About Lemonade Insurance
Positioning themselves as a go-to source for urban-dweller renters and homeowners policies, Lemonade Insurance claims to help you easily and quickly obtain amazing coverage to protect your stuff at killer prices, all in 90 seconds from the comfort of your smartphone.
And if you have to file a claim, the website indicates it could take as little as three minutes to get paid.
Compared to traditional insurers, the company claims to only takes a flat 20 percent fee for operational costs, to pay claims super fast, at the give back to causes that matter most to you at the end of the year. Furthermore, no brokers are involved, and the savings are passed along to consumers.
According to their website, 31 percent of Lemonade’s customers come from Assurant, Farmers, Homesite, and Progressive (among others), while another 19 percent come from Allstate.
Whether or not anything of these is your current carrier, can the company really save you money? Even then, are they worth the switch? Let’s kick things off by discussing the fundamentals.
Insurance Basics: What Are the Major Differences Between Renter’s & Homeowner’s Coverage?
Unless you’re in the industry, the reality is that most people find the topic of insurance to be painfully boring, whether related to property, auto, liability, or anything else. Here, we’ll make it pain-free by quickly addressing some core concepts.
Writing for Investopedia, Alexander Ruport of Laurel Tree Advisors in Cleveland, OH tells us that the primary difference between a homeowner’s (form HO-3) and a renter’s (form HO-4) is that the former “covers the actual building you live in (and other structures, such as garages), while renter's insurance does not.”
Another way to think of it is that these policies cover only what you own. And since renters almost never have a financial interest in the property they’re leasing, policies largely only cover personal property.
With these basics in mind, let’s drill down a little more and take a look at the specific coverage provided by Lemonade’s policies.
What Kinds of Coverage Will You Find Under a Lemonade Insurance Policy?
Outside of these fundamental differences, the website emphasizes that Lemonade’s renters and homeowners insurance only covers you and the property that you legally own, at replacement cost (vs. actual cash value). By default, the policy also covers all residents of your household who are related to you by marriage, blood, or adoption.
This includes personal property anywhere in the world, including theft on or off premises, along with:
“…16 bad things, or perils, and also covers extra living expenses, if one of those covered things happens. For example, if a kitchen fire forces you out of your apartment or condo, or your upstairs neighbor leaves a faucet running all day and it’s now raining inside your apartment - you may need to get a hotel. Make sure to review your policy to understand the amount of coverage that you have, because there is a lot going on in there!”
These “16 bad things” include coverage for fire and smoke damage, damage caused by bad weather, crime and vandalism, water damage, liability and medical payments to others, and even vicious dog attacks, as long as your dog isn’t classified by the company as a high risk (whether due to breed or bite history). All covered claims are less applicable deductibles.
Liability limits ranged between $100K and $500K for renters and homeowners policies. Earthquake coverage was specifically excluded, although we were instructed that this could be added by contacting the company directly.
Are There Any Stipulations?
Even for items that might initially be covered, certain stipulations can apply. For example, according to Lemonade’s FAQ, laptops are covered, but not for loss or breakage if you drop it.
Furthermore, fine art, jewelry, watches, and some other types of personal property are covered under these policies, but come with special sub-limits.
What’s Excluded Under a Lemonade Insurance Policy?
While specifics can vary based on state and policy type, coverage for earthquake, flood, and roommate’s personal property and personal injuries is typically excluded.
Pro tip: Per their FAQ video, your significant other will need to be added as an additional insured, which could entail an additional fee. In some instance, they note that it could be simpler (or easier) to get your own separate policies.
In answer to an extraordinarily common question, as someone who spent nearly a decade as a personal lines insurance underwriter; yes, Lemonade can add a landlord as an interested party, at no additional charge.
Do these coverage options sound appealing? Next, we’ll find out how you can apply for a Lemonade policy.
How Does the Lemonade Insurance Application Process Work?
Important note: As of 8/11/17, their FAQ indicated that Lemonade currently only offered renters, condo, and homeowners insurance in NY, CA, and NJ. Additionally, IL renters policies were coming soon, will additional states rolling out later in the year.
With this in mind, we found the application process simple and straightforward. We started by entering first and last name, address, and whether we were interested in renters or homeowners.
From there, we indicated if we had any roommates, fire/burglar alarms, dogs on the premises (and whether or not they had a bite history), any valuable jewelry (or cameras, bikes, or fine art), and if we currently had coverage in place.
After entering our email address and date of birth, we were presented with a quote, which only took a couple of minutes to complete.
Obtaining a quote through Lemonade’s quoting system involved answering relatively few questions, starting with the first and last name. Image credit: Lemonade Insurance Agency, LLC
With this said, we encountered several instances where Lemonade’s ‘Maya’ artificial intelligence system wasn’t able to provide us with a quote, although we were never provided additional details. As a result, we had to start the process all over again, without knowing if we’d trigger the same error again.
While Lemonade’s quoting system was easy to use overall, when experimenting with different variables, we often received ‘ineligible’ notifications for no stated reason, which we found a bit frustrating. Image credit: Lemonade Insurance Agency, LLC
What’s the Deal With Lemonade’s App?
Based on the description and screenshots posted online, Lemonade’s iOS and Android apps largely appeared to be an extension of their website. There, you’ll also be able to chat with support, obtain coverage, and so forth.
Lemonade’s website and app appeared to provide access to the same features, including quoting and instant messaging. Image credit: Apple Corporation
Now that we’ve covered all the basics, let’s address price.
How Much Does Lemonade Insurance Cost?
On their website, Lemonade advertised that they offered renters insurance for as little as $5/mo, along with homeowners from $25/mo.
With this said, their FAQ emphasized:
“Premiums are calculated individually for each policyholder and are based on a number of different factors including your credit history, recent claims and information about your property including its age, size, and construction quality. We also factor in the sensitivity of your home to windstorms, severe weather damage, and fires. We then provide discounts for protection equipment you may have installed, such as fire and burglar alarms.”
As with any other renters or homeowners policy, when quoting different options on the Lemonade site, we found that changing deductibles or other coverage could meaningfully impact price.
Lemonade’s Renters Policy Premium
For example, quoting a CA renter’s policy with minimum $10K personal property, $3K loss of use, $100K liability, $1K medical payments, a $250 deductible, and an addition $7K coverage for bikes, returned a $60 annual premium. Or, about $5 per month.
On the other hand, maxing coverage out at $250K personal property, $500K liability, $200K loss of use, $5K medical payments with the same deductible came in at a much higher $113.42/mo, or about $1,361 per year.
What About a Lemonade Homeowners Policy?
Minimizing coverage on an HO-3 quote for a similar location, coverage came in at $275K for the dwelling, $137,500 for personal property, $100K liability, $82,500 loss of use, $1K medical payments, and a $500 deductible.
Total premium? $45.17/mo, or a little less than $450/yr.
Again, maxing coverage out at $775K for the dwelling, $487,500 personal property, $500K liability, $232,500 loss of use, $5K medical payments, and a $250 deductible nearly tripled the monthly rate to $149.59. Annually, this works out to roughly $1,800.
Regardless of what you end up paying, you can cancel your Lemonade policy at any time through the app. Afterward, you’ll receive a refund for the remaining period you’ve paid.
If you decide to take out a Lemonade policy and are already insured, the company claims to take care of the switching hassle.
Next, let’s find out if these prices are competitive.
How Do Lemonade’s Insurance Policies Compare?
While we didn’t find any statistics specifically related to California (the state used for all the quotes above), a 2014 Forbes article indicated that the average renter pays about $184 per month (about $2,200 annually) for insurance coverage. Conversely, more recently, ValuePenguin reported that Americans pay an average of $1,083 per year for homeowners coverage.
From this perspective, it seemed like Lemonade’s upper-end renters quotes came in considerably lower than this average, while upper-end homeowners returned meaningfully higher premiums.
Outside of this, perhaps the biggest differentiating factor is that Lemonade is filed as a B corporation, which the Harvard Business Review defines as “social enterprises verified by B Lab, a nonprofit organization. B Lab certifies companies based on how they create value for non-shareholding stakeholders, such as their employees, the local community, and the environment.”
Comparatively, the vast majority of insurance companies are filed as for-profit entities, many of which are openly traded on stock exchanges and beholden to shareholders. A select few are also classified as mutual companies, where dividends are paid out to policyholders at the end of the year.
What about from a customer satisfaction perspective?
Learning What Lemonade Insurance Policyholders Are Saying In Their Reviews
On SuperMoney.com, 10 Lemonade customers gave the insurance company an average rating of three stars at the time of our research. There, most compliments referenced competitive prices, ease of use, quick coverage, and the fact that all their money goes to good causes at the end of the year.
On the other hand, most complaints appeared to revolve around claims problems and less-than-stellar customer service.
NerdWallet also noted that Lemonade comes with a high financial strength rating, that no complaints had been filed to the National Association of Insurance Commissioners (NAIC), and that the quoting process can be completed in 90 seconds.
However, returning to our comment earlier about the company’s claim to specialize in urban dwellers, from a coverage perspective, InsNerds.com emphasized that “Lemonade is a standard insurance company. You pay premiums, and they pay claims from the general pool of funds.”
On iTunes and Google Play, Lemonade’s iOS and Android apps had a combined average rating of about four stars. Most compliments appeared to revolve around ease of use and quick quotes, On the flip side, common complaints referenced bugginess and eligibility criteria.
From a company perspective, Lemonade Insurance was co-founded by CEO Daniel Schreiber and Shai Wininger in September 2016. Previously, Daniel worked as President of Powermat and SVP of SanDisk Mobile Network Operators, while Shai acted as founder, CPO, and CTP of Fiverr.com.
Alright, we’ve covered a whole lot of territory here, so let’s come to a final conclusion.
What’s the Bottom Line About Lemonade Insurance?
At the end of the day, Lemonade Insurance seemed to offer a lot of potential advantages at the time of our research:
- Their policies appeared to be competitively priced (depending on state and specific coverage options, of course)
- Their website and iOS and Android apps seemed to come with mostly positive online customer feedback
- Based on what we learned from their FAQ, they appeared to offer many key coverage options customers are looking for
- The company held an A (Exceptional) financial stability rating (this largely references their ability to pay claims)
However, based on what we learned from their website, they didn’t seem to offer any coverage necessarily targeted at urban dwellers (despite their marketing angle), and there are perhaps dozens of other companies out there that allow you to transact business completely online or via an app, or to obtain a quote from websites that use computer algorithms in lieu of live underwriters.
Another potential consideration is that, with a traditional renters or homeowners policy, consumers typically have the opportunity to speak with an agent or service representative, who can help counsel them on the most appropriate coverage. With automated systems like Lemonade, however, this largely goes by the wayside.
The good news is that if you’re looking to see how competitive Lemonade’s rates are, you likely won’t be out more than a few minutes of your time after running a quick online quote.