Lemonade Insurance uses a combination of technology, transparency, and simplicity to provide their homeowners and renters policyholders a fast, affordable, and hassle-free experience.
They take a flat fee for their services, pay claims quickly, and treat “the premiums you pay as if it’s your money,” so the website advertises they’re transforming and reversing “the very business model of insurance.”
As a certified B-Corp and a Public Benefit Corporation, Lemonade also maintains social impact at the core of their business model and gave more than $160K to charities in 2018.
There are a lot of fully licensed insurance carriers in the marketplace that can help you protect the stuff you love. And like Lemonade, many also advertise hassle-free service and claims, instant policies, competitive premiums, and social or charitable aspects.
Is there anything about a Lemonade renters or homeowners policy, though, that might deliver better value for your money? Who could they work best for, who might want to stay away?
Combining our research and experience with insight from third-party professionals, we’ll help answer all of your core questions. Let’s start by taking a closer look at Lemonade’s process.
How Does Lemonade Insurance Work?
Lemonade offers renters, condo, co-op, and homeowners insurance policies in 21 states, with an additional 25—and parts of Europe—“coming soon,” according to their website. They offer landlord policies in some of these states as well.
The company is fully reinsured, holds an A-Exceptional Financial Stability Rating from Demotech Inc., and takes a flat fee for each policy they issue. Together, they say this means there’s no incentive to bloat your premium or sell you additional coverage.
As a certified B-Corp, they donate up to 40% of their unclaimed money per year to non-profit organizations.
There’s another meaningful difference when it comes to Lemonade insurance—after asking just a few questions, their Maya artificial intelligence chatbot helps you set up your policy, including choosing limits, increasing coverage for certain classes of personal property, and even filing and settling claims.
In fact, Lemonade advertises this technology allows them to pay 25% of claims in just three seconds.
Lemonade’s Maya AI chatbot asks you a few simple questions, provides a rate, and allows you to make a payment and bind coverage immediately. Credit: Lemonade Inc.
Then, after choosing your deductible and reading through a coverage summary written in everyday language, you can click the “Activate Your Insurance” button to make a payment and start your policy.
If you’re already insured, Lemonade will notify your current provider and/or lender to advise of the change, as well as handle your escrow payments.
Following issuance, you can adjust coverage via the app or website, or cancel your policy.
The Lemonade Insurance iOS and Android apps work exactly like the website, just on a smaller screen. Credit: Lemonade Inc.
What are Lemonade Policyholders Saying in Their Reviews?
Here on HighYa, more than 190 readers have given Lemonade Insurance an average rating of 4.5 stars. Most policyholders seem pleased with the company’s claims process and excellent customer support.
On the other hand, relatively few complaints often referenced frustrating claim handling, denied coverage, and technical issues.
Between iTunes and Google Play, the Lemonade app has more than 15,900 user reviews and a combined average rating of about 4.8 stars.
Many reported that the app is user-friendly and makes filing a claim a breeze, while some experienced problems using the app, or didn’t appreciate that coverage wasn’t available in their area. The company responded to each complaint directly.
How Much Does Lemonade Insurance Cost?
Lemonade advertises that their renters insurance policies start at $5 per month, while their homeowners begin at $25/mo. We received a $12 monthly rate for our dummy quote in NYC ($40K personal property, $100K liability, $12K loss of use, $1K med pay, $250 deductible).
The website explains you might pay more or less, since “premiums are calculated individually” 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.”
As soon as you make your payment using a debit or credit card, Lemonade will instantly email you your final policy.
If you cancel, you’ll receive a pro-rated refund for the remaining period for which you’ve paid.
What You Should Know Before Buying Homeowners and Renters Insurance Online
I spent more than a decade in the personal lines insurance industry, much of this time as a high-value property underwriter.
From this experience, I learned that most home and renters policyholders have little-to-no idea what the coverages on their policy provide, as well as whether or not their current levels are sufficient.
As a result, my biggest recommendations before signing on the dotted line are related to making sure you have enough coverage.
Start by taking stock of your personal property and adding up its total value. The Lemonade blog has an excellent article that outlines how to do this.
If you own a home, make sure that you have enough dwelling coverage to rebuild if it’s a total loss, which you can do using an online replacement cost calculator.
Pro tip: Your home’s market value and its replacement cost can be very different, so don’t think they’ll necessarily match.
And whether you own or rent, I’d recommend against skimping on liability coverage, which comes with very little cost difference between minimum ($100K) and maximum ($500K+) limits. But, this could make a big difference if the unthinkable happens.
One of the biggest upsides of shopping online is that you can receive multiple quotes in a short amount of time, which gives you an important advantage, according to Sa El, Co-Founder of Simply Insurance.
“You should apply to more than one company,” he says, “because every company has its own underwriting guidelines and could come back with a different price than they quoted you. This also allows you to choose the policy with the best price and coverage.”
Lemonade Insurance vs. Competing Online Insurance Carriers
These days, just about every personal lines company has a website (and very likely an app) where you can obtain quotes, make changes, access policy documents, pay your premium, file claims, and so forth.
However, there aren’t any that use technology in quite the same way as Lemonade, although here’s how some of their top competitors compare:
The bottom line is that when it comes to purchasing personal lines insurance, there isn’t a single “perfect” combination of factors that will meet everyone’s needs.
With this said, if you’re looking to obtain competitively-priced homeowners or renters insurance in a completely AI online environment, and from a company that issues their own policies, Lemonade is currently the only game in town.
Still, Sa El of Simply Insurance points out that when you purchase insurance online, it’s up to you to “self-educate how your coverage works,” since there’s no agent involved.
Along these same lines, agent Jenny Saint Preux from HSN Insurance Services recommends watching “YouTube videos on different coverage options that the company offers, so that you may understand them more clearly.”
“You still won’t capture the underwriting, automatic coverage changes, and coverage application piece,” she admits. “However, you’ll be much more informed.”
On the other hand, if this doesn’t appeal to you, you’re not internet savvy, have lots of questions, or are otherwise uncomfortable with the process, “reaching out to an agent instead of purchasing online might work best for you,” El says.
Should You Start a Lemonade Insurance Policy?
Shai Wininger and Daniel Schreiber founded New York-based Lemonade to fix a broken industry, while also emphasizing that insurance can work as a social good.
And with their overwhelmingly positive online policyholder feedback, unique and easy-to-use AI chatbot, ultra-low prices, and mission to make a positive social impact, it seems like they’re well on their way. As such, they look like a no-brainer if you're in the market for a renters or homeowners policy and live in one of the 21 states where they provide coverage.
Are you considering switching your homeowners or renters policy over to Lemonade? If so, just remember they don’t offer auto coverage—and that one of the most significant discounts provided by most insurance carriers is for having both home and auto with them.
As a result, you might notice a steep increase in your current auto premium.