What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-02-25 compared with 2025-02-26 · 249 added, 237 removed, 753 unchanged (39% of the section changed)

Risk Factors.

The following are certain risk factors that could affect our business, results of operations, financial condition and prospects.

Although the risks are organized by headings and each risk is described separately, many of the risks are interrelated.

The risks that we have highlighted in the following section of this report are not the only ones that we face.

The risks that we have highlighted in the following section of this Annual Report on Form 10-K are not the only ones that we face.

Our business involves various risks and uncertainties as well as those associated with the general business and insurance industry environments.

5 unchanged sentences

We have a history of net losses and could incur substantial net losses in the future.

We may not be able to grow or achieve or maintain profitability in the future.

We may not be able to grow, achieve or maintain profitability in the future.

We incurred net losses on an annual basis from our incorporation in 2015 through the second quarter of 2024, and we may incur significant net losses in the future.

We incurred net losses of $147.4 million and $297.7 million for the years ended December 31, 2023 and 2022, respectively.

While we recorded a net profit of $30.9 million for 2024, we had an accumulated loss of $1,681.9 million and $1,715.2 million as of December 31, 2024 and December 31, 2023, respectively.

While we recorded a net profit of $40.3 million and $30.9 million for 2025 and 2024, respectively, we had an accumulated loss of $1,641.6 million and $1,681.9 million as of December 31, 2025 and December 31, 2024, respectively.

The principal driver of our historical losses has been our loss ratios associated with accidents by our customers.

4 unchanged sentences

When we do not accurately assess the risks that we underwrite, the premiums that we charge may not be adequate to cover our losses and expenses, which adversely affects our results of operations and our profitability.

Despite posting a net profit for 2024, our accumulated net loss may increase as we continue to make investments in the development and expansion of our business or if we suffer adverse business results.

Despite posting a net profit for 2025 and 2024, our accumulated net loss may increase as we continue to make investments in the development and expansion of our business or if we suffer adverse business results or other losses.

Expenses in the areas of building partnership products, telematics, digital marketing, brand advertising, consumer-facing technologies, core insurance operations services and lines of insurance not presently offered by Root contribute to net losses.

3 unchanged sentences

Our limited operating history makes it difficult to evaluate our current business and our future prospects.

While our revenue has grown in some recent periods and contracted in others, our historic growth rate may not be sustainable.

While our revenue has grown in certain recent periods and contracted in others, our historic growth rate may not be sustainable.

With changes to our focus areas of growth, our historic growth rates should not be considered indicative of future performance, and we may not realize sufficient revenue to maintain profitability.

Revenue growth rates may slow in future periods due to a number of reasons including increased competition and market changes.

may choose to preserve capital, change our focus areas of growth, reinvest in the business, or encounter unforeseen or unpredictable factors, which may, and in some cases will, result in increased operating expenses, other losses, complications or delays slowing demand for our services, increasing competition, a decrease in the growth of our overall market, and our failure to capitalize on growth opportunities or the maturation of our business.

may choose to preserve capital, change our focus areas of growth, reinvest in the business, or encounter unforeseen or unpredictable factors, which may, and in certain cases will, result in increased operating expenses, other losses, complications or delays slowing demand for our services, increasing competition, a decrease in the growth of our overall market, and our failure to capitalize on growth opportunities or the maturation of our business.

If we fail to manage our losses or to grow our revenue sufficiently to keep pace with our investments and other expenses, our business will be seriously harmed, and we may not maintain profitability in future periods.

5 unchanged sentences

Further, our ability to attract and retain customers depends, in part, on our ability to successfully expand geographically, grow our business in the markets we currently serve, expand into new lines of business and offer additional products beyond automobile and renters insurance.

Expanding into new geographic markets takes time, places us in unfamiliar competitive and regulatory environments, requires us to navigate and comply with extensive regulations and may occur more slowly than we expect and we may be unsuccessful at expanding nationwide.

Expanding into new geographic markets takes time, requires investment in technology, places us in unfamiliar competitive and regulatory environments, requires us to navigate and comply with extensive regulations and may occur more slowly than we expect and we may be unsuccessful at expanding nationwide.

Further, the insurance industry in which we operate is highly competitive.

14 unchanged sentences

If we are unsuccessful through these strategies in generating new business, retaining a sufficient number of customers or retaining or acquiring key relationships, our ability to maintain or increase premiums written or the ability to sell our products will be adversely impacted.

Because of the competitive nature of the insurance industry, there can be no assurance that we will continue to compete effectively within our industry, or that competitive pressures will not have a material effect on our business, results of operations, financial condition and prospects.

If we fail to remain

competitive on customer experience, pricing, and insurance coverage options, our ability to grow our business will also be adversely affected.

Because of the competitive nature of the insurance industry, there can be no assurance that we will continue to compete effectively within our industry, or that competitive pressures will not

have a material effect on our business, results of operations, financial condition and prospects.

If we fail to remain competitive on customer experience, pricing, and insurance coverage options, our ability to grow our business will also be adversely affected.

There are many other factors that could negatively affect our ability to maintain or grow our customer base, including if:

4 unchanged sentences

• technical or other problems frustrate the customer experience, particularly if those problems prevent us from generating quotes or paying claims in a fast and reliable manner;

we fail to provide effective updates to our existing products or to keep pace with technological improvements in our industry;

or customers have difficulty installing, updating or otherwise accessing our app or website on mobile devices or web browsers as a result of actions by us or third parties;

• we fail to provide effective updates to our existing products or to keep pace with technological improvements in our industry, including generative AI and machine learning technology;

• customers have difficulty installing, updating or otherwise accessing our app or website on mobile devices or web browsers as a result of actions by us or third parties;

• we suffer reputational harm to our brand including from negative publicity, whether accurate or inaccurate;

10 unchanged sentences

Further, if the trading price of our Class A common stock is depressed or declines, the potential magnitude of this dilution will increase.

As an insurance company, we are subject to extensive laws and regulations in every jurisdiction in which we conduct business, and any such issuances of equity or convertible debt securities to secure additional funds may be impeded by regulatory approvals or requirements imposed by such regulatory authorities if such issuances are deemed to result in a person

acquiring “control” of our company under applicable insurance laws and regulations.

As an insurance company, we are subject to extensive laws and regulations in every jurisdiction in which we conduct business.

Any such issuances of equity or convertible debt securities to secure additional funds may be impeded by regulatory approvals or requirements imposed by such regulatory authorities if such issuances are deemed to result in a person acquiring “control” of our company under applicable insurance laws and regulations.

Such regulatory requirements may require potential investors to disclose their organizational structure and detailed financial statements, as well as require managing partners, directors and/or senior officers to submit biographical affidavits which may deter investment in our company.

5 unchanged sentences

Our business model is dependent on our ability to collect, obtain or use driving behavior data and utilize telematics.

If legislation or judicial or regulatory intervention were to restrict our ability to collect or use driving behavior data, it would impair our capacity to underwrite insurance cost effectively, negatively impacting our revenue and earnings.

If legislation, judicial or regulatory intervention were to restrict our ability to collect or use driving behavior data, it would impair our capacity to underwrite insurance cost effectively, negatively impacting our revenue and earnings.

Further, if federal, state or international regulators were to determine that the type of data we collect or obtain, the process we use for collecting or obtaining this data or how we use this data is unfairly discriminatory or otherwise violates one or more laws, our ability to collect, obtain and use this data will be seriously impaired.

Due to Proposition 103 in California, we are currently limited in our ability to use telematics data beyond miles-driven to underwrite insurance, including data on how the car is driven.

This has significantly hindered our ability to offer cost-competitive insurance policies in California and, if other states were to pass similar laws or regulations, would impede our ability to offer insurance policies in those states.

Although there is currently limited federal and state legislation outside of California restricting our ability to collect driving behavior data, private organizations are implementing principles and guidelines to protect driver privacy.

The Alliance of Automobile Manufacturers and Global Automakers established their Consumer Privacy Protection Principles to provide member automobile manufacturers with a framework with which to consider privacy and build privacy into their products and services while the National Automobile Dealers Association has partnered with the Future of Privacy Forum to produce consumer education guidelines that explain the kinds of information that may be collected by consumers’ cars, the guidelines that govern how it is collected and used, and the options consumers may have to protect their vehicle data.

Due to Proposition 103 in California, we are currently limited in our ability to use telematics data beyond miles driven to underwrite insurance.

Additionally, restrictions in Maryland are currently limiting our ability to operate a consistent telematics program across jurisdictions.

These constraints hinder our ability to offer cost-competitive insurance in these states, and if other states were to adopt comparable laws or regulatory positions, our ability to underwrite and price insurance policies effectively in those markets will be harmed.

Although there is relatively limited federal and state legislation outside of these states restricting our ability to collect driving behavior data and operate a consistent telematics program, private organizations are implementing principles and guidelines to protect driver privacy.

The Alliance for Automotive Innovation established their Consumer Privacy Protection Principles to provide member automobile manufacturers with a framework with which to consider privacy and build privacy into their products and services.

Additionally, the National Automobile Dealers Association has partnered with the Future of Privacy Forum to produce consumer education guidelines that explain the kinds of information that may be collected by consumers’ cars, the guidelines that govern how it is collected and used, and the options consumers may have to protect their vehicle data.

The Global Alliance for Vehicle Data Access is another organization that was formed to advocate for driver ownership of all vehicle data, particularly for insurance underwriting purposes.

If federal or state legislators pass laws limiting our ability to collect or obtain driver data, particularly through driver’s smartphones, such legislation would have a material adverse effect on our business, results of operations, financial condition and prospects.

In 2024, news reports about certain automobile manufacturers’ collection of driving behavioral data, and the means of obtaining consent for the same, and the subsequent sale of this vehicle-derived telematics data to third-party brokers, and then eventually to insurers, drew national attention.

State attorneys general and private litigants initiated investigative activities and litigation against certain of these manufacturers and brokers.

If consumer sentiment, legislation, litigation, or a combination of these, were to materially impact our ability to collect, obtain and use telematics data, it would have a material adverse effect on our business, results of operations, financial condition and prospects.

Some regulators have expressed interest in the use of external data sources, algorithms and/or predictive models in insurance underwriting or rating.

If federal or state legislators pass laws limiting our ability to collect or obtain driver data, particularly through drivers’ smartphones, such legislation would have a material adverse effect on our business, results of operations, financial condition and prospects.

Recent news reports about certain automobile manufacturers’ collection of driving behavioral data, and the means of obtaining consent for the same, and the subsequent sale of this vehicle-derived telematics data to third-party brokers, and then eventually to insurers, continues to draw national attention.

State attorneys general and private companies and litigants initiated investigative activities and/or litigation against certain of these manufacturers and brokers under consumer protection and privacy laws.

If consumer sentiment, legislation,

litigation, or a combination of these, were to materially impact our ability to collect, obtain and use telematics data, or if such factors encouraged automobile manufacturers to move away from offering usage-based insurance programs to their customers, it would have a material adverse effect on our business, results of operations, financial condition and prospects.

Certain regulators have expressed interest in the use of external data sources, algorithms and/or predictive models in insurance underwriting or rating.

Specifically, regulators have raised questions about the potential for unfair discrimination, adequacy of consent and lack of transparency associated with the use of external consumer data.

A determination by federal or state regulators that the data points we collect or obtain and the process we use for collecting or obtaining data unfairly discriminates against a protected class of people could subject us to fines and

other sanctions, including, but not limited to, disciplinary action, revocation and suspension of licenses, regulatory fines and other sanctions, and withdrawal of product forms.

A determination by federal or state regulators that the data points we collect or obtain, and the process we use for collecting or obtaining data, unfairly discriminates against a protected class of people could subject us to fines and other sanctions, including, but not limited to, disciplinary action, revocation and suspension of licenses, regulatory fines and other sanctions, and withdrawal of product forms.

Any such event could, in turn, materially and adversely affect our business, results of operations, financial condition and prospects.

4 unchanged sentences

Additionally, existing laws, future laws, and evolving attitudes about privacy protection may impair our ability to collect, obtain, use, and maintain data points of sufficient type or quantity to develop and train our algorithms.

If such laws or regulations were enacted federally or in a large number of states in which we operate, it would impact the integrity and quality of our pricing and underwriting processes, as it already has in California.

We may fail to maintain an effective partnership channel offering, including our embedded insurance product and our independent agent platform, and/or fail to perform under the associated commercial arrangements.

1 unchanged sentence

The commercial agreement includes exclusivity rights to offer automobile insurance on Carvana’s platform, and we will partner exclusively with Carvana for an enterprise total loss replacement vehicle solution.

The commercial agreement is set to expire on September 1, 2027.

In addition, we are a party to and are pursuing commercial arrangements with other potential partners with varying levels of integration, including utilization of an embedded insurance offering.

If we or our commercial counterparties, including Carvana, are unable to satisfy obligations under commercial arrangements, if we are unable to maintain effective partnership arrangements, including an embedded insurance product and our independent agent platform, if we are unable to contract with additional partners to utilize these products, or if our partners experience difficulty with their businesses or if they or we are unable to attract insurance customers, that could have a material and adverse effect on our business, results of operations, financial condition and prospects.

We depend on search engines, social media platforms, digital app stores, content-based online advertising and other online sources to attract consumers to our website and our mobile app both rapidly and cost-effectively.

If we or our commercial counterparties, including Carvana, are unable to satisfy obligations under commercial arrangements, if we are unable to maintain effective partnership arrangements, including an embedded insurance product and our independent agent platform, if we are unable to renew or extend the term of any of our commercial agreements on terms attractive to us or at all, if we are unable to contract with additional partners to utilize these products, or if our partners experience difficulty with their businesses or if they or we are unable to attract insurance customers, that could have a material and adverse effect on our business, results of operations, financial condition and prospects.

We depend on search engines (including generative AI–driven search and discovery tools such as ChatGPT, Gemini, and Perplexity), social media platforms, digital app stores, content-based online advertising and other online sources to attract consumers to our website and our mobile app both rapidly and cost-effectively.

If these third parties change their listings or increase their pricing, if our relationships with them deteriorate or terminate, or if other factors related to these third parties arise which are beyond our control, we may be unable to attract new customers rapidly and cost-effectively, which would adversely affect our business, results of operations and prospects.

2 unchanged sentences

With respect to search engines, we are included in search results as a result of both paid search listings, where we purchase specific search terms that result in the inclusion of our advertisement, and free search listings, which depend on algorithms used by search engines.

For paid search listings, if one or more of the search engines or other online sources on which we rely modifies or terminates its relationship with us, we have to pay a higher price for such listings or if the alternatives we find are more expensive, our expenses have in the past and would again rise, or we could lose consumers and traffic to our website, any of which could have a material adverse effect on our business, results of operations, financial condition and prospects.

For free search listings, if search engines on which

we rely for algorithmic listings modify their algorithms, our website may appear less prominently or not at all in search results, which could result in reduced traffic to our website and our mobile app and fewer new customers.

For paid search listings, if one or more of the search engines or other online sources on which we rely modifies or terminates its relationship with us, we have to pay a higher price for such listings or if the alternatives we find are more expensive, our expenses have in the past and may again in the future rise, or we could lose consumers and traffic to our website, any of which could have a material adverse effect on our business, results of operations, financial condition and prospects.

For free search listings, if search engines on which we rely for algorithmic listings modify their algorithms, our website may appear less prominently or not at all in search results, which could result in reduced traffic to our website and our mobile app and fewer new customers.

Our ability to maintain or increase the number of consumers who purchase our products after being directed to our website or our mobile app from other digital platforms depends on many factors that are not within our control.

3 unchanged sentences

Additionally, changes in regulations could limit the ability of search engines and social media platforms, including but not limited to Google and Facebook, to collect data from users and engage in targeted advertising, making them less effective in disseminating our advertisements to our target customers.

For example, the proposed Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data, or DASHBOARD, Act would mandate annual disclosure to the SEC of the type and “aggregate value” of user data used by harvesting companies, such as Facebook, Google and Amazon, including how revenue is generated by user data and what measures are taken to protect the data.

If the costs of advertising on search engines and social media platforms increase, we have in the past and will again incur additional marketing expenses and be required to allocate a larger portion of our marketing spend to other channels and our business and operating results could be adversely affected.

For example, the proposed Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data Act would mandate annual disclosure to the SEC of the type and “aggregate value” of user data used by harvesting companies, such as Facebook, Google and Amazon, including how revenue is generated by user data and what measures are taken to protect such data.

If the costs of advertising on search engines and social media platforms increase, we have in the past and may again in the future incur additional marketing expenses and be required to allocate a larger portion of our marketing spend to other channels and our business and operating results could be adversely affected.

Similarly, changes to regulations applicable to the insurance brokerage and distribution business may limit our ability to rely on key distribution platforms, such as the Root API, if the third-party distribution platforms are unable to continue to distribute our insurance products without an insurance producer license pursuant to applicable insurance laws and regulations.

3 unchanged sentences

As we grow, we may struggle to maintain cost-effective marketing strategies, and our customer acquisition costs could rise substantially.

The marketing of our insurance products depends on our ability to cultivate and maintain cost-effective and otherwise satisfactory relationships with digital app stores, in particular, those operated by Google and Apple.

Furthermore, because many of our customers access our insurance products through a mobile app, we depend on the Apple App Store and the Google Play Store to distribute our mobile app.

The marketing of our insurance products depends on our ability to cultivate and maintain rapid, cost-effective and otherwise satisfactory relationships with digital app stores, in particular, those operated by Google and Apple.

Because many of our customers access our insurance products through a mobile app, we depend on the Apple App Store and the Google Play Store to distribute our mobile app.

Operating system platforms and application stores controlled by third parties, such as Apple and Google, may change their terms of service or policies in a manner that increases our costs or impacts our ability to distribute our mobile app, collect data through it and market our products.

3 unchanged sentences

For example, an operating system platform or application store may increase its access fees, restrict the collection of data through mobile apps that run on those platforms, restrict access to sensors contained on the mobile devices, restrict how that data is or may be used and shared, and limit how mobile app publishers advertise online.

significantly diminish the value of our platform and have an adverse effect on our business, operating results, financial condition and prospects.

Additionally, limitations on our ability to collect, obtain or use telematics and other data derived from customer activities on smartphones, as well as new technologies that block our ability to collect or use such data, would significantly diminish the value of our platform and have an adverse effect on our business, operating results, financial condition and prospects.

Limitations or blockages on our ability to collect, obtain, use or share data derived from use of our mobile app would also restrict our ability to analyze such data to facilitate our product improvement, research and development and advertising activities.

For example, in 2021, Apple implemented a requirement for applications using its mobile operating systems to obtain an end-user’s permission to track them or access their device’s advertising identifier for advertising and advertising measurement purposes.

These and other restrictions that have been or could be implemented in the future could adversely affect our business.

2 unchanged sentences

To the extent either of these occur, our business, results of operations, financial condition and prospects would be adversely affected.

Further, one of the factors we use to evaluate our customer satisfaction and market position is our Apple App Store ratings.

This rating may not be a reliable indicator of our customer satisfaction relative to other companies who are rated on the Apple App Store since, to date, we have received a fraction of the number of reviews compared to the companies we benchmark against, and thus our number of positive reviews is not as meaningful.

Our expansion within the U.S.

will subject us to additional regulatory approvals and costs and risks, and our plans may not be successful.

Our success depends in significant part on our ability to expand into additional markets in the U.S.

We currently hold Certificates of Authority in 50 s tates and the District of Columbia and operate in 35 of those states.

Further, one of the factors we use to evaluate our customer satisfaction and market position is our Apple App Store and Google Play Store ratings.

This rating may not be a reliable indicator of our customer satisfaction relative to other companies who are rated in the app stores since, to date, we have received a fraction of the number of reviews compared to the companies we benchmark against, and thus our number of positive reviews is not as meaningful.

Our expansion within the United States will subject us to additional regulatory approvals and costs and risks, and our plans may not be successful.

Our success depends in significant part on our ability to expand into additional markets in the United States.

We currently hold Certificates of Authority in 50 s tates and the District of Columbia and operate in 36 of those jurisdictions.

We plan to have a presence in all 50 states and the District of Columbia but cannot and do not guarantee that we will be able to provide nationwide coverage on any particular timeline or at all.

1 unchanged sentence

Generally, regulators in states (i) in which we have valid licenses but are not selling insurance or (ii) into which we are considering entering with an affiliated underwriting company, have preferred that we only begin selling insurance or entering the state with an affiliated underwriting company at such time that we can demonstrate that we have met certain financial performance metrics.

As we seek to expand in the U.S., we will incur significant incremental operating expenses, including expenses in connection with securing applicable regulatory approvals, marketing, hiring additional personnel, engaging third-party service providers and other research and development costs.

We have invested and expect to continue to invest substantial time and resources to expand our operations and revenues from those additional operations may not exceed the expense of establishing and maintaining them.

As we seek to expand in the United States, we will incur significant incremental operating expenses, including expenses in connection with securing applicable regulatory approvals, establishing new underwriting entities, marketing, hiring additional personnel, engaging third-party service providers and other research and development costs.

We have invested and expect to continue to invest substantial time and resources to expand our operations and revenues from those additional operations, and we may not exceed the expense of establishing and maintaining them.

In addition, these efforts compete for Company resources and may require the Company to forgo other projects that could be more profitable, including expansion into new states.

If we are unable to manage these risks effectively, our business, results of operations, financial condition and prospects will be adversely affected.

Moreover, our countrywide expansion has taken a substantial number of years to date, and may not be successful for a variety of reasons, including because of:

Moreover, our countrywide expansion has taken a substantial number of years to date, and may not be successful for a variety of reasons, including:

• one or more states could revoke our license to operate, or implement additional regulatory or financial requirements that could preclude or inhibit our ability to obtain or maintain our license in such state;

12 unchanged sentences

If our platform does not function reliably, we may incorrectly select our customers, incorrectly price insurance products for our customers or incorrectly pay or deny claims made by our customers.

These errors could cause us to select an uneconomic mix of customers, encounter customer dissatisfaction, which could lead customers to cancel or fail to renew their insurance policies with us or make it less likely that prospective customers obtain new insurance policies, underprice policies or overpay claims, or incorrectly adjust or deny policyholder claims and become subject to liability.

Additionally, technology platform errors may lead to unintentional bias and discrimination in the underwriting and claims process, which would subject us to legal or regulatory liability and harm our brand and reputation.

These errors could cause us to select an uneconomic mix of customers or encounter customer dissatisfaction, which could lead customers to cancel or fail to renew their insurance policies with us or make it less likely that prospective customers obtain new insurance policies, underprice policies or overpay claims, or incorrectly adjust or deny policyholder claims and become subject to liability.

Additionally, technology platform errors may lead to unintentional variations and anomalies in the underwriting and claims process, which would subject us to legal or regulatory liability and harm our brand and reputation.

Any of these alone or in combination could result in a material adverse effect on our business, results of operations, financial condition and prospects.

While we believe our telematics-based pricing model to be more fair for consumers when compared to traditional insurers’ offerings, it may also yield results that customers themselves nonetheless find unfair.

While we believe our telematics-based pricing model is more fair for consumers when compared to traditional insurers’ offerings, it may also yield results that customers themselves nonetheless find unfair.

For instance, we may quote certain drivers higher premiums than our competitors, if our model determines that the driver is higher risk even though their higher-risk driving has not resulted in a claim.

2 unchanged sentences

Our success depends on our ability to continue to develop and implement our telematics-based pricing model, and to maintain the confidentiality of our proprietary technology.

Changes to existing regulations, their interpretation or implementation, or new regulations could impede our use of this technology or require that we disclose our proprietary technology to our competitors and/or regulators, which would negatively impact our competitive position and result in a material adverse effect on our business, results of operations, financial condition and prospects.

For example, as explained above, the matters involving certain automobile manufacturers’ and third-party brokers’ collection and sharing of telematics data may prompt changes in the quality and availability of telematics data for use by us and others in the insurance industry, as well as changes to existing laws and regulations and their interpretation or implementation.

Changes to existing regulations, the interpretation or implementation of such regulations, or new regulations could impede our use of this technology or require that we disclose our proprietary technology to our competitors and/or regulators, which would negatively impact our competitive position and result in a material adverse effect on our business, results of operations, financial condition and prospects.

and their interpretation or implementation.

Our business, results of operations, financial condition and prospects could be adversely affected by any of these factors.

1 unchanged sentence

State insurance regulators perform examinations of insurance companies under their jurisdiction to assess compliance with applicable laws and regulations, financial condition and the conduct of regulated activities at least every three to five years.

Root Insurance Company is Ohio-domiciled and has completed financial examinations with the Ohio DOI, which include a review of the Company’s financials, governance, and operations, including its relationships and transactions with affiliates, and a specific examination of our pricing and underwriting

methodologies and our regulatory capital, and was most recently reviewed in 2024 resulting in no material findings.

Root Property & Casualty Insurance Company is also Ohio-domiciled but completed a similar financial examination by the Delaware Department of Insurance prior to its redomestication as an Ohio-domiciled insurer.

Root Insurance Company is Ohio-domiciled and has completed financial examinations with the Ohio DOI, which includes a review of the Company’s financials, governance, and operations, including its relationships and transactions with affiliates, and a specific examination of our pricing and underwriting methodologies and our regulatory capital, and was most recently reviewed in 2024 resulting in no material findings.

Root Property & Casualty is also Ohio-domiciled but completed a similar financial examination by the Delaware DOI prior to its redomestication as an Ohio-domiciled insurer.

It also underwent a financial examination with the Ohio DOI resulting in no material findings.

Newly-formed Root Florida Insurance Company is Florida-domiciled will be subject to an initial financial examination, which is customary for newly-licensed insurance subsidiaries and which is expected to begin in early 2026, though the commencement date is at the discretion of FOIR.

If, as a result of future examinations, our regulators determine that our financial condition, capital resources or other aspects of any of our operations are not satisfactory, or that we have violated applicable laws or regulations, such regulator may subject us to fines or other penalties and/or require us to take one or more remedial actions or otherwise subject us to regulatory scrutiny, such as an enforcement action or, in the case of regulatory capital, require us to maintain additional capital.

Newly formed Root Florida is Florida-domiciled and will be subject to an initial financial examination, which is customary for newly-licensed insurance subsidiaries and which the Florida OIR has notified us will begin in June 2026.

If, as a result of examinations, our regulators determine that our financial condition, capital resources or other aspects of any of our operations are not satisfactory, or that we have violated applicable laws or regulations, such regulator may subject us to fines or other penalties and/or require us to take one or more remedial actions or otherwise subject us to regulatory scrutiny, such as an enforcement action or, in the case of regulatory capital, require us to maintain additional capital.

The results of the examinations are a matter of public record, and our reputation may also be harmed by penalties.

3 unchanged sentences

These examinations have resulted in, and could in the future result in, fines and other monetary penalties, as well as other regulatory orders requiring remedial, injunctive, or other corrective action.

For example, Root Insurance Company was subject to a market conduct examination by the Virginia State Corporation Commission’s Bureau of Insurance, or the Virginia DOI, and in addition to requiring the company to undertake remedial action, the Virginia DOI fined the company for various market conduct violations.

Certain of our insurance subsidiaries are undergoing examinations and will be subject to such examinations in the future.

Any regulatory or enforcement action or any regulatory order imposing remedial, injunctive, or other corrective action against us resulting from an examination could have a material adverse effect on our business, reputation, financial condition, results of operations or prospects.

For more information regarding our previous and ongoing market conduct examinations, see the section titled “Periodic Examinations” in the “Insurance Regulation” section of Item 1 Business.

Our exposure to loss activity and regulation may be greater in states where we currently have most of our customers:

Texas, Georgia and Florida.

Approximately 39.8% of our gross premiums written for the year ended December 31, 2024 originated from customers in Texas , Georgia and Florida.

As a result of this concentration, if a significant catastrophic event or series of catastrophic events occur, and cause material losses in Texas , Georgia or Florida, our business, results of operation, financial condition and prospects would be materially adversely affected.

Further, as compared to our competitors who operate on a wider geographic scale, any adverse changes in the legal and regulatory environment affecting property and casualty insurance in Texas , Georgia or Florida may expose us to more significant risks.

We are subject to stringent and changing privacy and data security laws, regulations, and standards related to data privacy and security, increasing the complexity of compliance.

For more information regarding our previous and ongoing market conduct examinations, see the section titled “Periodic Examinations” in the “Insurance Regulation” section of Item 1.

Our exposure to loss activity and regulation may be greater in states where we currently have most of our customers, including Texas, Georgia, Florida, and California.

Approximately 46.9% of our gross premiums written for the year ended December 31, 2025 originated from customers in Texas , Georgia, Florida, and California.

As a result of this concentration of customers, if a significant catastrophic event or series of catastrophic events occur and cause material losses in Texas , Georgia, Florida, or California, our business, results of operation, financial condition and prospects would be materially adversely affected.

Further, as compared to our competitors who operate on a wider geographic scale, any adverse changes in the legal and regulatory environment affecting property and casualty insurance in Texas , Georgia, Florida, or California may expose us to more significant risks.

We are subject to complex and evolving privacy, data security and cybersecurity laws, regulations, and standards increasing the burden of compliance.

Our actual or perceived failure to comply with such obligations could harm our reputation, subject us to significant fines and liability, or adversely affect our business.

In the U.S., insurance companies are subject to the privacy provisions of the federal Gramm-Leach-Bliley Act and the NAIC Insurance Information and Privacy Protection Model Act, as adopted and implemented by certain state legislatures and insurance regulators.

The regulations implementing these laws require insurance companies to disclose their privacy practices to consumers, allow them to opt-in or opt-out, depending on the state, of the sharing of certain personal information with unaffiliated third parties, and maintain certain security controls to protect their information.

Violators of these laws face regulatory enforcement action, substantial civil penalties, injunctions, and in some states, private lawsuits for damages.

In the United States, insurance companies are subject to the privacy provisions of the federal Gramm-Leach-Bliley Act and the NAIC Insurance Information and Privacy Protection Model Act, as adopted and implemented by certain state legislatures and insurance regulators.

The regulations implementing these laws require insurance companies to disclose their privacy practices to consumers, allow them to opt-in or opt-out, of the sharing of certain personal information with unaffiliated third parties, and maintain certain security controls to protect their information.

Violators of these laws face regulatory enforcement action, substantial civil penalties, injunctions, and in certain states, private lawsuits for damages.

Insurance companies are also subject to state-specific privacy laws governing the use of particular data.

For instance, the Illinois Biometric Information Privacy Act regulates the use

and storage of biometric data such as fingerprints in the insurance industry and requires the informed written consent from policyholders if the insurance company intends to collect or disclose their personal biometric identifiers.

Privacy and data security regulation in the U.S.

is rapidly evolving.

For instance, the Illinois Biometric Information Privacy Act regulates the use and storage of biometric data, such as fingerprints, in the insurance industry and requires the informed written consent from policyholders if the insurance company intends to collect or disclose their personal biometric identifiers.

Privacy and data security regulation in the United States is rapidly evolving.

For example, existing laws, such as the CCPA, which became effective January 1, 2020, future laws, and evolving attitudes about privacy protection may impair our ability to collect, obtain, use, and maintain data points of sufficient type or quantity to develop and train our algorithms.

The CCPA gives California residents expanded rights to access and require deletion of certain of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches, which is expected to increase the volume and success of class action data breach litigation.

In addition to increasing our compliance costs and potential liability, the CCPA’s restrictions on “sales” of personal information restrict our use of cookies and similar technologies for advertising purposes.

The CCPA excludes information covered by Gramm-Leach-Bliley Act, the Driver’s Privacy Protection Act or the California Financial Information Privacy Act from the CCPA’s scope, but the CCPA’s definition of “personal information” is broad and may encompass other information that we maintain.

The CCPA gives California residents expanded rights to access, correct, delete and transfer certain of their personal information, opt out of certain personal information sharing and other processing activities, and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches, which increases the risk of class action data breach litigation.

In addition to increasing our compliance costs and potential liability, the CCPA’s restrictions on the “sharing”/”sale” of personal information restricts our use of cookies and similar technologies for cross-advertising purposes.

The CCPA excludes certain personal information covered by Gramm-Leach-Bliley Act, Fair Credit Reporting Act, the Driver’s Privacy Protection Act or the California Financial Information Privacy Act from the CCPA’s scope, but the CCPA’s definition of “personal information” is broad and may encompass other information that we collect and/or maintain.

The requirements of the CCPA expanded substantially in January 2023 as a result of California voters approving the CPRA in November 2020.

The CPRA, effective January 1, 2023, gives California residents the ability to:

The CPRA, which went into effect on January 1, 2023, gives California residents the ability to:

limit use of precise geolocation information and other categories of information classified as “sensitive”;

add e-mail addresses and passwords to the list of personal information that, if lost or breached, would entitle affected individuals to bring private lawsuits;

and establish the California Privacy Protection Agency to implement and enforce the new law, as well as impose administrative fines.

and add e-mail addresses and passwords to the list of personal information data fields that, if lost or breached, would entitle affected individuals to bring private lawsuits.

The CPRA also established the California Privacy Protection Agency to implement and enforce the new law, as well as impose administrative fines.

The effects of the CCPA, the CPRA, and other similar state or federal laws, are significant and may require us to further modify our data processing practices and policies, incur substantial compliance costs and subject us to increased potential liability.

Some observers have noted that the CCPA and the CPRA could mark the beginning of a trend toward more stringent privacy legislation in the U.S.

There is also discussion in Congress of new comprehensive federal data protection and privacy laws to which we likely would be subject if enacted.

Importantly, the CCPA and the CPRA marked the beginning of a trend toward more stringent privacy legislation in the United States.

At present, there are numerous comprehensive state privacy laws in effect, which mirror—and sometimes expand upon—the obligations and restrictions present in the CCPA and CPRA.

There also continues to be discussion in Congress of new comprehensive federal data protection and privacy laws to which we likely would be subject if enacted.

Until an overarching federal privacy law is passed, however, it is anticipated that individual states will continue to adopt or amend state laws and regulations governing data privacy and cybersecurity, which will increase the cost and complexity of our compliance efforts and impact the integrity and quality of our pricing and underwriting processes.

3 unchanged sentences

Also in 2017, the New York State Department of Financial Services adopted regulations providing minimum standards for insurance companies’ cybersecurity programs, requiring an annual certification confirming compliance.

In May 2018, South Carolina passed a cybersecurity bill requiring, among other things, any insurance entity operating in the state to establish and implement a cybersecurity program protecting their business and their customers from a data breach, to investigate data breaches and to notify regulators of a cybersecurity event.

Some jurisdictions, such as Connecticut, Massachusetts, Nevada, Maryland, Virginia and California have enacted more generalized data security laws that apply to certain data that we possess.

In May 2018, South Carolina passed a cybersecurity bill requiring, among other things, any insurance entity operating in the state to establish and implement a cybersecurity program

protecting their business and their customers from a data breach, to investigate data breaches and to notify regulators of a cybersecurity event.

Today, all 50 states have enacted some type of cybersecurity and data protection regulation, and around 19 jurisdictions have comprehensive privacy regulations that may apply to certain consumer data that we possess.

Additionally, some of the enacted regulations have since been amended to expand and strengthen established cybersecurity requirements in response to the evolving cybersecurity landscape.

1 unchanged sentence

In addition, efforts to comply with new or existing cybersecurity regulations could impose significant costs on our business, which could materially and adversely affect our business, results of operations, financial condition or prospects.

Further, we are subject to the terms of our privacy policies, privacy-related disclosures, and contractual and other privacy-related obligations to our customers and other third parties.

We have in the past experienced cybersecurity attacks that have resulted in threat actors obtaining customer personal information and some of these

events have caused us to incur losses, including regulatory penalties, costs and expend resources to modify our systems.

Any failure or perceived failure by us or third parties we work with to comply with privacy policies, disclosures, and obligations to customers or other third parties, or privacy or data security laws may result in governmental or regulatory investigations, enforcement actions, regulatory fines, criminal compliance orders, private litigation or public statements against us by consumer advocacy groups or others, and could cause customers to lose trust in us, any of which could materially and adversely affect on our business, results of operations, financial condition and prospects.

Cybersecurity incidents, or real or perceived errors, failures or bugs in our or our vendors’ systems or our website or app could impair our operations, compromise our confidential information or our customers’ personal information, damage our reputation and brand, and harm our business, financial condition, operating results and prospects.

Further, we are bound by the terms of our privacy policies, privacy-related disclosures, and contractual and other privacy-related obligations to our customers and other third parties.

We have in the past, and may in the future experience, cybersecurity incidents that have resulted in threat actors obtaining customer personal information and some of these events have caused us to incur losses, including regulatory penalties, costs and attorneys fees, and expend resources to modify our systems.

Any failure or perceived failure by us or third parties we work with to comply with privacy policies, disclosures, and obligations to customers or other third parties, or privacy or data security laws may result in governmental or regulatory investigations, enforcement actions, regulatory fines, criminal compliance orders, private litigation or public statements against us by consumer advocacy groups or others, and could cause customers to lose trust in us, any of which could materially and adversely affect our business, results of operations, financial condition and prospects.

Cybersecurity incidents, or real or perceived errors, failures or bugs in our or our vendors’ systems, or our website or mobile app could impair our operations, compromise our confidential information or our customers’ personal information, damage our reputation and brand, and harm our business, financial condition, operating results and prospects.

Our success depends on our systems, applications, and software continuing to operate and to meet the changing needs of our customers and users.

4 unchanged sentences

In addition, we utilize a workforce that is largely remote and may exacerbate exposure to cybersecurity incidents.

The rapid evolution and increased adoption of generative AI technologies may also increase our cybersecurity risks and the cybersecurity risks of our business partners.

We have experienced cybersecurity threats to our information technology infrastructure, and we have experienced cybersecurity incidents that have resulted in threat actors obtaining customer personal information, attempts to breach our systems, fraudulent activity and other incidents, and some of these events have caused us to incur losses, including regulatory penalties, costs and expend resources to modify our systems.

2 unchanged sentences

Publicized threats, incidents or events could cause harm to our business and our reputation and challenge our ability to provide reliable service, as well as negatively impact our results of operations materially.

In addition, copycat websites or mobile apps have in the past and may again attempt to misappropriate data and attempt to imitate our brand or the functionality of our website or our mobile app.

When we become aware of such websites or mobile apps, we have employed technological or legal measures in an attempt to halt their operations and intend to do so in the future.

In addition, copycat websites or mobile apps have in the past, and may in the future, attempt to misappropriate data and imitate our brand or the functionality of our website or our mobile app.

When we become aware of such

websites or mobile apps, we have employed technological or legal measures in an attempt to halt their operations and intend to do so in the future.

However, we may be unable to detect all such websites or mobile apps in a timely manner and, even if we could, technological and legal measures may be insufficient to halt their operations.

4 unchanged sentences

Such incidents have become more prevalent in recent years.

For example, attempts to fraudulently induce our personnel into disclosing usernames, passwords or other

information that can be used to access our systems and the information in them have increased.

For example, attempts to fraudulently induce our personnel into disclosing usernames, passwords or other information that can be used to access our systems and the information in them have increased.

Cybersecurity incidents can also result from malfeasance of our personnel, theft, errors, data leaks, and security vulnerabilities or bugs in our website, mobile app or the software or systems on which we rely.

3 unchanged sentences

These third parties support or operate critical business systems for us or store or process the same sensitive, proprietary and confidential information that we handle.

They may not have adequate security measures and could experience a cybersecurity incident that compromises the confidentiality, integrity or availability of the systems they operate for us or the information they process on our behalf.

They may not have adequate security measures and may experience a cybersecurity incident that compromises the confidentiality, integrity or availability of the systems they operate for us or the information they process on our behalf.

Some of our vendors have experienced cybersecurity breaches and other incidents.

Such past or future occurrences could adversely affect our business to the same degree as if we had experienced these occurrences directly, and we may not have recourse to the responsible third parties for any resulting liability that we incur.

There are many different cybercrime and hacking techniques, such techniques continue to evolve, and we may be unable to anticipate security breaches or incidents, react to cybersecurity incidents in a timely manner, implement adequate preventative measures or completely mitigate the effects of any such attack or incidents.

There are many different cybercrime and hacking techniques, and such techniques continue to evolve.

As such, we may be unable to anticipate security breaches or incidents, react to cybersecurity incidents in a timely manner, implement adequate preventative measures or completely mitigate the effects of any such attack or incidents.

While we have developed systems and processes designed to protect the integrity, confidentiality and security of the confidential and personal information under our control, we cannot guarantee that any security measures we or our third-party business partners have implemented will be effective against all current or future security threats.

A security breach or other cybersecurity incident, or the perception that one has occurred, could result in a loss of customer confidence in the security of our platform and damage our reputation and brand;

A security breach or other cybersecurity incident, or the perception that one has occurred, could result in a loss of customer confidence in the security of our platform;

damage our reputation and brand;

reduce demand for our insurance products;

3 unchanged sentences

Even if we take steps that we believe are adequate to protect us from cybersecurity threats, hacking against our competitors or other companies in our industry could create the perception among our customers or potential customers that our digital platform is not safe to use.

Security incidents could also damage our IT systems and our ability to make the financial reports and other public disclosures required of public companies.

Cybersecurity incidents could also damage our IT systems and our ability to make the financial reports and other public disclosures required of public companies.

These risks are likely to increase as we continue to grow and process, store and transmit an increasingly large volume of data.

1 unchanged sentence

In addition, we cannot be certain that insurance coverage will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.

The successful assertion of one or more large claims against us that exceed available insurance coverage, or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, results of operations, financial condition and prospects.

In some cases, particularly in the case of websites or mobile apps operating outside of the U.S., our available remedies may not be adequate to protect us against the effect of the operation of such websites or mobile apps.

successful assertion of one or more large claims against us that exceed available insurance coverage, or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, results of operations, financial condition and prospects.

In some cases, particularly in the case of websites or mobile apps operating outside of the United States, our available remedies may not be adequate to protect us against the effect of the operation of such websites or mobile apps.

Regardless of whether we can successfully enforce our rights against the operators of these websites or mobile apps, any measures that we may take could require us to expend significant financial or other resources and harm our business, results of operations, financial condition and prospects.

In addition, to the extent that such activity creates confusion among consumers or advertisers, our brand and business would be harmed.

Our brand may not become as widely known or accepted as incumbents’ brands or the brand may become tarnished.

Our brand may not become as widely known or accepted as our competitors’ brands or our brand may become tarnished.

Many of our competitors have brands that are well-recognized.

As a newer entrant into the insurance market, we have spent, and expect that we will for the foreseeable future continue to spend, considerable amounts of money and

other resources on creating brand awareness and building our reputation.

As a newer entrant into the insurance market, we have spent, and expect to continue to spend for the foreseeable future, considerable amounts of money and other resources on creating brand awareness and building our reputation.

We may not be able to build brand awareness to levels matching our competitors, and our efforts at building, maintaining and enhancing our reputation could fail and/or may not be cost-effective.

Complaints or negative publicity about our business practices, our marketing and advertising campaigns (including marketing affiliations or partnerships), our compliance with applicable laws and regulations, the integrity of the data that we provide to consumers or business partners, data privacy and security issues, and other aspects of our business, whether real or perceived, could diminish confidence in our brand, which would adversely affect our reputation and business.

Complaints or negative publicity, whether accurate or inaccurate, about our business practices, our marketing and advertising campaigns (including marketing affiliations or partnerships), our compliance with applicable laws and regulations, the integrity of the data that we provide to consumers or business partners, data privacy and security issues, and other aspects of our business, whether real or perceived, could diminish confidence in our brand, which would adversely affect our reputation and business.

As we expand our product offerings and enter new markets, we will need to establish our reputation with new customers, and to the extent we are not successful in creating positive impressions, our business in these newer markets could be adversely affected.

4 unchanged sentences

Our success depends on the talents and efforts of highly skilled individuals.

Our future success depends on our continuing to identify, hire, develop, motivate and retain highly skilled and experienced personnel and, if we are unable to hire and train a sufficient number of qualified employees for any reason, we may not be able to maintain or implement our current initiatives, or our business may contract and we may lose market share.

Our future success depends on continuing to identify, hire, develop, motivate and retain highly skilled and experienced personnel and, if we are unable to hire and train a sufficient number of qualified employees for any reason, we may not be able to maintain or implement our current initiatives, or our business may contract and we may lose market share.

We have implemented involuntary workforce reductions in the past, which may have harmed our reputation and relationship with our employees and may make it more difficult for us to recruit top talent, and we may implement workforce reductions in the future to support other business objectives.

7 unchanged sentences

If we lose the services of one or more of our senior management or other key personnel, including as a result of our workforce reductions or our business results, we may not be able to successfully manage our business, meet competitive challenges or achieve our business objectives.

Further, to the extent that our business grows, we will need to attract and retain additional qualified management personnel in a timely manner, and we may not be able to do so.

Our success depends on our continuing to identify, hire, develop, motivate, retain and integrate highly skilled personnel in all areas of our business.

New legislation or legal requirements may affect how we use artificial intelligence and /or may impact how we communicate with our customers, which could have an adverse effect on our business, financial condition, results of operations and prospects.

We continue to develop and implement applications of artificial intelligence, a term we use broadly to refer to computational systems that learn from data, identify patterns, and generate insights that can automate decision-making.

This term is inclusive of classical supervised machine learning, in which models are trained to faithfully mimic patterns observed in data sets.

Applications implemented by the Company include but are not limited to our pricing and underwriting models, claims process decisioning and marketing bid models, though in these instances the artificial intelligence deployed is static and deterministic.

As with many innovations, artificial intelligence

presents risks and there is no guarantee that our use of artificial intelligence or incorporation of artificial intelligence capabilities into our business will benefit our business.

State and federal lawmakers and insurance regulators are focusing on the use of artificial intelligence broadly, including, in particular, concerns about transparency, deception, and fairness.

For instance, on August 24, 2020, the NAIC adopted guiding principles on artificial intelligence developed by the NAIC’s AI Working Group to provide guidance to regulators on the use of artificial intelligence in the insurance industry, and on December 4, 2023, the NAIC issued a model bulletin on artificial intelligence, Use of Artificial Intelligence Systems by Insurers, which is intended to be used by state departments of insurance to set forth regulatory expectations as to how insurers should govern the development, acquisition, and use of artificial intelligence.

Further, to the extent that our business grows, we will

need to attract and retain additional qualified management personnel in a timely manner, and we may not be able to do so.

Our success depends on continuing to identify, hire, develop, motivate, retain and integrate highly skilled personnel in all areas of our business.

New legislation or legal requirements may affect how we use AI and /or may impact how we communicate with our customers, which could have an adverse effect on our business, financial condition, results of operations and prospects.

We continue to develop and implement applications of AI, a term we use broadly to refer to computational systems that learn from data, identify patterns, and generate insights that can automate decision-making.

This term is also inclusive of classical supervised machine learning, in which models are trained to faithfully mimic patterns observed in data sets.

Applications of AI implemented by the Company include but are not limited to our pricing and underwriting models, claims process decisioning and marketing bid models, though in these instances the AI deployed is static and deterministic.

As with many innovations, AI presents risks, and there is no guarantee that our use of AI or incorporation of AI capabilities into our business will benefit our business.

State and federal lawmakers and insurance regulators are focusing on the use of AI broadly, including, in particular, concerns about transparency, deception, and fairness.

For instance, on August 24, 2020, the NAIC adopted guiding principles on AI developed by the NAIC’s AI Working Group to provide guidance to regulators on the use of AI in the insurance industry, and on December 4, 2023, the NAIC issued a model bulletin on AI, Use of Artificial Intelligence Systems by Insurers, which is intended to be used by state departments of insurance to set forth regulatory expectations as to how insurers should govern the development, acquisition, and use of AI.

Subsequently, many state insurance regulators have promulgated that model bulletin through their own departments of insurance, occasionally modifying the model template to highlight state-specific concerns or positions.

In addition, legislation regulating the use of artificial intelligence has been enacted in several states and has been proposed on the federal level.

Changes in laws or regulations, or changes in the interpretation of laws or regulations by a regulatory authority, specific to the use of artificial intelligence, may decrease our revenues and earnings and may require us to change the manner in which we conduct some aspects of our business.

We may also be required to disclose our proprietary software to regulators, putting our confidential intellectual property at risk, in order to receive regulatory approval to use such artificial intelligence in the underwriting of insurance and/or the payment of claims.

In addition, our business and operations are subject to various U.S.

federal, state, and local consumer protection laws, including laws which place restrictions on the use of automated tools and technologies to communicate with wireless telephone subscribers or consumers generally.

For example, California’s Bolstering Online Transparency Act, effective as of July 2019, makes it unlawful for any person to use a bot to communicate with a person in California online with the intent to mislead the other person about the bot’s artificial identity for the purpose of knowingly deceiving the person about the content of the communication in order to incentivize a purchase of goods or services in a commercial transaction.

In addition, legislation regulating the use of AI has been enacted in several states (but recently challenged by the executive order on “Ensuring a National Policy Framework for Artificial Intelligence”) and has been proposed on the federal level.

Changes in laws or regulations, or changes in the interpretation of laws or regulations by a regulatory authority, specific to the use of AI, may decrease our revenues and earnings and may require us to change the manner in which we conduct some aspects of our business.

We may also be required to disclose our proprietary software to regulators, putting our confidential intellectual property at risk, in order to receive regulatory approval to use such AI in the underwriting of insurance and/or the payment of claims.

In addition, our business and operations are subject to various United States federal, state, and local consumer protection laws, including laws which place restrictions on the use of automated tools and technologies to communicate with wireless telephone subscribers or consumers generally.

Colorado’s requirements on an insurance company’s use of external consumer data and information sources, algorithms, and predictive models, which such requirements include additional documentation, oversight, testing, and reporting obligations, were extended to private passenger automobile insurers by regulation effective October 15, 2025.

Although we have taken steps to mitigate our liability for violations of this and other laws restricting the use of electronic communication tools, we cannot guarantee that we will not be exposed to civil litigation or regulatory enforcement for actual or perceived failures in this respect.

2 unchanged sentences

Under the terms of our policies, we are required to accurately and timely evaluate and pay covered claims.

We have settled claims related to allegations that we did not timely or accurately pay claims and have been assessed market conduct fines and penalties by regulatory authorities.

We have settled claims and actions related to allegations that we did not timely or accurately pay claims and have been assessed market conduct fines and penalties by regulatory authorities.

Our ability to accurately and timely evaluate and pay claims depends on a number of factors, including the efficacy of our claims processing, the training and experience of our claims adjusters, including our third-party claims administrators, and our ability to develop or select and implement appropriate procedures and systems to support our claims functions.

4 unchanged sentences

Our business experiences volatility in claim frequency from time to time, and short-term trends may not continue over the longer term.

Changes in claim frequency may result from changes in mix of business, miles driven, distracted driving, weather, pandemics, macroeconomic or other factors.

Changes in claim frequency may result from changes in mix of business, miles driven, distracted driving, weather, pandemics, the macroeconomic environment, including inflation, or other factors.

A significant increase in claim frequency or severity could have an adverse effect on our business, results of operations, financial condition and prospects.

1 unchanged sentence

Changes in auto property damage claim severity are driven primarily by inflation in the cost to repair or replace vehicles, including parts and labor rates, the mix of vehicles that are declared total losses, model year mix as well as used car values.

An increase in tariffs, or implementation of new tariffs, would likely drive an increase in auto property damage claim severity.

An increase in tariffs, or the implementation of new tariffs, including retaliatory tariffs, would likely drive an increase in auto property damage claim severity.

In addition, social inflation may materially and adversely affect our financial condition.

2 unchanged sentences

While actuarial models for pricing and reserving typically include an expected level of inflation (including social inflation), unanticipated increases in claim severity can arise from events that are inherently difficult to predict, such as inflationary shocks or surges in health care costs.

Implementation of tariffs could also contribute to claim severity.

Implementation of tariffs and changes in trade policies could also contribute to claim severity.

Although we pursue various loss management initiatives to mitigate future increases in claim severity, we cannot guarantee that these initiatives will successfully identify or reduce the effect of future increases in claim severity, and our failure to do so would adversely affect our business, results of operations, financial condition and prospects.

1 unchanged sentence

We are required to maintain sufficient capital and surplus in order to comply with insurance regulatory requirements, support our business operations and minimize our risk of insolvency.

The NAIC has developed a system to test the adequacy of statutory capital and surplus of U.S.-based insurers, known as risk-based capital, that all states have adopted.

The NAIC has developed a system to test the adequacy of statutory capital and surplus of United States-based insurers, known as risk-based capital, that all states have adopted.

This system establishes the minimum amount of capital and surplus necessary for an insurance company to support its overall business operations in consideration of its size and risk profile.

1 unchanged sentence

An insurer’s risk-based capital ratio measures the relationship between its total adjusted capital and its authorized control level risk-based capital.

Insurers with a ratio falling below certain calculated thresholds may be subject to varying degrees of regulatory action, including heightened supervision, examination, rehabilitation or liquidation.

Insurers with a ratio falling below certain calculated thresholds may be

subject to varying degrees of regulatory action, including heightened supervision, examination, rehabilitation or liquidation.

An insurance company with total adjusted capital that is less than 200% of its authorized control level risk-based capital is at a company action level, which would require the insurance company to file a risk-based capital plan that, among other things, contains proposals of corrective actions the company intends to take that are reasonably expected to result in the elimination of the company action level event.

7 unchanged sentences

Further, the NAIC has promulgated a Model Regulation to Define Standards and Commissioner's Authority for Companies Deemed to be in Hazardous Financial Condition, or the Hazardous Financial Condition Standards, which has been adopted by states in whole or part.

If our financial condition is deemed by state insurance regulators to meet the Hazardous Financial Conditions Standards, it could subject us to heightened regulatory scrutiny or measures or create uncertainty around the stability of our financial condition, which would harm our business.

The Ohio DOI has determined that our financial condition does meet certain of those standards and requires us to provide the Ohio DOI with monthly financial reports.

The South Carolina Department of Insurance and the Florida Office of Insurance Regulation also require the provision of monthly financial reports.

If our financial condition is deemed by state insurance regulators to meet the Hazardous Financial Condition Standards, it could subject us to heightened regulatory scrutiny or measures or create uncertainty around the stability of our financial condition, which would harm our business.

The Florida OIR requires the provision of monthly financial reports.

Similarly, our wholly-owned, Cayman Islands-based captive reinsurer, Root Re, is subject to additional capital and other regulatory requirements imposed by the CIMA.

Although these capital requirements are generally less constraining than U.S.

capital requirements, failure to satisfy these requirements could result in regulatory actions from the CIMA or loss of or modification of Root Re’s Class B(iii) insurer license, which would adversely impact our ability to improve our overall capital efficiency and support our “capital-efficient” model.

As a newer entrant to the insurance industry, we may face additional capital and surplus requirements as compared to those of our larger and more established competitors.

Failure to maintain adequate risk-based capital at the required levels could result in increasingly onerous reporting and examination requirements and could adversely affect our ability to maintain regulatory authority to conduct our business.

Although these capital requirements are generally less constraining than United States capital requirements, failure to satisfy these requirements could result in regulatory actions from the CIMA or loss of or modification of Root Re’s Class B(iii) insurer license, which would adversely impact our ability to improve our overall capital efficiency and support our “capital-efficient” model.

As a newer entrant to the insurance industry, we may face additional capital and surplus requirements as compared to those of our larger and more established competitors, including requirements imposed by non-domiciliary regulators to maintain statutory capital and surplus, deposits, or other financial security in excess of domiciliary standards as a condition of transacting business in their jurisdictions.

Failure to maintain adequate risk-based capital, or other capital requirements, at the required levels could result in limited state operations expansion, withdrawal from a state, and/or increasingly onerous reporting and examination requirements and could adversely affect our ability to maintain regulatory authority to conduct our business.

We may be unable to prevent, monitor or detect fraudulent activity, including policy acquisitions or payments of claims that are fraudulent in nature, or fraud that may be perpetrated by employees or external parties.

1 unchanged sentence

While we believe past incidents of fraudulent activity by customers, purported customers and/or claimants have been relatively isolated, we cannot guarantee that our systems and processes will always be adequate in the face of increasingly sophisticated and ever-changing fraud schemes.

We use a variety of tools to protect against fraud, but these tools may not always be successful at preventing such fraud.

We use a variety of tools to protect against fraud, but these tools may not always be successful.

Instances of fraud may result in increased costs, including possible settlement and litigation expenses, and could have a material adverse effect on our business and reputation.

1 unchanged sentence

A confidential settlement was reached with certain of these parties and the litigation continues as to others.

It is unlikely that we will be able to recover all of the funds from such former employee or the other defendants.

It is unlikely that we will be able to recover all of the

funds from such former employee or the other defendants.

While we maintain insurance coverage to protect us against such loss, our coverage was less than the amount of that loss and may be insufficient or inadequate to cover future losses.

4 unchanged sentences

Existing and future laws and regulations may impede the growth of the internet or other online services and increase the cost of providing online services.

These regulations and laws may involve taxes, tariffs, privacy and data security, anti-spam, content protection, electronic contracts and communications, electronic signatures and

consents, consumer protection and social media marketing.

These regulations and laws may involve taxes, tariffs, trade policies, privacy and data security, anti-spam, content protection, electronic contracts and communications, electronic signatures and consents, consumer protection and social media marketing.

It is at times not clear how existing laws governing issues such as property ownership, sales and other taxes and consumer privacy apply to the internet and the use of mobile apps in particular, as the vast majority of these laws were adopted prior to the advent of the internet and the use of mobile apps and do not contemplate or address the unique issues raised by the internet.

5 unchanged sentences

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand.

Our trade secrets, trademarks, copyrights, patents, know-how, and other intellectual property rights are important assets for us, in the U.S.

and other jurisdictions.

Our trade secrets, trademarks, copyrights, patents, know-how, and other intellectual property rights are important assets for us, in the United States and other jurisdictions.

We rely on, and expect to continue to rely on, various agreements with our employees, independent contractors, consultants and third parties with whom we have relationships, as well as trademark, trade dress, domain name, copyright, and trade secret laws, to protect our brand and other intellectual property rights.

6 unchanged sentences

Certain information or technology that we endeavor to protect as trade secrets may not be eligible for trade secret protection in all jurisdictions, or the measures we undertake to establish and maintain such trade secret protection may be inadequate.

In order to protect our proprietary information and technology, we rely in part on agreements with our employees, investors, independent contractors and other third parties that place restrictions on the use and disclosure of this intellectual property.

These agreements may not adequately protect our trade secrets, these agreements may be breached, or this intellectual property, including trade secrets, may otherwise be disclosed or become known to our competitors, which would likely cause us to lose any competitive advantage resulting from this intellectual property.

To the extent that our employees, independent contractors or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

In order to protect our proprietary information and technology, we rely in part on agreements with our employees, investors, independent contractors, contract counterparties and other third parties that place restrictions on the use and disclosure of this intellectual property.

These agreements may not adequately

protect our trade secrets, these agreements may be breached, or this intellectual property, including trade secrets, may otherwise be disclosed or become known to our competitors, which would likely cause us to lose any competitive advantage resulting from this intellectual property.

To the extent that our employees, independent contractors, contract counterparties or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

Current or future legal requirements may require us to disclose certain proprietary information or technology, such as our proprietary algorithms, to regulators or other third parties, including our competitors, which could impair or result in the loss of trade secret protection for such information or technology.

1 unchanged sentence

In addition, any changes in, or unexpected interpretations of, intellectual property laws may compromise our ability to enforce our trade secret and intellectual property rights.

Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and

failure to obtain or maintain protection of our trade secrets or other proprietary information could harm our business, results of operations, financial condition and prospects.

Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection of our trade secrets or other proprietary information could harm our business, results of operations, financial condition and prospects.

We have filed, and may continue in the future to file, applications to protect certain of our innovations and intellectual property.

17 unchanged sentences

In addition, we may be required to license additional technology from third parties to develop and market new offerings or platform features, which may not be on commercially reasonable terms or at all and could adversely affect our ability to compete.

Although we take measures to protect our intellectual property, if we are unable to prevent the unauthorized use or exploitation of our intellectual property, the value of our brand, content, and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused, and our ability to attract customers may be adversely affected.

to attract customers may be adversely affected.

Any inability or failure to protect our intellectual property could adversely impact our business, results of operations, financial condition and prospects.

1 unchanged sentence

Some license provisions that protect against unauthorized use, copying, transfer and disclosure of our technology may be unenforceable under the laws of certain jurisdictions and foreign countries.

While we enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with our third-party providers and strategic partners, we cannot guarantee that these agreements will be effective in controlling access to, and use and distribution of, our products and proprietary

While we enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with our third-party providers and contract counterparties, we cannot guarantee that these agreements will be effective in controlling access to, and use and distribution of, our products and proprietary information.

Further, these agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our offerings.

Some of our products and services contain open source software, which may pose particular risks to our proprietary software, products, and services in a manner that could have a negative effect on our business.

We use open source software in our products and services and anticipate continuing to use open source software in the future.

We use open source software in our products and services and anticipate that we will continue to use open source software in the future.

Some open source software licenses require those who distribute open source software as part of their own software product to publicly disclose all or part of the source code of such software product or to make available any derivative works of the open source code on unfavorable terms or at no cost, and we may be subject to such terms.

The terms of certain open source licenses to which we are subject have not been interpreted by U.S.

or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services.

The terms of certain open source licenses to which we are subject have not been interpreted by United States or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services.

Additionally, we could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we develop using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license.

12 unchanged sentences

In addition, future litigation may involve patent holding companies or other adverse patent owners who have no relevant product or service revenue and against whom our own patents may therefore provide little or no deterrence or protection.

Many potential litigants, including some of our competitors and patent-holding companies, have the ability to dedicate substantial resources to the assertion of their intellectual property rights.

Many potential litigants, including some of our competitors and patent-holding companies, have the ability to dedicate substantial resources to the assertion of their

intellectual property rights.

Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim, could distract our management from our business and could require us to cease use of such intellectual property.

7 unchanged sentences

Although we endeavor to provide adequate and appropriate coverage under each of our policies, customers could purchase policies that prove to be inadequate or inappropriate.

Customers have from time to time made claims and could do so in the future alleging that we or our appointed insurance producers failed in their responsibilities to provide them with the type or amount of coverage that they sought to purchase.

Customers have from time to time made claims, and may continue to do so in the future, alleging that we or our appointed insurance producers failed in our responsibilities to provide them with the type or amount of coverage that they sought to purchase.

We have settled some such claims in the past, and we could in the future be found liable for amounts significantly in excess of the policy limit, resulting in an adverse effect on our business, results of operations, financial condition and prospects.

25 unchanged sentences

• our failure to accurately estimate investment yields and the duration of our liability for loss and LAE, as well as unanticipated court decisions, legislation or regulatory action;

• unexpected or unanticipated changes in auto repair costs, auto parts prices, used car prices, labor and materials costs, tariffs, trade policies, rising medical costs, or changes in national or state healthcare laws or regulations.

To address the potential actual or perceived inadequacy of our current business model, we may be compelled to increase the amount allocated to cover policy claims, increase premium rates or adopt stricter underwriting standards, any of which would likely result in a decline in new business and renewals and, as a result, have a material adverse effect on our business, results of operations, financial condition and prospects.

7 unchanged sentences

We are subject to statutory property and casualty guaranty fund assessments in many states in which we do business.

The purpose of a guaranty fund is to protect customers in a particular state by requiring that solvent property and casualty insurers pay the insurance claims of insolvent insurers in such state.

The purpose of a guaranty fund is to protect customers in a particular state by requiring that solvent

property and casualty insurers pay the insurance claims of insolvent insurers in such state.

These guaranty associations generally pay these claims by assessing solvent insurers proportionately based on each insurer's share of voluntary premiums written in the state.

21 unchanged sentences

Our ability to utilize our net operating loss carryforwards may be limited.

As of December 31, 2024, we had federal income tax net operating losses, or NOLs, of approximately $1,292.3 million available to offset our future taxable income, if any, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code, or the Code, or otherwise.

Of our federal NOLs, $622.8 million of losses will begin to expire in tax years 2038 through 2043 and $669.5 million of losses can be carried forward indefinitely.

As of December 31, 2025, we had federal income tax net operating losses, or NOLs, of approximately $1,284.7 million, and state and local income tax NOLs of approximately $487.3 million, available to offset our future taxable income, if any, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code, or the Code, or otherwise.

Of our federal and state and local NOLs, $629.6 million and $232.1 million of losses will begin to expire in tax years 2038 through 2046 and 2026 through 2045, respectively, and $655.1 million and $255.2 million, respectively, of losses can be carried forward indefinitely.

We may be unable to fully use our NOLs, if at all.

4 unchanged sentences

To the extent we are not able to offset future taxable income with our NOLs, our net income and cash flows may be adversely affected.

The Tax Cuts and Jobs Act, or the Tax Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, among other things, includes changes to U.S.

federal tax rates and the rules governing NOL carryforwards.

The Tax Cuts and Jobs Act, or the Tax Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, among other things, includes changes to United States federal tax rates and the rules governing NOL carryforwards.

For federal NOLs arising in tax years beginning after December 31, 2017, the Tax Act as modified by the CARES Act limits a taxpayer’s ability to utilize non-P&C NOL carryforwards in taxable years beginning after December 31, 2020, to 80% of taxable income.

38 unchanged sentences

Historically, we have utilized reinsurance to expand our capacity to write more business than our insurance subsidiaries’ surplus would have otherwise supported.

Currently, we are ceding less of our business to external reinsurers than we have done previously.

A determination by us to continue to retain greater risk, or the retention of even more business in the future, increases our financial exposure to losses and significant losses could have a material adverse effect on our business, results of operations, financial condition, and prospects.

A determination by us to continue to retain risk increases our financial exposure to losses and significant losses could have a material adverse effect on our business, results of operations, financial condition, and prospects.

Reinsurance may be unavailable at current levels and prices, which may limit our ability to underwrite new policies.

5 unchanged sentences

We are also subject to the risk that, under applicable insurance laws and regulations, we may not be able to take credit for the reinsurance on our financial statements and instead would be required to hold separate admitted assets as reserves to cover claims on the risks that we have ceded to the reinsurer.

Reinsurers may become financially

unsound by the time that they are called upon to pay amounts due, which may not occur for many years, in which case we may have no legal ability to recover what is due to us under our agreement with such reinsurer.

Reinsurers may become financially unsound by the time that they are called upon to pay amounts due, which may not occur for many years.

At such time, we may have no legal ability to recover what is due to us under our agreement with such reinsurers.

Any disputes with reinsurers regarding coverage under reinsurance contracts could be time consuming, costly, and uncertain of success.

1 unchanged sentence

No guarantee can be made that reinsurance will remain continuously available to us to the same extent and on the same terms and rates as is currently available, as such availability depends in part on factors outside of our control.

A new reinsurance treaty may not provide sufficient protection.

Market forces and external factors, such as significant losses from hurricanes or terrorist attacks or an increase in capital and surplus requirements, impact the availability and cost of the reinsurance we purchase.

7 unchanged sentences

In addition, we are subject to the risk that one or more of our reinsurers will not honor its obligations, that the reinsurers will not pay in a timely fashion, or that our losses are so large that they exceed the limits inherent in our reinsurance contracts, limiting recovery.

Reinsurers may become financially unsound by the time that they are called upon to pay amounts due, which may not occur for many years, in which case we may have no legal ability to recover what is due to us under our agreement with such reinsurer.

Reinsurers may become financially unsound by the time that they are called upon to pay amounts due, which may not occur for many years.

At such time, we may have no legal ability to recover what is due to us under our agreement with such reinsurer.

For instance, certain reinsurers, including reinsurers utilized by us, have become financially unsound in the past.

9 unchanged sentences

approval of intercompany service agreements and reinsurance agreements;

statutory and risk-based capital solvency requirements, including the minimum capital and surplus our regulated insurance subsidiary must maintain;

statutory and risk-based capital solvency requirements, including the minimum capital and

surplus our regulated insurance subsidiary must maintain;

restrictions on, and regulatory approval requirements for, the payment of dividends, or other capital distributions, by and among our insurance subsidiaries;

and establishing minimum reserves that insurance carriers must hold to pay projected insurance claims.

To date, our subsidiary boards of directors have declared dividends on an intercompany basis only, in the exercise of their respective discretion and subject to regulatory approval, after considering a variety of factors, including our results of operations, capital and liquidity needs, and applicable regulatory requirements.

To the extent we decide to expand our current product offerings to include other insurance products, this would subject us to additional regulatory requirements and scrutiny in each state in which we elect to offer such products.

Several states have also adopted legislation prohibiting unfair methods of competition and unfair or deceptive acts and practices in the business of insurance as well as prohibiting unfair claims practices.

Most states have also adopted legislation prohibiting unfair methods of competition and unfair or deceptive acts and practices in the business of insurance as well as prohibiting unfair claims practices.

Prohibited practices include, but are not limited to, misrepresentations, false advertising, coercion, disparaging other insurers, unfair claims settlement procedures, and discrimination in the business of insurance.

1 unchanged sentence

States also regulate various aspects of the contractual relationships between insurers and independent agents as well as, in certain states, insurers and third-party administrators.

Although state insurance regulators have primary responsibility for administering and enforcing insurance regulations in the U.S., such laws and regulations are further administered and enforced by a number of additional governmental authorities, each of which exercises a degree of interpretive latitude, including state securities administrators;

state attorneys general as well as federal agencies including the SEC, the Financial Industry Regulatory Authority, the Federal Reserve Board, the Federal Insurance Office, the U.S.

Department of Labor, the U.S.

Department of Justice and the National Labor Relations Board.

Although state insurance regulators have primary responsibility for administering and enforcing insurance regulations in the United States, such laws and regulations are further administered and enforced by a number of additional governmental authorities, each of which exercises a degree of interpretive latitude, including state securities administrators;

state attorneys general, as well as federal agencies including the SEC, the Financial Industry Regulatory Authority, the Federal Reserve Board, the Federal Insurance Office, the United States Department of Labor, the United States Department of Justice and the National Labor Relations Board.

Consequently, compliance with any particular regulator’s or enforcement authority’s interpretation of a legal issue may not result in compliance with another’s interpretation of the same issue, particularly when compliance is judged in hindsight.

13 unchanged sentences

Failure to comply with other state insurance laws and regulations in the future could also have a material adverse effect on our business, operating results, financial condition and prospects.

As another example, the federal government could pass a law expanding its authority to regulate the insurance industry, expanding federal regulation over our business to our detriment.

As another example, the federal government could pass a law expanding its authority to regulate the insurance industry, expanding federal regulation over our business

to our detriment.

These laws and regulations may limit our ability to grow, raise additional capital or improve the profitability of our business.

1 unchanged sentence

If we are unable to satisfy the applicable licensing requirements of any particular state, we could lose our license to do business in that state, which would result in the temporary or permanent cessation of our operations in that state.

Alternatively, if we are unable to satisfy applicable state licensing requirements, we may be subject to additional regulatory oversight, have our

license suspended, or be subject to the seizure of assets.

Alternatively, if we are unable to satisfy applicable state licensing requirements, we may be subject to additional regulatory oversight, have our license suspended, or be subject to the seizure of assets.

Any such events could adversely affect our business, results of operations, financial condition and prospects.

See the sections titled (i) “Regulation — Insurance Regulation”, (ii) “Regulation — Insurance Holding Company Regulation” and (iii) “Regulation — Required Licensing” in Item 1.

See the sections titled “Regulation — Insurance Regulation”, “Regulation — Insurance Holding Company Regulation” and “Regulation — Required Licensing” in Item 1.

Business for additional information.

A regulatory environment that requires rate increases to be approved or that can dictate underwriting practices, mandate participation in loss sharing arrangements, or require insurers to lower rates and/or disgorge profits may adversely affect our business, results of operations, financial condition and prospects.

From time to time, political events and pressures affect the insurance market, including efforts to suppress rates to a level that may not allow us to reach targeted levels of profitability.

For example, as our loss ratio compares favorably to that of the industry, regulatory authorities may impose rate rollbacks, require us to pay premium refunds to policyholders or otherwise disgorge ourselves of profits, or challenge or otherwise delay our efforts to raise rates even if the property and casualty industry generally is not experiencing regulatory challenges to rate increases.

Such challenges affect our ability to obtain approval for rate changes that may be required to achieve targeted levels of profitability and returns on equity.

The regulation of insurance frequently changes as regulators respond to new, emerging, or perceived issues within the insurance market.

From time to time, political events and pressures also affect the insurance market, including efforts to suppress rates to a level that may not allow us to reach targeted levels of profitability.

Regulatory authorities may impose rate rollbacks, require premium refunds to policyholders or otherwise challenge or delay our efforts to raise rates even when rate increases may be actuarially justified.

Such challenges affect our ability to obtain approval for rate changes necessary to achieve targeted levels of profitability and returns on equity and may result in our pricing being inadequate, which could adversely impact our underwriting results.

This could also negatively impact our cash flows and deteriorate our financial condition.

In addition, certain states have enacted laws that require an insurer conducting business in that state to participate in assigned risk plans, reinsurance facilities and joint underwriting associations.

5 unchanged sentences

Our business, results of operations, financial condition and prospects could be adversely affected by any of these factors.

State insurance regulators impose additional reporting requirements regarding enterprise risk on insurance holding company systems, with which we must comply as an insurance holding company.

State insurance regulators impose additional reporting requirements regarding enterprise risk on insurance holding company systems, and we must comply as an insurance holding company.

In the past decade, various state insurance regulators have increased their focus on risks within an insurer’s holding company system that may pose enterprise risk to the insurer.

For example, an insurance holding company system’s ultimate controlling person is required to submit annually to its primary state insurance regulator an “enterprise risk report” that identifies activities, circumstances or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.

On behalf of Root Insurance Company and Root Property & Casualty Insurance Company, Root Inc.

submitted its annual enterprise risk report with Ohio on June 1, 2024, as required by Ohio law.

For example, an insurance holding company system’s ultimate controlling person is required to annually submit an “enterprise risk report” to its primary state insurance regulator that identifies activities, circumstances or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.

On behalf of Root Insurance Company, Root Property & Casualty, and Root Florida, Root, Inc.

submitted its annual enterprise risk report with Ohio and Florida on May 30, 2025, as required by applicable laws.

Other changes include the requirement that a controlling person submit prior notice to its supervisory insurance regulator of a divestiture of control, having detailed minimum requirements for cost sharing and management agreements between an insurer and its affiliates and expansion of the agreements between an insurer and its affiliates to be filed with its supervisory insurance regulator.

In addition, we are subject to Own Risk and Solvency Assessment, or ORSA, requirements, which require an insurer to conduct an internal assessment of material and relevant risks associated with its business plans and the sufficiency of its capital and liquidity under normal and stressed conditions.

ORSA summary reports must be filed

annually with the lead state insurance regulator.

We conduct an ORSA review annually, and we last submitted our report to Ohio on April 2, 2025.

There is also risk that insurance holding company systems may become subject to group capital requirements at the holding company level.

1 unchanged sentence

The group capital calculation provides regulators with an additional analytical tool for conducting supervisory activities.

The state of our primary insurance regulator, Ohio, provides that an insurance holding company system that does not write business outside the U.S., like us, is not required to file a group capital calculation until June 1, 2025.

We filed a group capital calculation in 2025.

We rely on technology and intellectual property from third parties to operate our business, including for pricing and underwriting our insurance policies, handling claims and maximizing automation, the unavailability or inaccuracy of which could limit the functionality of our products and disrupt our business.

Our business is highly dependent upon our ability to perform necessary business functions in an efficient and uninterrupted manner.

The shut-down, disruption, degradation or unavailability of one or more of our systems or

facilities, or the inability of our employees to communicate in a largely work-from-home environment, for any reason could significantly impair our ability to perform critical business functions on a timely basis.

The shut-down, disruption, degradation or unavailability of one or more of our systems or facilities, or the inability of our employees to communicate in a largely work-from-home environment, for any reason could significantly impair our ability to perform critical business functions on a timely basis.

In addition, many of our critical business systems interface with and depend on third-party systems.

15 unchanged sentences

Any of these results could harm our business, results of operations, financial condition and prospects.

We are subject to payment processing risk.

We are subject to payment processing risk and risk related to the availability of consumer credit.

We currently rely exclusively on one third-party vendor to provide payment processing services, including the processing of payments from credit cards and debit cards, and our business would be disrupted if this vendor refuses to provide these services to us and we are unable to find a suitable replacement on a timely basis or at all.

In addition, if the availability of consumer credit decreases, including as a result of the imposition of caps on credit card interest rates as has been proposed, customers may lose access to payment methods and we may experience difficulty collecting payments.

If we or our processing vendor fail to maintain adequate systems for the authorization and processing of credit card transactions, it could cause one or more of the major credit card companies to disallow our continued use of their payment products.

3 unchanged sentences

The PCI data security standards, however, will likely evolve over time to address emerging payment security risks and other issues requiring additional compliance efforts by us.

Our intention is to maintain compliance with PCI’s data security standards.

Our intention is to maintain compliance with PCI’s data security standards, but such compliance cannot be guaranteed.

The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in payment systems.

1 unchanged sentence

In addition, our customers could lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs.

If we fail to adequately control fraudulent credit card transactions, we may face civil liability, diminished public perception of our security measures, and significantly higher credit card-related costs, each of which could harm our business, results of operations, financial condition and prospects.

If we fail to adequately control fraudulent credit card transactions, we may face civil liability, diminished public perception of our security measures, and significantly higher credit card-related costs, each of which, in addition to other disruptions in our ability to accept or collect credit card payments, could harm our business, results of operations, financial condition and prospects.

Our success depends upon the insurance industry continuing to move online at its current pace and the continued growth and acceptance of online and mobile app-based products and services as effective alternatives to traditional offline products and services.

2 unchanged sentences

Purchasers of insurance may develop the perception that purchasing insurance products online or through a mobile app is not as effective as purchasing such products through a broker or other traditional offline methods, and the insurance market may not migrate online as quickly as (or at the levels that) we prefer.

Moreover, if, for any reason, an unfavorable perception generally develops that telematics, mobile engagement, a technology-based platform, artificial intelligence and/or bots are less efficacious than traditional offline methods of purchasing insurance, underwriting, claims processing, and other functions that do not use data automation, artificial intelligence and/or bots, or that our processes lead to unfair outcomes, our business, results of operations, financial condition and prospects could be adversely affected.

Moreover, if, for any reason, an unfavorable perception generally develops that telematics, mobile engagement, a technology-based platform, AI and/or bots are less efficacious than traditional offline methods of purchasing insurance, underwriting, claims processing, and other functions that do not use data automation, AI and/or bots, or that our processes lead to unfair outcomes, our business, results of operations, financial condition and prospects could be adversely affected.

Our actual incurred losses and LAE may be greater than our loss and LAE reserves, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

2 unchanged sentences

Rather, reserves represent an estimate of what the expected ultimate settlement and administration of claims will cost, and the ultimate liability may be greater or less than the current estimate.

In our industry, there is always the risk that reserves may prove inadequate or redundant since we will likely misestimate the cost of claims and claims administration.

In our industry, there is always a risk that reserves may prove inadequate or redundant since we will likely misestimate the exact cost of claims and claims administration.

We base our estimates on our assessment of known facts and circumstances, as well as estimates of future trends in claim severity, claim frequency, judicial theories of liability, and other factors.

These variables are affected by both internal and external events that could increase our exposure to losses, including changes in actuarial projections, claims handling procedures, inflation, severe weather, economic and judicial trends and legislative and regulatory changes.

Moreover, changing climate conditions, whether due to global climate change or other causes, may increase how often severe weather events and other natural disasters occur, how long they last, and how much insured damage they cause, and may change where the events occur.

We regularly monitor reserves using new information on reported claims and a variety of statistical techniques to update our current estimate.

We regularly monitor reserves using new information on reported claims and a variety of statistical techniques to update estimates.

Our estimates could prove to be inadequate, and this underestimation could have a material adverse effect on our business, results of operations, financial condition and prospects.

Recorded claim reserves, including case reserves, salvage and subrogation and incurred but not reported, or IBNR, claims reserves, are based on our estimates of losses after considering known facts and interpretations of the circumstances, including settlement agreements.

Additionally, models that rely on the assumption that past loss development patterns will persist into the future are used.

Internal factors are considered including our experience with similar cases, actual claims paid, historical trends involving claim payment patterns, pending levels of unpaid claims, loss management programs, product mix, state mix, contractual terms, industry payment and reporting patterns, and changes in claim reporting, and settlement practices.

External factors are also considered, such as court decisions, changes in law and litigation imposing unintended coverage.

Additionally, models are used that rely on the assumption that past loss development patterns will persist into the future.

Internal factors are considered including our experience with similar cases, actual claims paid, historical trends involving claim payment patterns, pending levels of unpaid claims, loss management programs, product mix, state mix, contractual terms, industry payment and reporting patterns, changes in claim reporting, and settlement practices.

External factors are also considered, such as court decisions, as well as changes in law and litigation imposing unintended coverage.

We also consider benefits, such as requiring the availability of multiple limits for a single loss occurrence.

Regulatory requirements and economic conditions are also considered.

Since reserves are estimates of the unpaid portion of losses and expenses for events that have occurred, including IBNR losses, the establishment of appropriate reserves, including reserves for catastrophes, is an inherently uncertain and complex process that is regularly refined to reflect current estimation processes and practices.

The ultimate cost of losses may vary materially from recorded reserves and such variance may adversely affect our business, results of operations, financial condition and prospects as the reserves and reinsurance recoverables are reestimated.

If any of our insurance reserves should prove to be inadequate for the reasons discussed above, or for any other reason, we will be required to increase reserves, resulting in a reduction in our net income and stockholders’ equity in the period in which the deficiency is identified.

Future loss experience substantially in excess of established reserves could also have a material adverse effect on future earnings and liquidity and financial rating, which would affect our ability to attract new business or to retain existing customers.

Future loss experience substantially in excess of established reserves could also have a material adverse effect on future earnings and liquidity and financial rating, which could affect our ability to attract new business or to retain existing customers.

Performance of our investment portfolio is subject to a variety of investment risks that may adversely affect our financial results.

5 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In recent years, interest rates have been at or near historic lows although rates have been slightly higher of late.

In recent years, interest rates have been at or near historic lows although rates

have been slightly higher of late.

A protracted low interest rate environment would place pressure on our net investment income, particularly as it relates to fixed income securities and short-term investments, which, in turn, may adversely affect our operating results.

16 unchanged sentences

In the recent past, certain banks, including a bank utilized by the Company, have failed and depositors, including the Company, were unable to access funds in those banks for a period of time.

Likewise, our investment portfolios are subject to risks inherent in the nation’s and world’s capital markets, including the U.S.

continuing to honor its outstanding debt and other obligations.

Any disruption in the functioning of those markets or in our ability to liquidate investments or specific categories of investments on favorable terms when desired, or a default by the U.S.

in its obligations, could impair our ability to pay claims or other financial obligations when due and could result in a significant decline in the value of our investment portfolio and have a material adverse impact on our cash flows and capital position.

Likewise, our investment portfolios are subject to risks inherent in the nation’s and world’s capital markets, including the United States continuing to honor its outstanding debt and other obligations.

Any disruption in the functioning of those markets or in our ability to liquidate investments or specific categories of investments on favorable terms when desired, or a default by the United States in its obligations, could impair our ability to pay claims or other financial obligations when due and could result in a significant decline in the value of our investment portfolio and have a material adverse impact on our cash flows and capital position.

Any such event or series of such events could also result in significant operational difficulties, reputational harm and adverse actions by regulators and have a material adverse effect on our business, results of operations, financial condition and prospects.

25 unchanged sentences

Our directors and executive officers and their affiliates collectively beneficially own, in the aggregate, shares representing approximately 34.3% of the voting power of our outstanding capital stock.

As a result, the holders of our Class B common stock are able to exercise considerable influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or our assets, even if their stock holdings represent less than 50% of the outstanding shares of our capital stock.

As a result, the holders of our Class B common stock are able to exercise considerable influence over matters requiring stockholder approval, including the election of directors and approval

of significant corporate transactions, such as a merger or other sale of our company or our assets, even if their stock holdings represent less than 50% of the outstanding shares of our capital stock.

This concentration of ownership limits the ability of other stockholders to influence corporate matters and may cause us to make strategic decisions that could involve risks to you or that may not be aligned with your interests.

5 unchanged sentences

Applicable law provides for a rebuttable presumption of “control” by any person which owns or acquires, directly or indirectly, 10% or more of the voting stock of the insurance company, and a person must seek regulatory approval from the superintendent of the supervisory DOI prior to acquiring direct or indirect “control” of an insurer by filing a Form A Statement Regarding the Acquisition of Control of or Merger with a Domestic Insurer, or Form A.

As part of this Form A application, the entity acquiring control (as well as any controlling shareholders of such entity) will need to submit, along with other documents and disclosures, its financial statements, organizational charts and biographical affidavits for any officers, directors and controlling shareholders of each applicable entity.

Would-be acquirers may find these

requirements burdensome, which could deter potential acquisition proposals and may serve to delay or prevent change of control transactions, including transactions that some or all of the stockholders might consider to be desirable.

As part of this Form A, the entity acquiring control (as well as any controlling shareholders of such entity) will need to submit, along with other documents and disclosures, its financial statements, organizational charts and biographical affidavits for any officers, directors and controlling shareholders of each applicable entity.

Would-be acquirers may find these requirements burdensome, which could deter potential acquisition proposals and may serve to delay or prevent change of control transactions, including transactions that some or all of the stockholders might consider to be desirable.

These requirements may also inhibit our ability to acquire an insurance company should we wish to do so in the future.

6 unchanged sentences

State insurance regulatory authorities that have jurisdiction over the payment of dividends by our regulated insurance subsidiary may in the future adopt statutory provisions more restrictive than those currently in effect.

Any return to stockholders will therefore be limited to the appreciation of their stock.

Any return to stockholders will therefore be limited to any appreciation of their stock.

As a public company, we are subject to more stringent federal and state law requirements.

1 unchanged sentence

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations.

Compliance with these rules and regulations have and may continue to increase our legal, accounting, investor relations, financial and other costs and expenses, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.

Compliance with these rules and regulations has increased, and may continue to increase, our legal, accounting, investor relations, financial and other costs and expenses, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.

The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results.

In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

Stockholder activism, the current political environment and the current high level of U.S.

government intervention and regulatory reform may also lead to substantial new regulations and disclosure obligations, which may in turn lead to additional compliance costs and impact the manner in which we operate our business in ways we do not currently anticipate.

In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and Nasdaq have imposed various

requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

Stockholder activism, the current political environment and the current high level of United States government intervention and regulatory reform may also lead to substantial new regulations and disclosure obligations, which may in turn lead to additional compliance costs and impact the manner in which we operate our business in ways we do not currently anticipate.

Our management and other personnel devote a substantial amount of time to comply with these requirements.

2 unchanged sentences

Being a public company and the associated rules and regulations make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain adequate coverage.

These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our Audit, Risk and Finance Committee and Compensation Committee, and qualified executive officers.

These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our Audit, Risk and Finance Committee, on our Compensation Committee, and as qualified executive officers.

Actions and changing expectations from investors, clients, regulators and our employees with respect to environmental, social and governance matters may impose additional costs on us, impact our access to capital, or expose us to new or additional risks.

Changing expectations, including from governmental organizations, investors, employees and clients, on environmental, social and governance matters such as environmental stewardship, climate change, diversity, equity and inclusion, pay equity, racial justice, workplace conduct and cybersecurity and data privacy, may result in increased costs (including but not limited to increased costs related to compliance and stakeholder engagement), impact our reputation, or otherwise affect our business performance.

Conflicting environmental, social and

governance policies within jurisdictions, such as between federal and some state policies in the U.S., is leading to a complex and fragmented regulatory environment, which may be difficult to navigate and we may not effectively anticipate or respond to regulatory changes.

Negative public perception, adverse publicity or negative comments in social media could damage our reputation or harm our relationships with regulators, investors and the communities in which we operate, if we do not, or are not perceived to, adequately address these issues, including if we fail to demonstrate progress towards any current or future environmental, social and governance goals.

Changing expectations, including from governmental organizations, investors, advisory firms, employees and clients, on environmental, social and governance matters, such as environmental stewardship, climate change, diversity, equity and inclusion, pay equity, racial justice, workplace conduct and cybersecurity and data privacy, may result in increased costs (including but not limited to increased costs related to compliance and stakeholder engagement), impact our reputation, or otherwise affect our business performance.

Conflicting environmental, social and governance policies within jurisdictions, such as between federal and some state policies in the United States, is leading to a complex and fragmented regulatory environment, which may be difficult to navigate, and we may not effectively anticipate or respond to regulatory changes.

Negative public perception, adverse publicity or negative comments in social media, whether accurate or inaccurate, could damage our reputation or harm our relationships with regulators, investors and the communities in which we operate, if we do not, or are not perceived to, adequately address these issues, including if we fail to demonstrate progress towards any current or future environmental, social and governance goals.

Any harm to our reputation could negatively impact employee engagement and retention and the willingness of customers to do business with us.

1 unchanged sentence

In addition, a variety of organizations have developed ratings to measure the performance of companies on environmental, social and governance topics, and the results of some of these assessments are widely publicized.

Such ratings are used by some investors to inform their investment and voting decisions.

Such ratings are used by certain investors to inform their investment and voting decisions.

In addition, many investors have created their own proprietary ratings that inform their investment and voting decisions.

4 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Our management does not expect that our internal control over financial reporting will prevent or detect all errors and all fraud.

9 unchanged sentences

If we are unable to hire the additional accounting and finance staff necessary to comply with these requirements, we may need to retain additional outside consultants.

If we or our auditors are unable to

conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our Class A common stock may decline.

If we or our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our Class A common stock may decline.

Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

9 unchanged sentences

• prohibit our stockholders from calling a special meeting of our stockholders;

• authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a stockholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors;

ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors;

• require the approval of the holders of at least 66 2⁄3% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.

4 unchanged sentences

Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.

Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case, to the fullest extent permitted by Delaware law.

Delaware law provides that directors of a corporation will not be personally liable for monetary damages for any breach of fiduciary duties as directors, except liability for:

The DGCL provides that directors of a corporation will not be personally liable for monetary damages for any breach of fiduciary duties as directors, except liability for:

• any breach of the director’s duty of loyalty to the corporation or its stockholders;

3 unchanged sentences

Such limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

Our amended and restated bylaws provide that we are required to indemnify our directors and officers to the fullest extent permitted by Delaware law and may indemnify our other employees and agents.

Our amended and restated bylaws also provide that, on satisfaction of certain conditions, we will advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law.

Our amended and restated bylaws provide that we are required to indemnify our directors and officers to the fullest extent permitted by the DGCL and may indemnify our other employees and agents.

We have entered and expect to continue to enter into agreements to indemnify our directors and executive officers.

2 unchanged sentences

While we maintain directors’ and officers’ liability insurance, such insurance may not be adequate to cover all liabilities that we may incur, which may reduce our available funds to satisfy third-party claims and may adversely impact our cash position.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the U.S.

are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States are the exclusive forums for substantially all disputes

between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) is the exclusive forum for the following claims or causes of action under Delaware statutory or common law:

8 unchanged sentences

Accordingly, both state and federal courts have jurisdiction to entertain such claims.

will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions.

2 unchanged sentences

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees.

If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.

If a court were to find an exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may encounter additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.

Risks Related to Our Indebtedness

1 unchanged sentence

Our failure to comply with covenants contained in the Amended Term Loan may result in acceleration of our repayment obligations, which could harm our liquidity, financial condition, operating results, business and prospects and cause the price of our Class A common stock to decline.

Root is a party to a term loan agreement by and among Root, Caret Holdings, Inc., or Caret, as borrower, and other subsidiary loan parties, the lenders party thereto, or the Lenders, and Acquiom Agency Services LLC, as the administrative agent for the Lenders, or the Term Loan.

The Term Loan was initially entered into in January 2022 and was amended in October 2024, or the Amended Term Loan.

Under the terms of the Amended Term Loan, Caret has borrowed a principal amount of $200 million, all of which is currently outstanding.

42 unchanged sentences

Our revenue and results of operations could vary significantly from quarter to quarter and year to year and may fail to match periodic expectations as a result of a variety of factors, many of which are outside of our control.

Our results may vary from period to period as a result of fluctuations in the number of customers purchasing our insurance products and renewing their agreements with us as well as fluctuations in the timing and amount of our expenses.

In addition, the insurance industry is subject to its own cyclical trends and uncertainties, including extreme weather which is often seasonal and may result in volatility in claims reporting and payment patterns.

29 unchanged sentences

Since auto insurance constitutes substantially all of our business, we are more sensitive than other insurers and more adversely affected by trends that could decrease auto insurance rates or reduce demand for auto insurance over time.

We may not be able to respond effectively to these changes, which could have a material effect on our results of operations and financial condition.

The COVID-19 pandemic caused disruption to our operations and future pandemics may negatively impact our business, key metrics, and results of operations in numerous ways that are unpredictable.

Our business was impacted by the effects of the outbreak of the novel strain of coronavirus, or COVID-19, which was declared a global pandemic in March 2020.

Pandemics and governmental responses thereto could impact the economies of affected countries, including creating or exacerbating supply chain disruptions and inflation and negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates.

It is possible that a pandemic and governmental responses thereto will cause increased inflation, an economic slowdown of potentially extended duration, as well as a global recession.

The impact of the pandemic may also exacerbate the other risks described in these Risk Factors, and additional impacts may arise that we are not currently aware of, any of which could have a material effect on us.

Pandemics and governmental responses thereto have resulted, and could further result in, an increase in costs associated with claims under our policies, including the cost to repair or replace vehicles, as well as an increase in the number of customers experiencing difficulty paying premiums, any one of which could have a material adverse effect on our business, results of operations, financial condition and prospects.

We may not be able to respond effectively to these changes, which could have a material effect on our business, results of operations, financial condition and prospects.

An economic downturn and economic uncertainty may adversely affect demand for our products.

There are indications of increased economic uncertainty in the United States, including the potential for an economic recession.

Impacts of such general economic weakness include, without limitation:

reduced credit availability;

reduced liquidity;

volatility in credit and equity markets;

contentious trade markets, including changes to tariffs and trade policy;

increasing job losses, bankruptcies and rising interest rates.

In recent years, there have been instances of Congress and the President failing to reach agreement on federal budgetary and spending matters.

A government shutdown, a default by the United States government on its debt obligations, credit-rating downgrades or a weakened dollar relative to other currencies could also have adverse effects on the broader global economy and contribute to, or worsen, an economic recession or create recessionary conditions.

In addition, certain regulators may institute moratoriums that prohibit or limit an insurer’s ability to cancel or non-renew an insurance policy or require an insurer to defer the collection of past-due premiums to the end of the moratorium period.

These moratoriums may lead to an increase in earned, but not collected premium, thereby adversely impacting the insurer.

Certain of the jurisdictions in which we operate instituted moratoriums during the COVID-19 pandemic, and could do so again in adverse economic conditions.

In addition, adverse economic conditions have included or resulted in, and could continue to include or result in, a significant increase in inflation.

We may not be able to respond effectively to these challenges, which could have a material effect on our business, results of operations, financial condition and prospects.

Future sales of our Class A common stock in the public market by current shareholders could cause the market price of our Class A common stock to decline.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors