
Launch HN: Goodcover (YC S17) – Cooperative renters insurance for half the price - chrisplotz
Hi HN, we’re Chris and Dan, co-founders of Goodcover (<a href="https:&#x2F;&#x2F;www.goodcover.com" rel="nofollow">https:&#x2F;&#x2F;www.goodcover.com</a>). Goodcover provides renters insurance (only in California at the moment) and operates as a cooperative. We take a fixed fee on every policy, pool the premiums to pay claims, and then return what’s left over back to Members through an annual dividend. Thanks to this model and good technology we’re able to cut the price of renters insurance in half.<p>I (Chris) worked in traditional insurance for 8 years. That time taught me to love insurance and how it picks people up after disasters, but it also gave me first hand exposure to the things people hate about it – the ever-increasing prices, the adversarial claims negotiations, the mountains of paperwork, and the byzantine decision making. All these inefficiencies kept us from really understanding and working for our policyholders – the people we were meant to serve. I became convinced technology was coming for this industry.<p>I moved to SF in 2016, which is where I met Dan through a family friend. Dan had co-founded Cloudkick (YCW09) and was now looking to start another company. He also knew technology was coming for insurance, especially after his early career at IBM where he saw just how many “tech consultants” were placed in State Farm. Meeting him was a breath of fresh air – we started Goodcover in 2017 and got into YC right after.<p>And then… it took us two years to get a product to market. We had opportunities to get going faster – you can get an agent’s license, buy off the shelf software, and sell other companies’ products in a matter of weeks. But they would be the same crappy, overpriced, adversarial products that everybody sells, and everybody hates. What good is that? Instead, we didn’t take the shortcuts and stuck it out to change the business model to cut the price in half, and Goodcover is the result.<p>The story of how we did this starts with how insurance prices are made. If you have lots of claims data, you can run regressions to learn how underwriting factors like location, customer data, previous losses, etc all affect the frequency and severity of claims for every dollar of coverage you are providing. You then load that claims model with your expenses and desired profit margin, and boom you have insurance rates. You then have to get the Department of Insurance in each state you enter to sign off on your rates (not too low so you lose money, not so high that the government calls out your gouging).<p>We knew technology would save us a lot on processing costs – with Dan’s technical background we knew that we could build technology that would run the business for a fraction of the cost that the typical industry vendors charge. We weren’t going to be saddled with huge agency forces or massive brand advertising. But, we didn’t have any claims data.<p>Enter Quirk 1 of the insurance industry: all personal lines insurance pricing is public. Since all product and pricing is approved by the state government, to start something new you need to essentially reconstitute work other companies have done, proving that the elements you choose work for your target market. This is why most new insurance offerings are basically just another version of the pricing model sold by the “Insurance Services Office” (ISO – yes, that’s a company, not a government agency). It’s approved everywhere and used by everyone, so it’s a quick start. Lemonade uses ISO with one important modification: they set their minimum premium at $60 instead of $120, allowing them to claim an introductory price of $5 a month. If you buy more than the minimum coverage though, you’ll quickly get to “everybody else’s price” territory.<p>However to cut the price without sacrificing coverage, we couldn’t use the same model that everyone else does. We needed a more granular model where we could charge the safest 99% people very little in exchange for charging the riskier 1% more. In my insurance career I had learned a lot about models designed for high-value homes, jewelry, cars etc – these models price in catastrophe (like hurricane and wildfire) very precisely to manage exposures in high-risk places. This granularity results in much lower prices for safer risks, since prices there don’t need to subsidize risky ones like they do in traditional “mass market” models. We decided to adapt these models to build our own that would be applicable to our target market, i.e. Renters. Our competitors that don’t use these models are in a bit of a pickle, because they can’t raise prices for high risks too fast thanks to regulatory constraints, meaning they have to keep prices high in safe places to balance the book.<p>It also meant we could start with a coverage baseline that was better than the usual Renters Policy, including coverage for mold remediation, water damage originating from other peoples’ apartments, etc. We modernized the coverage, getting rid of extra coverage for things like oriental rugs and replacing it with more computer coverage. And critically we lowered the expense base, allowing us to offer huge savings thanks to the compound effect of lower costs and more granular pricing for our target market. The biggest apples-to-apples discount we’ve clocked so far is 71%.<p>Custom model in hand, we were a critical step closer. But we still couldn’t offer insurance until we had the capital ready to pay claims. Insurance regulation sensibly makes sure that before you sell insurance to anyone you are adequately capitalized to pay your claims. Thus we set out to raise more capital.<p>Here’s where we ran into Quirk 2, and something I should have known all along. Insurance Claims Capital is inherently not venturable. VCs look for 10-100x return on investment. But, as we grew the company, by law our claims capital reserves would always need to be at least 3x our expected losses (8x is normal). That geometric growth pattern is not scalable. Even if we raised over and over again, by the time we “made it big” we would be selling shares to normal investors, people who value insurance companies on a multiple of their cash on hand. Today’s insurance monsters have grown their cash base slowly for about 100 years. We found it was inefficient for us to own this capital, and therefore impossible to pitch. Money we raise should go to scaling our operations, not sitting around in case we had more claims than premiums. This meant we need to get claims capital partners – aka, rent it from insurance companies.<p>We had hoped to avoid this because of quirk 3 of the insurance industry, “underwriting profits”. It used to be you could run an insurance business with huge expenses at a loss and make money because interest rates are great. No longer. The way insurance companies make money today is by keeping the difference of premium minus claims and expenses, or “underwriting profit”. This sets insurers up to be in conflict with their customers, and my experience in the industry showed me that if there was a root cause for all the reasons people hated insurance, this was it. So not only would we now need to ask insurers for help, we’d need them to give us their profit back to return to Members.<p>This process took over a year. Fortunately we secured in-principle approval from a great reinsurer (TransRe) early on. The next step was to find a “primary” insurance partner to get us set up in California. We still have the chart of our emotions on the whiteboard in our office from that time – with huge ups (like when we moved to board-level conversations with one of California’s best cooperative insurers) to huge lows (like when those talks collapsed because that insurer’s agency force wouldn’t allow the channel conflict of a digital partner). Eventually we got it done, inking a three-party deal that worked for everyone, providing a more or less stable return for our capital partners but with the excess profit returning to Goodcover’s Members. With model and insurance capital partners in hand we then moved to get approval from California, which went as well as a process like that could, thank goodness.<p>While we were working on these business objectives we built the necessary technology to service policies, quotes and maintain regulatory compliance. The easiest way to think of insurance is it works like an append only database. For instance, to remove coverage you would amend a person’s policy contract to remove a coverage, and so similarly in our tech stack we append an event that describes the changes to the policy which outputs a final policy. As a side benefit, this allows us to see the current state of a policy at any point in time. This model works well for us considering most, if not all, of our code is written in a functional language (Scala).<p>Which brings us up to late last year when we wrote our first Goodcover policy. Honestly it’s been quite an ordeal, but we think the changes we’ve been able to implement have been worth it. I am so thankful for the hard work and persistence of the team, and for all the feedback and help the HN and YC community have given us over the years (shout out to anyone who remembers our “Advice” Show HN from 2018! - <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=17465114" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=17465114</a>).<p>Renter’s insurance in CA is just the first step, (home and more states on the way) We have a ton more listening to Members to do, but we hope you enjoy the benefits – and are super grateful for any feedback you have!
======
NicolasGorden
Great business concept. I loved the write up, made me think of my own trials
and tribulations as an ex-entrepreneur.

As a marketing guy though, I saw a few points I'll mention in case you want to
implement. I'm sure the editing will improve your conversion rate:

1- Authority logos - I'm pretty sure the average renter won't recognize them.
Find more recognizable logos to use, or don't use them. The whole purpose of
authority logos is to leach off the goodwill people might have to brands they
know and love. If they can't recognize the authority logos, that defeats the
point of having them.

2- I'd change from "TV Famous Insurers" to "Geiko" or whatever specific one
you are talking about (lemonade uses specific names on their landing pages for
a real good reason)

3- Clarify the meaning of "Free Insurance" \- I'd use the Get 1 Month Give 1
Month of FREE Insurance" or simply "One Month of Free Insurance". I'd then
make the text under the headline much clearer. Why you do something isn't as
important as what the end user gets, avoid getting bogged down in too many
details.

4- Testimonials need to look more like testimonials. Use pictures or something
that shouts 'this is a testimonial'. The colored boxes look cool, but I
believe design should always follow function.

5- I'd avoid mentioning the packages on the lander/home. Just mention the
highlights "From as Little as $5 for insurance of up to $500,000". Moving
people through the funnel before you get into details.

6- Avoid the word 'ruthlessly'.

7- I'd include a hero shot or something a little more human. The page is a
little dry.

Overall though, I love the concept and will likely sign up soon (my wife
generally handles that, but I'll bring it up to her) - The website is also
super well done, my comments aren't trying to detract from that in any way.
Just trying to give feedback to make it even better.

~~~
chrisplotz
Thanks for the advice! As an insurance guy... I am always in need of advice
from marketing folks! So thanks again.

~~~
wpietri
I'll just add that I loved the packages on the front page. I never bothered
with renter's insurance, because it seemed like a hassle and I have been
willing to self-insure. But seeing my options immediately made me think,
"Maybe I should!"

Please do put a jobs page up, though. Your thoughtful and frank description
here definitely has me curious.

~~~
chrisplotz
Thanks! Yeah it was always annoying to us that you needed to give away all
your personal details before you even found out whether something would be
worth it, so we wanted to be different. Glad to hear you like it!

On a jobs page, thanks for your interest! We have something up on AngelList
right now: [https://angel.co/company/goodcover-
co/jobs](https://angel.co/company/goodcover-co/jobs)

~~~
wpietri
Alas, I suspect I'm not FP-ish enough for that role, but I appreciate you
pointing it out. Good luck with your efforts!

~~~
chrisplotz
Oh bummer, but no problem, thank you for considering us!

------
chiph
I think you made a good choice in picking renter's as your first policy
offering. It's not complex, many people are required to have it (as a
landlord, I certainly require it of my tenants), and you won't have a tough
time getting some reinsurance for your policies.

How will you deal with aggregator sites? Will you allow scraping?

Best of luck.

~~~
chrisplotz
Thanks!

I think (correct me if I'm wrong) you're asking about comparison sites - in
those cases the law requires them to establish an agency relationship. We're
open to it and think we'll compete well, but much like Southwest it would be
hard to give better prices anywhere else than our own site.

------
subhobroto
Chris,

Congratulations. I wish there were more like Goodcover.

How would you handle premiums and claims from high risk earthquake and fire
prone areas (in California)?

For example, if I invested in building a defensible area around my house,
would you give me a discount on "fire insurance"?

~~~
chrisplotz
Thanks! Yeah, if the whole industry ended up working the way we do, we'd be
thrilled.

To your question: Premium: Our model has granular rating for high risk areas
(fire is the biggest issue there). And part of that is the defensibility of
the specific property for sure. But unfortunately the biggest factors there
are all location specific - distance to water, slope, ease of access, distance
to burnable area, etc, which not much can be done about. This is why although
it is hard, communities investing in collective defense has the biggest impact
on insurance prices.

On claims: We have reinsurance, so no need to fear us being blown out capital-
wise. To actually get the claims paid and work done we (like most others) have
contracts with emergency-overflow claims administration teams, so that a force
is ready at peak times.

~~~
subhobroto
> fire is the biggest issue there

A few months ago during the socal fires my community was up in flames, as were
a lot of other's.

The house a mile down from me burned. We were evacuated

There is no insurance company willing to insure our area

> This is why although it is hard, communities investing in collective defense
> has the biggest impact on insurance prices.

100%. My neighbors and I self insure. We have built defensible areas and
maintain it together.

It's cheaper (?) to self insure than pay premiums some, who managed to get a
quote, said.

It is a lot of work maintaining that defensible area and keeping it up to
spec!

We like to say our actions stopped the fire from spreading but when I saw
embers in the air around me, I could not stay around to verify whether that
was true.

Our firefighting department, incidentally less than a mile away from us, is
one of our best buddies.

This is possible because of the rural location I have chosen to live in.

I see no way of pulling this off in a city.

I will keep checking with you and recommend to my community.

Please keep it up

~~~
chrisplotz
Firstly, I'm sorry to hear about your community, that is rough and hope people
are ok. And thank you (and your fire buddies - my cousin is a wildfire-
fighter) for all your work to keep your community safe!

To your question on self insurance - it's a matter of risk and statistics. No
insurance is less money up front than coverage, but you retain the risk which
may or may not cost a lot. We give a quote everywhere, and we think it
accurately represents the risk Goodcover is covering for you, but I concede it
is more expensive than it used to be.

Something else to know - CA has a non-renewal moratorium in force for wildfire
areas, if anyone is being cancelled or non-renewed in your area please check
this out: [http://www.insurance.ca.gov/0400-news/0100-press-
releases/20...](http://www.insurance.ca.gov/0400-news/0100-press-
releases/2019/release092-19.cfm)

~~~
subhobroto
> CA has a non-renewal moratorium in force for wildfire areas

Thank you sharing the link as this raises a question I think you are perfect
to ask:

What are your thoughts on this regulation?

Would it now, in effect, significantly increase premiums for everyone now that
an insurance company cannot drop the high risk customers?

Feel free to email me as the answer might be not something you want to make
public.

If you can answer, and I think the answer is yes, how much in hike in premiums
would account for this regulation?

~~~
chrisplotz
So, given the underlying risk, I think the premium for wildfire in CA will be
going up in general with or without this. The moratorium on non-renewal only
lasts one year, and really just reiterates existing law. Most insurers have
been trying to adjust their rates long before this came out.

How much is hard to say. An old mentor of mine always said, "There's a price
for every risk, but sometimes it's as much as the limit of insurance." That's
a bit geeky but basically, as wildfire becomes more common, the models will
adjust to accommodate. Community efforts to make their communities more
resilient will go a long way though, like mentioned above.

------
arjie
This pricing is way better than other insurers but I just signed up for
Lemonade. How do I know you can pay out?

Also, the fact that you can give me a quote without an email address is
amazing. I’ll sign up but it’ll be a year before you see anything because I
just got Lemonade.

~~~
vgeek
I hadn't heard of Lemonade and it is 30% of the price of State Farm for the
same coverage levels, and is way more transparent for electronics and cameras.
Thank you for mentioning.

~~~
toomuchtodo
I have State Farm and found Lemonade renter’s insurance to be more expensive
for the same coverage levels. YMMV.

------
neil_s
This is such a well-written community resource, educating members and not just
promoting the service. Thanks!

Question: does someone like me _need_ renter's insurance? I rent a bedroom in
the owner's flat, don't have anything super valuable in there and am not
required by the owner to have insurance. If I'm comfortable self-insuring my
personal belongings, is there any other outsized risk that would justify
paying $60/year?

~~~
ddispaltro
Thank you! Probably the most outsized risk is liability, basically if you're
sued for something related to the property (had a party and someone broke
their leg) your insurance company will defend you up to your liability limit.

Edit: Also keep in mind our renter's insurance (and most others) covers you
wherever you are, so if your laptop is stolen out of a coffee shop, it's
covered. Also if there's a fire in your building and your stuff is not damaged
but you have to move out, renters insurance covers additional living expenses.

------
phonon
An actually honest(-ish) insurance launch! Congratulations!

Competing on better pricing/underwriting models, and modernized, streamlined
endorsements of ISO forms is fine. (I can't speak to whether the actuarial and
underwriting work you did is up to snuff, but will give the benefit of the
doubt, and TransRe is a good company, as is Milliman). You probably didn't
need to create your own PAS (hint...you've just just started! MTE are not the
only hard parts...) but enjoy the challenge.

If you're doing by-peril, bit surprised you didn't try to collaborate with
AAIS, instead of copying CAIC? AAIS loves working with startups, and they're a
non-profit, member-driven organization. (Btw, delete the CAIC references from
[https://www.goodcover.com/files/Goodcover_Policy_Sample_Full...](https://www.goodcover.com/files/Goodcover_Policy_Sample_Full.pdf)
)

Surprised (did you? I don't see it mentioned in your Filing Memorandum, which
it definitely, _definitely_ should be) you got approval for "Goodcover's
Invitation Thank You Policy," pretty sure that won't fly in NY. Your
advertising should really say "up to" everywhere, as you (and everyone
knowledgeable) knows you are not selling steeply discounted insurance across
the board. (As you quite rightly admit, Lemonade's "$5/month" (including
instalment fees!) offer is a loss leader, even if they can't admit that.)

Looks like your TOS was updated, still not happy about the blanket ownership
of customer data terms.

------
Etheryte
While I understand you've clearly run the numbers, it still boggles my mind
that you can cover $100,000 with $5/mo, and even more for higher tiers. It's
fairly hard to see how it all works out, could you maybe ELI5?

~~~
chrisplotz
The math for any insurance pricing is basically Price = Expected Loss Severity
x Expected Loss Frequency. The frequency of getting sued (Liability Coverage)
is really low, hence low price, even though the expected loss is high. But
yeah it really is mind boggling!

PS you've got me thinking about how I would explain insurance to a five year
old! My son is 3 and Dan's is 4 so we'll get practicing.

------
jawns
Wait, is Goodcover an actual cooperative, as a business structure?

Because that has a specific meaning, especially with regard to insurance. (And
there are a lot of mutual insurance companies out there that are genuinely,
100 percent member-owned.)

But you mention venture capital and a rate of return for your capital
partners.

So how is Goodcover what you say it is? Sounds like a for-profit company to
me.

Saying you operate as a co-op when you're actually a for-profit is like saying
you operate as a non-profit when you're actually a for-profit.

Ultimately, if you have outside investors, you've gotta make them money. If
that's true, then suggesting you're operating as a cooperative is misleading
at best.

EDIT: I looked at the legal notices section of your site, and this ain't a
cooperative in any shape or form.

* "Goodcover takes a fixed fee - currently 20% of premiums."

* "Whether a Dividend can be paid is up to the discretion of Goodcover’s board."

This is absolutely a venture-backed, for-profit company that is describing
itself as a "member driven cooperative." I would not be surprised if legal
issues arise because of this misrepresentation, because California treats
cooperatives as a distinct legal structure. (For instance, it's illegal to
have the word "Cooperative" in your business name if you're not incorporated
as a co-op.)

~~~
chrisplotz
Thanks for your question, it's an important one, and deserves more than a
handwave answer. When we started Goodcover, our goal was to make it so we were
not in conflict with our Members - and the core of this is a cooperative
model.

The original business model we were looking for is known as a "Reciprocal
Exchange" (RE) - a type of co-op or mutual (like you mention) where the
members own the claims capital, but the business is managed by a company
called an "Attorney in Fact", which is usually a for profit (Farmers is an
example). That would be us - we’d make money providing an amazing service to
as many people as possible.

Unfortunately, we found out from the CA regulators very early on that starting
a Reciprocal Exchange today was basically a non-starter. The capital
requirements I mention in "Quirk 2" mean we can't just raise money from
somewhere and kick-start the RE. We would need to get future-subscribers to
put up the cash, and the amount we were talking there was just not possible.
Farmers started in 1928 with a loan for their backend capital, something that
is illegal today. So we were stuck - how do we start a new co-op insurer given
this requirement?

The above story is the process of us figuring that out. Goodcover is an MGA
that manages insurance on behalf of its Members, like an Attorney in Fact does
for an RE. However since we can't have an actual RE until we have sufficient
number of Members, we rent the capital backstop from conventional carriers.
They pay us a fee and return the "underwriting profit" to us (that part is
even more complicated and can talk later if you want), which we then return to
Members, like Farmers should, but doesn’t anymore.

So, long answer - but yes, we are a for profit company. We operate the
insurance like a cooperative, but like many other coops we do that for a for-
profit fee. But, given the regulatory environment today we don't really look
like your 1920s co-op!

~~~
funwhilelost
Thanks for sharing this extra detail. Your industry is obviously much trickier
to navigate than the service industry our worker co-op is in.

Do your members get any voting rights or other feedback mechanisms?

~~~
chrisplotz
No problem, it's important I think. It is a heavily regulated industry so we
always have to be mindful of what is legal, what is going to get regulatory
approval, and what we actually want that will serve Members the best.

On voting rights - we haven't worked out how to legally do so, but we're
experimenting with ideas over how to give the community more control. Would
love to brainstorm ideas! Feel free to reach out, chris @ goodcover com

------
TheBill
Hey, product looks awesome, something I would put time into:

Large landlords: They often mandate specific coverage, and will cross sell &
promote you into their tennant email/welcome kits.

EQR requires something like 100K of liability in the bay area, gives you 30
days from lease effective or so to secure a policy or they auto enroll you in
a $10/Mo from another vendor.

~~~
chrisplotz
Thanks! And yes, great idea. So far we've been seeing a lot of landlord-
provided policies, and we beat them by wide margins. By pitching ease of use
and great coverage for the minimum possible tax on their tenants I hope will
be a win!

------
eaenki
Hi!

I have 3 questions:

1) how much, in total, excluding your own hours, did the regulatory compliance
stuff cost to launch just 1 product in 1 state?

2) how much would it cost to launch that same product in 50 states?

3) since you didn’t want to have x3 or more sitting in the bank you chose to
go with a re-insurer. And that took a year. Why was it that hard? Did you need
a connection?

~~~
chrisplotz
Thanks for your questions! So, the actual cost of the regulatory filing part
isn't that high in dollars, it isn't necessarily cost prohibitive. The real
issue is building a unique insurance product, the underwriting for it, the
pricing model, and all that good stuff - and then finding the reinsurance and
primary insurance partners that will go to this new place with you. Knowing
people helps, track records are important, the strength of your underlying
models (industry vets at those companies will put them through the wringer).
And then you need to do that 49 more times...

------
mttjj
Looks really cool. I'm in MO so I can't check it out quite yet. I know you
can't give specifics but could you give some generalities on the plan to roll
out to the rest of the US? Is that something you are _actively_ working on now
or are you really just trying to establish yourself in CA first and then will
work on other states later? Basically, are we looking at months or years? In
either case, I've already added my email to be notified.

Again, totally understand the legal aspects of making too many promises. Just
curious. Cheers!

~~~
chrisplotz
Thanks! Short answer, Months - but perhaps not in 2020. Definitely recommend
you get renters insurance if you don't have it.

More info: We have to roll out state by state, meaning we need to get approved
in a state before we can do business there. That can be a pretty tedious
process. So although we are working on it, we don't really have a good
estimate for when we'll be available in each one. Since our model is a bit...
different... some state regulators may take more convincing. California is
very consumer friendly, so we got along because our model helps people. But
other states don't share that point of view.

~~~
mttjj
That makes sense! I have renters insurance now but will be needing to renew
within the next few months so I'll probably still have to go somewhere else
for now but I'll keep checking back with Goodcover. Thanks for the reply and
congrats on the launch!

~~~
chrisplotz
Thanks!!

------
chanfest22
I just signed up for Goodcover. The cost-saving and how simple you make it to
switch from Lemonade is truly mind-blowing.

~~~
chrisplotz
Thanks, and Welcome!

------
plttn
I'm actually curious on this: how broad is the coverage on say computers? This
is HN, so would say a home server be covered?

~~~
chrisplotz
Good question - yes. "Home computers" would cover it. Just be sure to check
the limit you're buying and that it's adequate for the amount of equipment you
have.

~~~
phonon
Note the "Scheduled Items and Blanket Coverage" exclusion "5\. Loss to
property used primarily for “business” purposes."

If the server is being used primarily for business purposes, it is not
covered.

------
twog
Im extremely impressed with what you've built here. Id love to connect, any
chance you can drop me a note toni @ figma?

~~~
chrisplotz
Thanks!! Sure, will do.

------
nimish
In a previous life tried this with a UK car insurance startup. It's a tough
world. Glad you have reinsurance already.

Good luck! Hope you come to New York

~~~
quickthrower2
Ah Uk car insurance. Crazy variance in premiums between providers when I was
there. Like I don’t hunk I ever took the renewal offer.

------
ianai
I really appreciate your business. I hope you make it to the rest of the US
soon!

~~~
ddispaltro
Thanks, we're working on it!

------
ZeroCool2u
This is a really cool idea! Looking forward to seeing availability in New
York.

~~~
chrisplotz
Thanks!! You don't have to, but if you punch in you zip on the site and leave
your email we'll let you know when we're there!

~~~
jermaustin1
I second this. I'd loveto get away from big insurance. Also is there a plan
for more different coverages? Home/Auto/Life?

~~~
chrisplotz
Yes, for sure - Home/Condo is next, with Auto, Life and others further down
the roadmap. Lots to do! But the goal is to be full service.

------
ebg13
I don't mean to be a wet blanket, but, if renters insurance is only $100/year,
what makes you think that a lower price matters at that point? Is the market
that price sensitive, and doesn't psychology drive people away from deviantly
low offerings for insurance?

------
DoreenMichele
Glad to see this.

I worked in insurance for a few years and I am sometimes flabbergasted that
it's legal. Good job analyzing where (some of) the sticking points are and
working through them.

I hope this actually works and gives us a new model that makes me stop seeing
insurance like some kind of evil empire.

~~~
chrisplotz
Thanks!!

------
clairity
i was just looking at my renter's insurance with AAA recently and was thinking
about canceling because the premiums have steadily creeped up over the last
few years (by ~30-40% overall).

goodcover would cost a third of my current premiums for the lowest tier, and
half for the highest. i'm going to dig a little deeper and will likely switch!

(i also did some tech consulting early in my career in life insurance
underwriting, when mutual firms were all converting to corps)

~~~
chrisplotz
Sounds great, let us know if you have any questions! You can send your current
policy to compare @ goodcover and we'd be happy to send back and apples-to-
apples comparison.

------
foolinaround
Just curious, as a product, is renter's insurance very different from
homeowner's insurance? Superficially, i can think of similarities.

Is it a matter of time before you would move into this sector as well?

------
spir
Congrats! Awesome that you use Scala!

~~~
sraquo
Scala.js too! Been a great experience overall. (I work at Goodcover)

------
xivzgrev
How are you different than lemonade? I use them And sounds like same approach

~~~
chrisplotz
Thanks for your question. Apart from the structural difference (MGA vs.
balance-sheet carrier) the main one is our business model. It allows us to
offer better coverage for less money, and a Member Dividend.

------
staticautomatic
Your maximum ALE coverage ("Temp Housing") is unconscionably low for any major
metro area, metro area with a tight housing market, or area with rent control.

~~~
chrisplotz
Thanks for your comment. The default scales with our property coverage (and
you can top it up too) ending up at $50k total. What number would you be
looking for here?

~~~
staticautomatic
Your maximum ALE limit in my zip code is $29K.

By way of background, I consult on litigation for a living. I may not be the
Farmers guy but I've seen a thing or two when it comes to displacements
(evictions, mold, fires/explosions, natural disasters, etc.). Here are some
reasons and scenarios explaining why $29K is likely to be woefully inadequate
in the areas I mentioned:

1\. You're going to eat up a chunk of your ALE coverage in the immediate
aftermath of your displacement and will never find permanent relocation
immediately.

2\. You have to assume that the claims reps on the subro or defense side (or
both) are going to fight you on paying out limits.

3\. You have to assume that you'll need to retain an attorney. With a standard
contingency fee of 30%, your maximum ALE recovery is going to be 70% of your
ALE limit, which in Goodcover's case is $20,300.

4\. You have to assume that there will not be an entity against which you can
pursue an uninsured loss above your limit (for various reasons).

5\. You are highly likely face a substantial monthly rent increase, including
the loss of financially tangible amenities, when you relocate. Full stop. That
increase is likely to be indefinite.

6\. Supposing you are lucky-- for example you're in a rent-controlled unit in
an area governed by a law which requires the landlord to offer back a unit
under your original lease terms upon rehab/rebuild-- you are highly likely to
hit your ALE limit anyway for a variety of reasons. A) There might be no
rebuild, in which case your rent increase will be indefinite. B) Your landlord
might violate the requirement to re-lease under the original terms, in which
case your rent increase will be indefinite. C) A rehab/rebuild could easily
take 2-3 years (especially in a heavily regulated metro area) if the building
damage is extensive, in which case you may well exhaust your coverage before
you can move back in.

~~~
chrisplotz
All regions go to $50k if you up the property coverage, thanks for the
feedback on the UI we'll adjust to make that more obvious.

In the renters insurance market our ALE numbers are pretty normal (or
better!), so wanted to get a sense of what you think is needed here.

~~~
staticautomatic
Whether or not your max ALE limit is "normal" is beside the point: my
experience tells me that the amount is insufficient to cover one's probable
downside risk in a major metro area, especially for unit larger than 1
bedroom.

I live in SF. My personal best case scenario in the event of a permanent
relocation (insurer freely pays out limits without me having to hire an
attorney, I use none of my ALE coverage in the immediate aftermath of my
displacement, I relocate to a rent-controlled apartment with the same
amenities), is that if I'm extremely lucky, $100K _might_ last me 4 years
before I have to leave SF entirely.

~~~
jermaustin1
> 100k might last 4 years

ALE is not meant to permanently replace your apartment. I don't understand why
you would be expecting 4 years of living expenses to be covered in the case of
your apartment burning down. I wouldn't even expect 4 months. It is meant to
help you get back on your feet, and go to a hotel for the immediate aftermath
while you look for a new place to stay.

You lost your apartment, not your entire livelihood. Chances are you still
have an income to pay rent and a big chunk of contents coverage to help you
out with down payments, and honestly, the insurance company should be going
after the building owner.

~~~
staticautomatic
You're misunderstanding both my point and how ALE works. Among other things:

1\. ALE time limits are set by the policy unless otherwise defined by statute.
In CA, for example, if you are displaced due to a natural disaster, your ALE
coverage remains in place by law _" for a period of no less than 24 months
from the inception of the loss"_ (CA Insurance Code 2051.5(b)(2))

2\. There is no statutory ALE time limit on uninsured losses (at least not in
CA). In theory (and in practice), you can make a claim for an indefinite
period of time if you can prove you'd more likely than not stay in your
apartment forever (I have recently seen one such actual claim in SF for 30
years of ALE, for example).

3\. If you live in SF, you should expect 4 years of ALE because it might well
take that long to rebuild. The building owner may spend the better part of a
year deciding whether or not to rebuild, 3-6 months getting estimates, and 2
years actually rebuilding. This happens all the time.

4\. I won't speak for what other people want from their insurance, but the
loss I am personally trying to protect against is not the out of pocket cost
while I look for a temporary apartment, it's the additional $2K or $3K+ per
month that a temporary apartment is going to cost me until I can either find
something cheaper, move back into my old unit after a rebuild, or decide to
permanently leave the Bay Area. I want to buy myself as much time for that
process/decision as possible, because the odds are good I'll need it.

~~~
phonon
ALE for a home vs. renting are conceptually extremely different, sorry. ALE
for a home covers the fact that it may take many months to rebuild,
particularly after a natural catastrophe. ALE for a rental means how long it
takes the renter to find suitable long-term housing _somewhere else_.

If the underlying issue here is that you're in some sort of rent controlled
situation, and market rents in your area are way way higher than what you pay,
and you expect the insurance company to pay ALE until you find another rent
controlled apartment--sorry. You're not going to find many insurers that will
plan on covering that.

~~~
staticautomatic
You are incorrect.

A) There's no point in quibbling over what "temporary" or "permanent" means
because the definition varies from policy to policy. There is no other source
of truth unless it's in a legal statute.

B) With respect to the scenario I'm talking about, you are both factually and
legally wrong. Again, I know this because I work on property damage lawsuits
for a living. If my rent-controlled apartment is damaged in a fire and I have
to _temporarily_ relocate to another more expensive one for 3 years while I
wait for mine to be rebuilt, the _additional living expense_ I pay in the form
of increased rent during that period is absolutely something ALE is intended
to, and does in fact, cover.

~~~
phonon
Well, tell me if you find a carrier offering renters insurance with ALE of I
guess the $200k+ limit you're looking for. I'm sure it exists, but not in a
mass market, D2C product line, where the underlying personal property coverage
is much less than that.

Also, since unlike homeowners' the carrier has no way in expediting the
rebuilding of the building, I'd be surprised if they are willing to pay for
your rent indefinitely until the original building is rebuilt. Perhaps you
could win if you took them to court, but it will not be a routine process.

