Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Shuman Roy
Content Writer & Entrepreneur

UPDATED: Sep 29, 2021

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Like most other industries, the tech disruptors have their eyes on insurance too. One such newcomer in the space is “Lemonade Insurance Company,” which wants to make insurance more transparent, easier to use, and cheaper. They cater to the tech savvy user who wants to save on homeowners or renters insurance without an agent or other middle man. They also pride themselves on giving back to the community.

They lean on tech to meet these goals and seem to be squarely aimed at Millennials who have largely shunned big insurance. Lemonade appeals to many buyers who may not want an insurance policy with industry giants like State Farm or Allstate.

Let’s learn more about the Lemonade Insurance Company to see how they’re different, how they’re the same, and why they might be a consideration for your insurance needs.

What insurance product does Lemonade offer?

  • They don’t offer auto insurance, health, or term life at the moment. Lemonade also has not gotten into pet insurance yet
  • Currently, their focus is on homeowners, condo, and renters policies with room to expand
  • Company has been around since 2016 making them one of the newest names in insurance, but their customer base is growing quickly
  • They rely on AI to provide fast quotes and pay claims quickly

The company has been around since 2016. At the moment, Lemonade only offers three types of insurance, including renters, condo, and homeowners.

They do not offer auto insurance coverage, nor do they offer health, life, or pet insurance, though that could change in the future if their unique model proves successful.

Additionally, they only provide owner-occupied coverage. So if you happen to rent out a condo or a single-family home, you’ll be out of luck here. Lemonade’s automated system isn’t designed for investment properties, second homes, etc.

In other words, they are a highly-specialized insurer focused on one sliver of the overall insurance market. Their goal is to streamline the process, which ultimately means that if something doesn’t flow well on its own, it cannot go through the Lemonade system. For homeowners who just want a quick quote and pricing on a policy for their primary residence, though, it could be a serious time and hassle saver.

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Where is Lemonade insurance available?

Speaking of specialization, Lemonade is also only available in a handful of states at the moment, which vary based on coverage types.

They offer all three types of coverage (renters, condo, and homeowners insurance) in Arizona, California, Connecticut, Georgia, Illinois, Maryland, Michigan, Nevada, New Jersey, New York, Pennsylvania, and the District of Columbia.

They offer renters and condo insurance in the states of Rhode Island and Texas.

Lemonade only offers renters insurance in the states of Arkansas, Iowa, New Mexico, Ohio, and Oregon. They plan to roll out to additional states in the near future. Some reports suggest they may soon move into the auto insurance market in some states as well. Only time will tell for sure.

What’s so special about Lemonade insurance?

Lemonade Insurance’s main pull is their automated system that’s supposed to make the process easier for certain types of buyers. There’s one other thing that separates Lemonade from other insurers.

Instead of keeping all the profits, unused premium or other leftover funds go to charitable causes you pick. They are a Public Benefit Corporation and certified B-Corp, and 25% of their claims are paid out in just 3 seconds! Keep in mind these would be claims that can be estimated on a flat rate basis. If you have a serious claim or even a total loss, every insurance company has to send an adjuster to generate an estimate. That estimate is also subject to change as professionals dig into your car.

As noted, they are a tech-based insurance company that aims to keep things simple. You can get a quote in just a few minutes via their website or smartphone app.

You can file a claim simply by hitting the “Claim button” in the app. Assuming your claim is approved, the company will send money directly to your bank account minus any deductible.

They claim to pay out 25% of claims in just three seconds thanks to AI. Yes, 3 seconds. Otherwise, it’s handed off to a human to handle it.

Additionally, they are a Public Benefit Corporation and certified B-Corp, which means they were given a special certification as a for-profit company that meets “rigorous standards of social and environmental performance.”

This distinction is due to their Giveback policy, where they give left over money (after their cut) from the balance of premiums and claims to charitable causes.

This differs from other insurance companies that keep this difference as profit.

If you get insured by Lemonade, you are allowed to pick a cause to donate to. Once it is paid out, you get the opportunity to select a new charity, if you so desire.

Of course, the Giveback isn’t guaranteed if the company doesn’t have extra money once all claims are paid out. In lean years, this might mean no Giveback.

Also note that the Giveback isn’t tax deductible for customers, just for the company, we assume.

How can you get an insurance quote with Lemonade?

lemonade

I gave it a whirl for a condo policy and a homeowners policy in California and the process was indeed very quick. It probably took me three minutes (a little longer than the 90 seconds they claim) to get a quote.

They ask super basic questions like address, age of house, construction (doesn’t matter if you’re not sure), if you have a smoke alarm, security system, dog, etc.

From there, they’ll display a monthly quote once you provide you email address. Below that price, you’ll see the coverage options they picked out for you.

For the record, they provide replacement cost coverage as they aim to make you whole again in the event of a loss.

You can then fine-tune as you wish and up the coverage in certain areas if you feel you need more. You are also given the option to try to save money by answering additional questions.

I tried that too and added that my home had a fire extinguisher, which saved another buck or so per month. Nothing substantial, but you might be able to save a tad more.

There are also extra coverage options available, such as coverage for jewelry worth $1,500 or more, or better coverage that protects you against accidental loss, damage, and theft worldwide.

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Lemonade’s Zero Everything Plan

Zero Everything

The company also offers a special coverage option called “Zero Everything” in select states.

It features no deductible and no increase in premium when filing a claim.

Typically, you must pay say $500 or $1,000 to cover a claim before the insurance company will pay out funds for your loss.

This means a claim for less than those amounts wouldn’t make sense.

The other downside to filing an insurance claim is the typical increase in premium post-claim. That won’t happen either with the Zero Everything plan from Lemonade.

However, you only get two free claims per year. Then each new renewal year starts as a clean state. If you file a third claim in a single year, you could face a rate hike.

There’s also the cost associated with such a policy, which is baked into the premium upfront, regardless of whether you file a claim or not.

It’s similar to accident forgiveness offered by lots of car insurers these days.

How much Is Lemonade insurance?

  • They advertise rates as low as $5 per month for renters insurance
  • And $25 per month for homeowners insurance
  • Prices will vary based on attributes of the property and the insured
  • Along with any add-ons or increases in coverage needed

They advertise rates starting from $5 per month for renters insurance and $25 per month for homeowners insurance.

Once you put in your details you may find that your quote is similar or higher. I tested it and got a homeowners policy of around $85 per month, which works out to just over $1,000 annually.

This pricing will of course depend on the property in question, such as size and age, construction, proximity to a fire station, along with any add-ons you require.

I felt their pricing was decent, but not necessarily the lowest out there. They probably handily beat the big guys that advertise constantly on TV.

But you might be able to do better with the many lesser-known, but still A-rated insurers that offer homeowners and renters, especially if you bundle and save that way.

My assumption is they could probably do better if they offered auto as well, which could result in a lower combined price. Maybe that’s in the pipeline?

In the meantime, you can add Lemonade Insurance Co. to your list if you’re taking the time to comparison shop your insurance.

Pros of Lemonade Insurance

  • Very fast and easy to get a quote
  • Can do everything from a smartphone app on the go
  • Apparently also very quick and easy to file a claim
  • Transparent regarding pricing and coverage add-ons
  • Some of your premium cost may go to a charity of your choice
  • Pricing seems to be pretty competitive

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Cons of Lemonade Insurance

  • Rely heavily on tech so may not have personal touch
  • If you want better understanding of coverage options you may not get it
  • Only offer homeowners/renters insurance in select states
  • Don’t offer all lines of insurance
  • Claims process could be slow if not automatically approved by their AI engine
  • Might be able to get a lower price from a lesser-known company or via independent agent

(photo: Marco Verch)