Root makes money by selling car insurance: almost all its revenue is premiums it keeps after reinsurance, plus fees (installment, policy and late-payment fees) and investment income on the float. It profits when premiums exceed claims and costs. Incorporated in 2015, based in Columbus, Ohio, and led by co-founder and CEO Alex Timm, Root prices policies mainly on how people actually drive, measured through its app (telematics). In fiscal 2025 it reported total revenues of $1,517.1 million and net income of $40.3 million.
Net premiums earned were $1,401.7 million of $1,517.1 million revenue in fiscal 2025: premiums written are earned over the policy period, minus the share ceded to reinsurers.
02
Fees
Fee income was $78.3 million in fiscal 2025, mainly flat fees for paying in installments, plus policy fees and late-payment fees.
03
Investment income
Root earns interest on cash and investments it holds before claims are paid: $33.7 million in fiscal 2025.
04
Underwriting margin
The key ratio is the net combined ratio, losses plus expenses as a share of premiums: 98.2% in fiscal 2025 and 97.2% in the third quarter of 2026. Below 100% means an underwriting profit.
In the third quarter of 2026 Root reported revenue of $381 million and net income of $14 million. Gross written premium fell 8% year on year to $358 million as Root pulled back in its direct channel while large carriers cut prices and spent more on marketing.
Partnerships carry new business
Partnership channels, including independent agents, produced 52% of new writings in the third quarter of 2026, up from 44% a year earlier. Root renewed its Carvana deal through August 2028; more than 250,000 Root policies were written through Carvana from September 2022 to August 2026.
Insurance inside the car purchase
Root launched a pilot with Hyundai Capital America at 14 Phoenix-area Hyundai dealerships, offering six months of Root auto insurance at no cost to eligible buyers of a new Hyundai. Root now operates in 38 states, about 82% of the US population.
Ready for AI shopping agents
Root says AI agents can take much of the work of buying car insurance off customers’ hands and shift advantage toward carriers with the best price and coverage. It is adapting its direct quote experience for agentic tools and has built a new pricing model.
Root's revenue lines, fiscal 2025
Net premiums earned
What it isAuto and renters premiums kept after reinsurance
Fiscal 2025$1,401.7M
Fee income
What it isInstallment, policy and late-payment fees
Fiscal 2025$78.3M
Net investment income
What it isInterest on cash and investments
Fiscal 2025$33.7M
Other income
What it isMainly selling leads where Root does not operate
Fiscal 2025$3.4M
Total revenues
What it isAll lines; net income $40.3M
Fiscal 2025$1,517.1M
What it means for you
Investors: read the net combined ratio before revenue; growth at a ratio above 100% loses money.
Builders: embedding a product at the moment of purchase, as Carvana does for insurance, can beat paid acquisition.
Operators: in a price war, slowing growth where returns fall short can protect the business, as Root did in 2026.
Drivers: usage-based pricing rewards safe driving, so compare a telematics quote with a traditional one.
Product teams: prepare quote flows that AI shopping agents can read and complete.
The Business Engineer lens
Insurance is a pricing business, and AI shopping agents could make price and coverage easier to compare than brand. The Business Engineer reads Root as a test of whether a better data model plus embedded distribution can beat incumbents’ marketing budgets once agents do the shopping.
From car insurance premiums it keeps after reinsurance ($1,401.7 million in fiscal 2025), plus fees and investment income; it profits when premiums exceed claims and costs.
Is Root profitable?
Yes. It reported net income of $40.3 million in fiscal 2025 and $14 million in the third quarter of 2026.
How is Root different from other car insurers?
It prices mainly on individual driving behaviour measured through its app, rather than mainly on demographics.
Who runs Root?
Co-founder Alex Timm is Chairman and Chief Executive Officer; the company is based in Columbus, Ohio.
The complete explainer, cleaned up and reformatted for mobile.
Root Insurance is an app-based car insurance provider founded by Alex Timm and Dan Manges in 2015. Root was built to streamline the insurance application process for both the consumer and the insurance company. The company makes a profit if the value of insurance premiums exceeds compensation payouts. While the company does have some overheads, its costs are much lower without the need to maintain physical branches.
Updated 6 October 2026: we refreshed 10 figures on this page, now taken from SEC EDGAR filings. Anything we could not check against a current source keeps its original year, so you can see how old it is.
Latest figures · checked 6 October 2026
Root, Inc. reported total revenues of $1,517.1 million for fiscal year 2025. SEC EDGAR filings
Root, Inc. reported net income of $40.3 million for fiscal year 2025. SEC EDGAR filings
Root had 1,256 full-time employees as of December 31, 2025. SEC EDGAR filings
Root, Inc. reported total revenues of $389.2 million and net income of $25.4 million for the three months ended June 30, 2026. SEC EDGAR filings
Root had 483,921 policies in force as of the quarter ended June 30, 2026. SEC EDGAR filings
In its fiscal 2025 annual report, Root stated that it currently operates in 36 states. SEC EDGAR filings
Root had 481,869 policies in force as of the end of 2025. SEC EDGAR filings
Value Proposition
AnalysisRoot Insurance’s value proposition includes: – Personalized Pricing: Offering auto insurance premiums based on individual driving behavior, determined through a mobile app’s data collection and analysis. – Easy Sign-Up: Simplifying the insurance application process through the app, eliminating the need for paperwork and allowing users to get coverage quickly. – Fairness and Transparency: Promoting a fairer insurance model by pricing policies based on driving habits, which may benefit safe drivers with lower rates. – Enhanced User Experience: Leveraging technology to provide a more user-friendly and customer-centric approach to auto insurance. Root Insurance attracts customers seeking personalized, transparent, and tech-driven auto insurance solutions.
ImplicationsProvides auto insurance premiums based on individual driving habits. Simplifies the insurance application process with a user-friendly mobile app. Promotes fairness in insurance pricing, potentially lowering costs for safe drivers. Enhances user experience through technology and data-driven solutions. Offers a unique value proposition in the auto insurance industry.
Examples– Customers seeking personalized auto insurance pricing. – Users looking for a digital and hassle-free insurance application process. – Safe drivers interested in potentially lower insurance rates. – Those valuing an improved and technology-driven insurance experience.
Customer Segments
AnalysisRoot Insurance primarily serves the following customer segments: 1. Drivers: Targeting individuals in need of auto insurance coverage. 2. Tech-Savvy Consumers: Attracting users comfortable with using a mobile app for insurance-related tasks. 3. Safe Drivers: Benefiting safe drivers who may receive lower premiums based on their driving behavior data. Root Insurance focuses on providing auto insurance solutions tailored to the needs of these customer segments.
ImplicationsTargets a broad range of drivers seeking auto insurance coverage. Appeals to tech-savvy consumers comfortable with digital insurance processes. Offers potential benefits to safe drivers through data-driven pricing models. Diversifies its customer base within the auto insurance sector.
Examples– Individuals in need of auto insurance coverage. – Tech-savvy consumers comfortable with digital solutions. – Safe drivers interested in potential premium reductions.
Distribution Strategy
AnalysisRoot Insurance’s distributionstrategy includes: – Mobile App: Providing a mobile app that collects driving behavior data and facilitates the insurance application process. – Direct-to-Consumer Model: Selling policies directly to customers through the app, eliminating the need for traditional agents. – Data Analytics: Utilizing data analytics to assess driving behavior and calculate personalized insurance premiums. – Marketing and Advertising: Engaging in marketing efforts to promote the app and its benefits. Root Insurance relies on its mobile app, a direct-to-consumer model, data analytics, and marketing to distribute its insurance offerings.
ImplicationsProvides a mobile app for data collection and insurance applications. Sells policies directly to consumers, reducing the reliance on agents. Utilizes data analytics to determine personalized insurance premiums. Engages in marketing to raise awareness of the app’s advantages. Implements a tech-centric distributionstrategy in the auto insurance industry.
Examples– Using the mobile app to collect driving data and purchase coverage. – Directly interacting with Root Insurance for policy acquisition. – Having driving behavior assessed through data analytics. – Discovering Root Insurance through marketing and advertising efforts.
Revenue Streams
AnalysisRoot Insurance generates revenue through the following channels: 1. Auto Insurance Premiums: Collecting premiums from policyholders for auto insurance coverage. 2. Policy Fees: Charging fees related to policy changes, endorsements, and administrative tasks. Root Insurance primarily relies on revenue from auto insurance premiums and policy-related fees.
ImplicationsCollects revenue through premium payments for auto insurance coverage. Charges fees for policy changes and administrative tasks. Focuses on core revenue streams within the auto insurance sector.
Examples– Paying auto insurance premiums for coverage. – Incurring fees for policy changes and endorsements.
Marketing Strategy
AnalysisRoot Insurance’s marketingstrategy involves: – Digital Advertising: Engaging in online advertising campaigns to increase brand visibility and attract potential customers. – App Promotion: Promoting the mobile app’s features and benefits to encourage downloads and usage. – Data-Driven Marketing: Utilizing driving behavior data to tailor marketing messages to potential customers. – User Testimonials: Sharing positive user experiences and testimonials to build trust and credibility. Root Insurance combines digital advertising, app promotion, data-driven marketing, and user testimonials to effectively market its tech-driven auto insurance solutions.
ImplicationsIncreases brand visibility through online advertising efforts. Promotes the app’s advantages to encourage downloads and usage. Customizes marketing messages based on individual driving data. Builds trust through user testimonials and positive experiences. Implements a comprehensive marketingstrategy in the auto insurance industry.
Examples– Encountering Root Insurance through online ads. – Downloading the app for insurance-related tasks. – Receiving personalized marketing messages based on driving behavior. – Reading user testimonials and experiences with Root Insurance.
Organization Structure
AnalysisRoot Insurance’s organizational structure includes: – Executive Leadership: Comprising executives responsible for strategic direction, decision-making, and overall company management. – Technology and Development Teams: Managing the app’s technology, user experience, and data analytics. – Customer Support: Providing customer support and assistance through dedicated teams. – Marketing and Advertising Teams: Handling marketing campaigns and digital advertising efforts. Root Insurance maintains an organized structure to support technology development, customer support, marketing, and user experience.
ImplicationsLed by executive leadership for strategic guidance and decision-making. Manages app technology, user experience, and data analytics. Provides customer support and assistance through dedicated teams. Focuses on marketing campaigns and digital advertising efforts. Maintains an organized structure aligned with its mission in the tech-driven auto insurance industry.
Examples– Executive leadership for strategic direction. – Technology and development teams. – Customer support teams. – Marketing and advertising teams.
Origin Story
Root Insurance, formally known as Root Insurance Company, is an American app-based car insurance provider.
Key numbersChecked 6 October 2026
$1,517.1 millionRoot, Inc. reported total revenues of $1,517.1 million for fiscal year 2025.SEC EDGAR filings
$40.3 millionRoot, Inc. reported net income of $40.3 million for fiscal year 2025.SEC EDGAR filings
$389.2 millionRoot, Inc. reported total revenues of $389.2 million and net income of $25.4 million for the three months…SEC EDGAR filings
1,256Root had 1,256 full-time employees as of December 31, 2025.SEC EDGAR filings
In one lineRoot Insurance is an app-based car insurance provider founded by Alex Timm and Dan Manges in 2015.
FourWeekMBABusiness EngineerAt a glance
Root Insurance is an app-based car insurance provider founded by Alex Timm and Dan Manges in 2015.
Whilst the driver is on the road, the app gathers data on acceleration, cornering, braking, and other sensors to gauge driving skills.
That is, the company makes a profit if the value of insurance premiums exceeds compensation payouts.
In 2025, net investment income was $33.7 million and fee income was $78.3 million, out of total revenues of $1,517.1 million.
Layout and figures refreshed 6 October 2026. Sources are listed at the end of the article.
Why it mattersFrom the article
Fairness and Transparency: By directly linking premiums to driving behavior, Root ensures transparency and fairness, rewarding safe drivers with lower rates.
Root Insurance was founded by Alex Timm and Dan Manges in 2015. Timm, who has worked in insurance since the age of fourteen, wanted to streamline the insurance application process for both the consumer and the insurance company.
Indeed, the whole process is handled on a smartphone. Users must first download the app and scan their license. The software then adds personal details to the insurance application automatically.
But it is the way the app assesses driving capability that is particularly interesting. Whilst the driver is on the road, the app gathers data on acceleration, cornering, braking, and other sensors to gauge driving skills. It also measures risk parameters such as how much driving is done at night. This allows a more tailored car insurance quote that promotes company values of fairness and simplicity.
In October of 2020, Root Insurance became a publicly listed company. It was the largest such IPO to ever occur in the state of Ohio.
Root Insurance revenue generation
While Root Insurance uses a somewhat unique risk assessment method, its revenue generation model is not unlike many other insurance companies.
That is, the company makes a profit if the value of insurance premiums exceeds compensation payouts. While the company does have some overheads, its costs are much lower without the need to maintain physical branches.
As noted in the previous section, Root also offers rental and homeowners insurance.
Rental insurance
Renters can get insurance cover for their household possessions, in the event of theft, personal injury, or damage to the home resulting from fire or water.
Here, the exact premium broadly depends on the number of bedrooms and assets in the home and whether the landlord needs to be added to the policy.
Root Home
Root Home is the name given to the Root insurance for homeowners. It is similar to rental insurance in that it covers incident damage, property that is destroyed or stolen, medical payments, and temporary living expenses.
Net investment and fee income
Root also makes a small (but by no means insignificant) amount of revenue from net investment income.
Net investment income is money received from investments such as bonds and stocks before taxes have been applied. The company is likely investing a small portion of each insurance premium it collects.
In 2025, the company reported fee income of $78.3 million. The nature of these fees is undisclosed.
FourWeekMBABusiness EngineerTimeline, as stated in the article
2015
Root Insurance is an app-based car insurance provider founded by Alex Timm and Dan Manges in 2015.
2015
Root Insurance was founded by Alex Timm and Dan Manges in 2015.
2020
In October of 2020, Root Insurance became a publicly listed company.
Value Proposition
Personalized Pricing: Root assesses driving habits through telematics, providing tailored insurance premiums based on individual behavior rather than demographic factors.
Fairness and Transparency: By directly linking premiums to driving behavior, Root ensures transparency and fairness, rewarding safe drivers with lower rates.
Simplicity and Convenience: Root’s mobile app offers a seamless user experience, enabling customers to manage policies, file claims, and receive real-time driving feedback with ease.
Cost Savings: Root incentivizes safe driving habits, potentially leading to significant cost savings for customers over time compared to traditional insurers.
Empowerment Through Data: Root empowers drivers by providing insights into their driving behavior, encouraging safer choices and contributing to improved road safety outcomes.
Marketing Strategy
Mobile App Focus: Root emphasizes its mobile app as the primary marketing channel, offering a user-friendly platform for customer interaction, policy management, and driving behavior monitoring.
Digital Advertising: Root invests in targeted digital advertising campaigns across social media, search engines, and display networks to reach potential customers interested in insurance products.
Referral Program: Root implements a referral program to leverage customer advocacy, incentivizing existing customers to refer friends and family, expanding its customer base through word-of-mouth marketing.
Partnerships: Root establishes strategic partnerships with car manufacturers and ride-sharing platforms to promote its insurance offerings, leveraging existing customer bases and distribution channels.
Content Marketing: Root produces educational content, blog posts, and articles on safe driving habits and insurance-related topics, attracting and engaging potential customers while establishing itself as a trusted industry authority.
Distribution Channels
Direct-to-Consumer: Root primarily distributes insurance products directly to consumers through its mobile app and website, offering a convenient and accessible platform for policy management and purchases.
Partnership Networks: Root collaborates with various partners, including car manufacturers and ride-sharing platforms, to expand its reach and access new customer segments.
Digital Platforms: Root leverages digital platforms such as social media, search engines, and display networks to promote its insurance products and engage with potential customers online.
Referral Program: Root’s referral program encourages existing customers to refer friends and family, leveraging word-of-mouth marketing to drive customer acquisition.
Content Distribution: Root distributes educational content and resources through its website, blog, and social media channels, reaching potential customers with valuable information and driving engagement.
Key takeaways
Root Insurance is a North American app-based insurance provider. The company was founded to streamline the insurance application process by Alex Timm and Dan Manges in 2015.
Root Insurance earns money by charging its customers a monthly insurance premium. While car insurance is the primary product, rental and homeowner insurance is also now available.
Root Insurance also makes from net investment and fee income. In 2025, net investment income was $33.7 million and fee income was $78.3 million, out of total revenues of $1,517.1 million.
Key Highlights
Founding and Background: Root Insurance is an app-based car insurance provider founded by Alex Timm and Dan Manges in 2015. Alex Timm, with a background in insurance since the age of fourteen, aimed to simplify the insurance application process for both consumers and insurance companies.
Digital Approach: Root Insurance operates entirely through a smartphone app. Users download the app, scan their driver’s license, and the app automatically populates personal details for the insurance application.
Innovative Risk Assessment: The app assesses driving skills by collecting real-time data while the driver is on the road. It measures factors like acceleration, cornering, braking, and other sensors to gauge driving capability. This data-driven approach allows Root to provide tailored car insurance quotes that align with their values of fairness and simplicity.
Public Listing: In October 2020, Root Insurance became a publicly listed company through an Initial Public Offering (IPO).
Revenue Generation Model: Root Insurance’s revenue generation model is similar to traditional insurance companies. They earn profits when the total value of insurance premiums collected exceeds compensation payouts. Their digital-centric approach reduces costs by eliminating the need for physical branches.
Coverage Expansion: Root Insurance doesn’t only offer car insurance. They’ve expanded to provide rental insurance for household possessions, covering theft, personal injury, fire, water damage, and more. Additionally, they offer homeowners insurance, similar to their rental insurance, covering property damage, theft, medical payments, and temporary living expenses.
Net Investment and Fee Income: Besides insurance premiums, Root also earns revenue from net investment income, generated from investments such as bonds and stocks. They also generate income from undisclosed fee sources. In 2025, net investment income was $33.7 million and fee income was $78.3 million, out of total revenues of $1,517.1 million.
Insurance Availability: While Root primarily offers car insurance, their rental insurance and homeowner insurance products are available in a limited number of American states.
The insurance company revenue model revolves around a claimant receiving compensation in the event of an accident, illness, death, or damage to an asset resulting from theft or a natural disaster. In return for continual insurance cover, the company charges a regular fee – otherwise known as a premium. In essence, insurance companies make money by carefully considering the risk of each policy. They bet that the holder will continue to pay for insurance coverage and never be required to make a claim.
Root Insurance is an app-based car insurance provider founded by Alex Timm and Dan Manges in 2015. Since the age of fourteen, Timm, who has worked in insurance, wanted to streamline the insurance application process for both the consumer and the insurance company. The company makes a profit if the value of insurance premiums exceeds compensation payouts. While the company does have some overheads, its costs are much lower without the need to maintain physical branches.
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Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
