The way we live and move around has evolved over the decades.
For example, according to recent research, sales of e-bikes are outpacing electric car sales in the US. And prefabricated and fabricated homes are gaining popularity as housing shortages persist worldwide.
It seems that their popularity is not a fleeting trend. Light Electric Vehicle Association predicts that more than 1 million e-bikes will be sold in the US by 2022. Research shows that the global e-bike market will rise to nearly $41 billion by 2030, a big jump from its value of $17.56 billion in 2021.
Meanwhile, the US Census Bureau it is estimated by 2020 that there are currently 22 million Americans living in 6.8 million manufactured homes in the US. As of 2019, about 10% of new single-family homes (including manufactured homes) were categorized as manufactured homes.
Durability and cost are among the main factors behind the popularity of both e-bikes and manufactured homes. So it’s no surprise that startups have emerged to meet the unique needs of owners of both.
Limitless rider is a new insurance company created specifically to serve riders of motorcycles, e-bikes and motorsports vehicles. The Boston-based startup recently closed at $4.75 million in a seed funding round led by American Family Ventures, with participation from The Cross Country Group, SiriusPoint Re and Belmont Capital. The company also previously raised $2 million in pre-seed funding that was never announced publicly.
CoverTree is a two-year-old start-up emerging from stealth with $8 million in seed funding due in May and $2 million in “pre-seed” SAFEs raised earlier. AV8 Ventures and Distributed Ventures jointly led the seed funding, including participation from Detroit Venture Partners, Ludlow Ventures and Annox Capital.
While both companies focus on very different products, both have one thing in common: a niche, digital native focus on a specific industry.
Historically, motor and motor sports insurance has been packaged as a subcategory in traditional auto insurance.
“There’s a world of difference between someone driving to work or running errands and someone riding their motorcycle, snowmobile, quad or e-bike on the weekend,” said Boundless Rider CEO and Co-Founder Blair Baldwin. . “These are specialty products with different behaviors and they guarantee their own unique customer experience, claims experience and their own unique product design and coverage in a way that wraps into a much larger and broader product category just doesn’t.”
Baldwin describes Boundless Rider as a standalone motorcycle, e-bike, and power sports product that can be purchased directly from the company or eventually bundled with another carrier’s homeowner or auto insurance product or at the time of purchase through a manufacturer can be purchased.
CoverTree CEO Adarsh Rachmale — who left his product management position at LinkedIn to focus on building the insurtech with Rishie Modi and Divyansh Sharma — says the company’s goal is to focus only on prefab or fabricated home dwellers. He believes CoverTree’s offering is the first time consumers can purchase manufactured home insurance online.
“If it’s built in a factory — and this includes modular homes, small homes, and ADUs, we help insure it,” Rachmale told businesskinda.com. “And because we’re so focused, we do so much better.”
Growing markets
In particular, Baldwin only predicts an increasing demand for e-bikes, for which he believes “there is a bit of a gap in the market”.
“E-bikes can get very expensive. They are very portable and are often stolen,” he said. “Many go up to 28 mph or even faster and there is a real liability in case something goes wrong – if there is damage to a bike, or a replacement is needed, or if someone causes an accident that injures someone else.”
This isn’t Baldwin’s first insurance technology startup. He also co-founded Quilt, which was: acquired by a MassMutual subsidiary in 2018. The entrepreneur then headed the product innovation lab at MassMutual before being hired by American Family Ventures and Cross Country Group to help build Boundless Rider.
“There are about 7 million recreational ATVs and UTVs, some of which require insurance. There are about one and a half million snowmobiles in the country. And they’re now selling about a million e-bike units a year, and that’s only expected to increase,” Baldwin told businesskinda.com. “So when you look at this collectively, it’s actually a universe of about 20. million riders who are all underserved by the market today.”
Boundless Rider plans to use its new capital for state expansion plans and to build its data science capabilities. It combines its basic insurance product with an optional smartphone app with features that live on its own telematics, Baldwin said.
For now, CoverTree is available in: Arizona, Indiana, Michigan, New Mexico, Ohio, Illinois and Tennessee. It also plans to use its new capital to expand geographically and build out its technology, including automated underwriting and AI for assessment.
Rather than working directly with consumers, insurtech’s strategy is to build its customer base through partnerships with ‘key home industry stakeholders’.
“This helps us pre-insure potential policyholders through our pre-selection of partners,” Rachmale said. “And buying online gives insurance customers better prices with more data based on our own datasets, including, for example, aerial photos of roofs.”
Automated underwriting makes the offering more affordable because Rachmale said his competitors “drive up costs and errors by manually insuring with people.”
Eventually, CoverTree hopes to move into Boundless Rider territory.
“From an independent study we conducted, manufactured homeowners are more likely to own things like RVs, motorcycles, ATVs and boats than non-manufactured homeowners,” Rachmale said. “Our ultimate plan is to build an insurance technology brand around protecting manufactured homes and this ‘toy’, or insurtech for Central America and the outdoor lifestyle.”
VCs write checks
Investors seem to appreciate the startups’ specialized approaches.
Adam Blumencranz, partner at Distributed Ventures, believes that the manufactured home industry will only play a more critical role in the future “for a greater portion of an already significant portion of the population.”
“Reshaping homeowners insurance for this hard-to-serve insurance segment was a perfect wedge in the market, with huge potential to expand into other risk management related products,” he wrote via email.
Amir Kabir, partner of AV8 Ventures, said he was impressed with: CoverTree’s ability “to build the business with limited resources and forge significant relationships with leading insurance companies and manufactured home communities.”
Kyle Beatty, president of American Family Ventures, said his company “has seen and believes in the power of partner-based insurance distribution many times over.[s] that if done right, it can deliver significant economies of scale and cost.”
“We also believe that mobile technology offers real customer retention benefits, and we also had a first-hand role in organizing an expert inception team,” he wrote via email.
As the larger insurtech industry struggles, it will be interesting to see if specialized insurtechs like this one succeed.
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Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.