offers up to $3 million term life insurance for adults under age 59 with medical exam or $500,000 without exam. Adults between the ages of 60 and 64 may be eligible for a maximum of $1,000,000.
  • Scale: Offers terms of 10 to 30 years and up to $3 million in policies for applicants aged 20 to 60.
  • Sproutt: Save money on your term life insurance policy with Sproutt if you live a healthy lifestyle.

Carry

Digital insurance may not be as widespread today as the traditional model, but it is growing in popularity. You’ll find that companies like Root and Lemonade offer affordable premiums and coverage that policyholders are happy with.

In fact, Lemonade consistently ranks high in JD Powers’ annual study of the best insurance companies, beating out many of the best-known names in the industry. It ranks third behind USAA and Nationwide for overall customer satisfaction with renters insurance. That being said, next time you’re looking for coverage, be sure to get a quote from a digital insurance provider to compare – you might be happy with what you see.

Digital Insurance FAQ

  • What is digital car insurance?
    • Digital car insurance is online-only coverage. This means there are no physical offices available – everything is handled through the mobile app instead. However, coverage might be cheaper since the company has lower overhead costs than a traditional insurance company.
  • What is online-only insurance?
    • Online-only insurance works the same way as an online bank. There are no branches and almost everything can be managed using the mobile app.
  • What type of company is OneDigital?
    • According to the company’s website, OneDigital offers an “insurance, financial services and HR platform [with] personalized, technology-enabled solutions for a contemporary working life experience.”

Information is accurate as of October 24, 2022.

Editorial note: This content is not provided by any entity covered by this article. Any opinions, analyses, criticisms, evaluations, or recommendations expressed in this article are those of the author alone and have not been reviewed, endorsed, or otherwise endorsed by any entity named in this article.

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