Should you switch to an online insurance company during or after the pandemic?

Fact-checked with HomeInsurance.com

With budget cuts and social distancing top of mind because of the COVID-19 pandemic, your current situation is likely a lot different than the one you were in just a few months ago. If you’re looking to change your insurer, either to find a better deal or better service, we looked at whether a digital insurance company may be a good fit for your new provider.

What is an online insurance company?

A digital insurer is a company that performs all of its business online. Some are complete insurance companies that underwrite the policies they sell, meaning they actually hold onto the risk. Others act as agencies, handling customer service and policy management, but working with a larger, established insurance partner for underwriting.

Also referred to as insurtechs, these companies combine innovative technology with insurance services. Recently, fully remote businesses have shown their value as the world has struggled to adapt to living life apart, but the streamlined processes of these digital businesses can provide consumers with savings and efficiencies at any time.

Choose an insurer that aligns with your priorities

Whether an insurer is fully online or not is only one of the many factors you should consider when making your decision.

Some important factors to consider are:

  • Price 
    • Can you afford coverage? 
    • Is it a competitive rate for the level of protection?
  • Customer Service 
    • Does the company have a track record of high customer satisfaction?
  • Financial Strength
    • Is the underwriter financially sound enough to pay out claims?

Advantages of online insurers

Fully remote

“All of our operations were already online – we’ve never had a brick-and-mortar shop that customers could walk into,” says Sean Harper, CEO and Co-founder of Kin Insurance. “So we’ve always been in a position to sell coverage remotely.”

If you’re not interested in talking face-to-face or over the phone with another human, an insurance company where you can communicate and manage your policy completely through an app or computer interface could be perfect for you.

Built to adapt

Online insurance startup companies have carved out a niche in the insurance industry based on their ability to innovate and respond to the needs of modern consumers. While we will overcome the coronavirus pandemic as a society, the flexibility to respond quickly to a necessary change will always be an asset, and is much harder for traditional insurers with thousands of physical locations and deeply entrenched processes.

Potential savings

Your price will vary, but digital insurers may be able to offer you a more competitive rate by lowering overhead costs or tailoring your premium to more closely reflect your actual risk.

“As many households look for ways to reduce spending given all the economic uncertainty, now seems to be an especially good time for homeowners to shop for more affordable coverage,” Harper says. The best way to find the best price for you personally is to compare custom quotes from several insurers.

Advantages of traditional insurers

Face-to-face options

The devastating effects of the novel coronavirus won’t be around forever. In time, we’ll be able to have in-person meetings again and if having a relationship with a local agent is something you value, then moving to a provider with no physical branches won’t serve that need. 

Longer track record 

Traditional insurers that have been around for a long time will have a lot of helpful, publicly available data on them that can help you make your decision. Resources like the NAIC, Better Business Bureau and AM Best have great information on the historical performance of an insurer. 

Keep in mind, some insurers may have well-documented poor service, so we don’t recommend writing off a newer insurer solely because there’s less information available.

Broad availability

Each state has its own regulations around insurance, so digital insurers are typically available in only a handful of states as they grow. Large established insurers, on the other hand, have had decades to build a presence in the states, and many are available nationwide.

Samantha Kostaras

Insurance Reporter

Samantha Kostaras is an insurance reporter who covers financial services and insurance. Before becoming a writer, she worked as a financial analyst and earned her Bachelor’s degree in Finance from the University of Alabama.

Consequences of driving without… Read Next What Home Insurance Doesn’t…