Cuvva, a Scottish start up just raised £1.5 million (1.9 million USD) in new funding in a round led by LocalGlobe. The company aims to fill the gap in the auto insurance industry by offering hourly car insurance sold through a mobile app. This new type of insurance could potentially disrupt the status quo of auto insurance designed for car owners which do not drive frequently. Many people nowadays opt to drive less even when they own a car, especially for those who live in the city or work in the city and that said city has a transit system where it may be more advantageous to take than to drive to avoid traffic. Yet conventional auto insurance may not cover that kind of life style and the premiums paid do not reflect the the infrequent use of the vehicle. Cuvva's new product, which will be launched in April, has the goal to end that kind of unfair premium charged to drivers which will have an annual low mileage to make up for drivers which do have larger mileages on their vehicles. They want to see people stop paying for expensive insurance when their vehicles spend most of their time sitting idle.
"It was ridiculous that I couldn't borrow a car for an hour, because of the difficulty of getting short-term cover. I could order an Uber or Deliveroo to my house, but I couldn't buy insurance for a short period quickly. We realized that we could use the same mechanism to save infrequent drivers a huge amount of money. Saving £500 to £1000 a year on your car insurance is life-changing. Everyone can think of someone who will benefit from that." The program will allow customers to subscribe to their services at a monthly fee between £10 to £30 ($12.50 to $37.50 USD) dependent on the car and where the owner lives. Then the customer can purchase a premium "top up" insurance via the Cuvva app, starting from £1.20 ($1.50 USD) per hour when the customer wishes to drive the vehicle.
Like regular insurance, their customers can still earn a no claims discount each year and this product is directed towards drivers who drive less than 4000 miles a year. Since its launch in October 2015, the startup became the first tech company to offer insurance through a mobile app who wanted to borrow a friend or relative's car for a few hours or share driving. The company has sold over 130,000 hours of car insurance through its Curvva Sharing product. The company is able to offer very low-cost insurance to customers because it has built a tech playform that acts as a layer between underwriters and customers, with direct links to third parties like the DVLA. Because of their structure, they are able to cut out all the middle-men and build their product that are customer friendly and flexible.