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Lemonade: Home Insurance Review 2021

8 min read
- Money; Getty Images
Money; Getty Images

Lemonade Homeowners Insurance Review

Lemonade was founded with the goal of making the home insurance claims process easier and more engaging for the average consumer. The company does this by heavily using artificial intelligence and machine learning to analyze and process claims, allowing them to be paid out in a matter of minutes in some cases. Lemonade also eschews physical locations in favor of an entirely digital presence, handling all transactions through their website or their mobile app.

PROS

Quick application and claims. Signing up for Lemonade is relatively fast, with the entire process taking just a few minutes of questions from Maya, one of its AI bots, to help narrow down your policy options. As far as settling claims are concerned, Lemonade says it holds the record for fastest claim resolution at 3 seconds, and asserts that 30% of its claims are resolved that quickly.

Lower-than-average rates for some coverage. Lemonade also has some of the most low-cost pricing in the insurance industry. Their most basic homeowner insurance policies cost $25/month, and premiums for renter’s policies are as low as $5/month.

Customizable policies. Lemonade allows you to pick and choose the specific coverages that you want in order to create a policy that is unique to you, which isn't an option with many insurance providers. This includes a “zero-all” policy which eliminates your insurance deductibles at the cost of increased premiums.

Unclaimed payments donated to charity. Additionally, Lemonade operates under a B-Corporation business model where the company donates all unclaimed premiums to charity at the end of each year.

Commitment to transparency. Lemonade operates with a refreshing degree of transparency for an insurance company. All of their policy and coverage details are available in the FAQ section of their website. The company also keeps a “transparency blog” where they provide updates on their finances and future implementation plans, as well as a generalized copy of their policy document on their website as part of their Lemonade policy 2.0 initiative. Lemonade does its best to ensure you make the most informed decision possible.

CONS

Claims not always “instant” as advertised. More complex cases, involving residence or property damage, are more often than not settled using AI but sent to manual reviewers. As with other insurers, resolving those claims can take days or even weeks, depending on the severity of the claim.

Limits to availability and coverage limits. Limits to availability and coverage limits. Lemonade is currently unavailable to a significant portion of U.S. residents, since they currently only service Arizona, California, Colorado, Connecticut, District of Columbia, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin. In addition, they also explain that their business model allows them to only insure homes up to a certain level of liability.

Lemonade Home Insurance Policies

Lemonade offers policies for both single family homes and apartments, with each one custom-tailored to the property’s specific requirements. As mentioned, their policies are highly flexible, allowing you to adjust the degree of insurance coverage for the physical structure of your home, personal liability level, loss of use, and other factors. The “zero-all” policy eliminates your insurance deductible entirely, and is available to those willing to spend more on their premiums.

Like other companies, Lemonade also allows you to choose add-on coverage for items not included in the standard policy, such as cameras, musical instruments, and individual pieces of jewelry. In addition to their extra coverage options, you can also choose to protect your personal property against accidental loss, damage and theft, whether it happens at home, or while traveling.

Lemonade Insurance Giveback

Lemonade’s B-Corporation status means that they are legally required to “balance profit and purpose,” according to B Lab, the nonprofit certifying entity. Lemonade achieves this by taking a 25% flat fee from a customer’s premium to cover operational expenses and adds the remaining 75% to the communal insurance pool. At the end of the year, their Giveback program donates unclaimed premiums to a charity of the customer’s choice.

Traditional insurance companies make the bulk of their profits from these unclaimed premiums, which incentivizes them to charge higher rates and pay out fewer claims in general. In theory, the Giveback program keeps Lemonade focused on their policyholders, since their revenue is already accounted for. Aside from the social benefit this program provides, it ensures that insurance funds are being used responsibly, as the donation only takes place after all insurance claims have been paid out for the year.

Lemonade Homeowners Insurance Policy Fees

Lemonade does not charge any additional or hidden fees for its home insurance products. You only have to pay your monthly premiums, since any deductibles you may be required to pay will be deducted directly from your insurance payout. For example, if you filed a claim for $10,000 and you have a $500 deductible, Lemonade will send you an insurance payout of $9,500.

Lemonade Company Information

Lemonade is a home and renter’s insurance company established in 2015 by Daniel Schreiber and Shai Wininger, with the aim of providing homeowners access to affordable insurance while simplifying and streamlining the claims process.

As a certified B-Corporation, Lemonade chooses to forgo unclaimed premiums, donating them to a charity of the customer’s choice, instead. Due to their status as a relatively new company, it has not yet received a financial strength rating from established agencies such as Moody’s, though Demotech granted them an A-Exceptional rating in 2020, while Lloyd’s of London stands out as one of their most notable reinsurers.

Lemonade Home Insurance FAQs

How does Lemonade insurance work?

Lemonade operates under a peer-to-peer insurance model, which means that paid premiums are placed in a communal fund from which claims are paid out. In addition to the communal funds, Lemonade also purchases reinsurance to pay claims that exceed the available communal funds for the year, ensuring that all claims are able to be paid as necessary.

Can I bundle my insurance plans?

Since Lemonade currently only offers homeowners, renters, and pet insurance, they do not offer any discounts for bundling your coverages like other carriers do with auto insurance.

Does Lemonade offer landlord insurance?

Though they do not advertise this fact, Lemonade does offer landlord insurance. However, this option is only available in seven states (New York, California, Texas, Illinois, Pennsylvania, Washington D.C., or New Jersey), and only if you own a condo or co-op.

Lemonade Insurance Review: Key Takeaways

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