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Auto-insurance startup Clearcover raises $43M

Clearcover, a Chicago-based auto insurance startup that uses artificial intelligence to more effectively market auto insurance, has raised a $43 million round of funding.

Founded in 2016, Clearcover aims to use technology to offer better customer service and lower prices. In practice, Clearcover has developed an API that it seeks to integrate with websites that have the data it needs to figure out which customers are seeking to buy car insurance right now. A visitor to one of the sites or apps that has Clearcover’s API integrated might get an ad to check out a quote from Clearcover.

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Clearcover pays its API partners. However, Clearcover says that it’s still spending less than traditional insurance companies might spend on traditional marketing campaigns. This lower cost basis allows offering insurance at a lower price than traditional carriers. The company claims to charge premium 15 to 40 percent less than the larger agency carriers.

Currently, Clearcover is only selling insurance in California, and wrote about $10 million in direct premium in 2018. Clearcover’s biggest competitors are San Francisco-based Metromile and Columbus-based Root Insurance. Clearcover is the smallest of the three.

Metromile quotes customers based on the number of miles they drive, while Root Insurance generates quotes by using smartphone data to determine how safe of a driver they are. Instead, Clearcover uses the same data that traditional insurance companies.