A new unicorn is born: Root Insurance raises $100 million for a $1 billion valuation

Root provides car insurance to drivers. Not exactly a new concept. But it establishes the premium customers based on their driving along with other factors. Drivers download the app and take a test drive that typically lasts two or three weeks. Then Root provides a quote that rewards good driving behavior and allows customers to switch their insurance policy. Customers can purchase and manage their policy through the mobile phone Root app.

Root says its approach allows good drivers to save more than 50 percent on their policies compared to traditional insurance carriers.

The company uses AI algorithms to adjust risk and sometimes provide discounts. For example, a vehicle with an advanced driver assistance system that it deems improves safety might receive further discounts.

“Root Insurance is leading digital innovation in U.S. auto insurance,” Lee Fixel, a partner at Tiger Global Management said in a statement. “This industry is ripe for change, and we are excited to invest in a team that has the expertise, vision, and momentum to deliver real results. We look forward to growing our partnership with Root and helping them expand their footprint across the United States.”