A relative newcomer to the insurance space, Lemonade has become a strong contender in the insurance market due to its affordable rates and easy-to-use mobile app. Its unique approach to insurance through an all-digital platform can be a draw to those who don’t prefer the agency experience when purchasing their policy. Whether you are searching for home, renters, condo, pet, life or now, auto insurance, Lemonade offers coverage in most states that you can tailor to fit your unique needs.
- Date established: April 2015
- Insurance products offered: Renters, homeowners, auto, life and pet
- AM Best financial strength rating: Not rated
- NAIC complaint index: 1.85 (above the national baseline)
- Availability: Varies by product
|Easy to use mobile app for quick quotes and digital policy management||Some policy types are only available in certain states|
|Claims are filed through the app and, if approved, are paid immediately||A focus on all-digital format means no in-person customer service|
|Lemonade’s Giveback program donates unused premium to charities that customers choose||Some insurance offerings are not rated by J.D. Power or financial agencies like AM Best, S&P Global or Moody’s|
What is Lemonade insurance?
Lemonade is known for affordable coverage, with renters insurance policies starting as low as $5 a month and homeowners insurance policies starting at $25 per month. Their aim to provide low-cost coverage has carried into other insurance products like pet, life and most recently auto insurance, though personal rates will vary depending on a variety of personal factors.
Lemonade stands out among other competitors through its high-tech business model that uses a mobile app and artificial intelligence to help you get a quote, service your policy, make payments and file claims. Unlike traditional insurance companies that can take months to pay a claim, Lemonade can pay in as little as three minutes. Additionally, as a Certified B Corporation, Lemonade is a great choice for new customers to consider when looking to save some cash while still being socially and environmentally responsible.
How does Lemonade work?
When someone signs up for a Lemonade insurance policy, they select a nonprofit organization to receive their unclaimed premiums. The premiums they pay go into a pool with others who selected that same nonprofit. Lemonade uses money from that pool to pay claims for policyholders who suffer covered losses. Lemonade also takes a flat fee off each premium to cover salaries, business costs and technology updates. If the cost of claims exceeds the premiums paid by policyholders, reinsurance is used to cover those claims so unexpected fees can be avoided.
Since there is no way to predict the exact number and cost of claims in a given year, policyholders may pay more than what is needed to cover the claims. Unlike many insurance companies who take that leftover money as profits, Lemonade donates that money to charities and causes chosen by its customers through its Giveback program, which donates unclaimed money to that cause each year. In 2020, Lemonade gave over one million dollars to nonprofits.
Lemonade coverage types
Although Lemonade originally started with a single insurance offering, it has since expanded to multiple insurance products ranging from home and auto to life and pets.
Lemonade announced in November 2021 that it now officially offers auto insurance. Currently, its auto insurance policies are only available in Illinois, but the company plans to expand coverage to more states. Lemonade car insurance includes standard coverage types such as liability, collision coverage and comprehensive coverage. Policies also include:
- Emergency crash assistance – If you have been in an accident, the Lemonade app can automatically detect it and dispatch emergency services.
- Roadside assistance – If you need a tow or your vehicle needs a jump, Lemonade will cover the expenses.
- Glass damage coverage – If the glass in your vehicle, such as windshield or sunroof, is damaged, Lemonade will cover the repairs.
Lemonade stands out from other insurance companies due to its use of telematics. By collecting data relating to drivers’ mileage and driving habits through their mobile app and vehicles, Lemonade strives for fair and personalized rates that start as low as $30 per month. Though this is lower than the average cost of car insurance, which is $139.50 per month, individual rates will vary depending on a variety of factors. Other features of Lemonade car insurance include discounts for low-mileage and safe drivers, and special rates and coverages for EV and hybrid cars.
Additionally, Lemonade continues its mission to create a positive social impact. Through its Giveback program, Lemonade promises to plant trees to help offset its customers’ CO2 emissions.
As a homeowner, having a homeowners insurance policy protects what is likely your largest investment. Lemonade’s homeowners insurance includes standard protections, like covering repairs against covered perils and liability coverage. Standard home insurance coverage with Lemonade includes:
- Dwelling coverage: If your home is damaged by a covered loss, Lemonade’s home insurance will pay for repairs or rebuilding costs up to your policy limit.
- Other structures coverage: Detached structures, like sheds, garages and fences are typically covered for damage up to your limit.
- Personal property coverage: Your belongings, like furniture, clothing and some electronics, are covered under this section of your policy.
- Personal liability coverage: This coverage protects your financial assets if you are found negligent for someone’s injuries or damage to someone’s property, including the cost of a legal defense for lawsuits that allege damage from a covered occurrence.
- Loss of use coverage: If your home is unlivable due to a covered peril, Lemonade can help pay for expenses like a hotel or rental home or any other expense that represents a necessary living expense cost so you can maintain your normal standard of living.
- Medical payments: If someone is injured on your property, regardless of fault, medical payments may help pay for their bills.
Lemonade’s home insurance reviews are positive and its unique claims process can be completed in minutes over the app without ever speaking to a person. Lemonade’s app-based homeowners insurance is perfect for people who want basic home coverage. The carrier’s policies start at $25 per month, which is competitive compared to the average cost of homeowners insurance of $109 per month for $250,000 in dwelling coverage.
When shopping for home insurance, you may want to compare Lemonade’s offerings and rates to the best homeowners insurance companies of 2022.
If you rent, Lemonade’s renters insurance can provide financial protection for your items starting at $5 per month. The average cost of renters insurance about $15 per month, but your rates may vary depending on your coverage needs. Standard renters insurance policies cover the cost of stolen or damaged items in a variety of situations, including:
Renters can also add extra coverage for high-value items like fine jewelry, electronics, bikes, musical instruments and more. Some extra coverage items might require a value assessment or other proof of purchase. These items can be added to most insurance policies for an additional cost directly from the Lemonade app. Accidental loss or damage can also be covered, which is something not typically covered under a base policy.
Renters insurance, like home insurance, also typically includes liability coverage, and medical payments coverage may be an option.
Condo owners need a different kind of coverage than homeowners. Lemonade’s condo insurance (called an HO-6 policy) includes walls-in dwelling coverage, personal property, loss of use, personal liability, and medical payments to others.
Unlike many insurers, Lemonade offers condo insurance and co-op insurance as separate products. Their condo insurance works well for people who want complete “walls-in” coverage at a lower price than many other insurers. “Walls-in” coverage means that everything within the walls of the condo is insured in case of a qualifying event, including the walls themselves.
Pet health insurance
Lemonade’s pet health policy will insure any furry friends for as little as $10 per month. If the animal gets sick or is in a covered accident, the pet health insurance policy will cover the cost of diagnostics, treatments and medication, potentially saving thousands in medical bills.
The policy can be upgraded by adding the wellness package. This will cover annual checkups, heartworm tests, vaccines and bloodwork. It also provides access to a pet health expert for questions after hours.
Lemonade offers term life insurance policies for as little as $9 per month. No medical exams are required and coverage can be purchased in just five minutes. Lemonade sells policies with term lengths from ten to 30 years with a death benefit of up to $1.5 million.
Where is Lemonade insurance available?
Lemonade insurance is available in about half of the U.S, with more widespread coverage for pet and life insurance. Because its auto insurance is a brand new offering, auto policies are currently only available in one state. Keep in mind that while the online-based company provides stellar service, it does not offer any brick-and-mortar locations for in-person customer service.
Currently, Lemonade sells its various insurance products in these states:
|State||Auto insurance||Homeowners insurance||Renters insurance||Condo insurance||Pet health insurance||Term life insurance|
|District of Columbia||✔||✔||✔||✔||✔|
Lemonade insurance reviews
Lemonade’s homeowners insurance is not rated by J.D. Power or financial agencies like AM Best, S&P Global or Moody’s. The company’s auto insurance has also not been rated by J.D. Power, as it is a brand new offering. However, Lemonade ranked number one for renters insurance providers in the 2021 J.D. Power U.S. Home Insurance Study, emphasizing the milestone of an insurtech brand ranking so highly against traditional insurance companies. Demotech also gave Lemonade an A (Exceptional) rating for financial stability.
Lemonade’s digital insurance approach
Where Lemonade may be able to set itself from traditional insurance companies is with the digital experience for each user. Starting with the website, potential and existing customers can browse through the various products and watch videos with more detailed information. Getting a quote online is a relatively quick process — as quick as 90 seconds according to the Lemonade site — but naturally, you must answer several questions to receive the quote.
The highly-rated mobile app is where Lemonade begins to separate itself from other insurance carriers. All changes to your existing policy, including adding or removing coverage selections, submitting claims or even cancelling your policy, can take place in the app. Most insurance carriers stop short of allowing policyholders to make changes to coverage via an app, but Lemonade makes digital policy management exceedingly easy.
Frequently asked questions
What information is needed to get a quote from Lemonade?
Lemonade insurance applicants are asked to fill in their name and address, along with other relevant details for the insurance policy they’d like to buy. For property insurance, this could include questions like the type of residence a person lives in and whether it is owned or rented. For auto insurance, the carrier may ask for more details about your vehicle and other drivers in your household.
The whole experience takes about three minutes, depending on how the questions are answered.
How do I file a claim with Lemonade?
The Lemonade app makes filing a claim as easy as pressing a button. An artificial intelligence expert asks for some details; then the insured person will be asked to record a short video to explain exactly what happened (the video is completely confidential). Lemonade’s AI then reviews the claim and pays in seconds if the claim is approved. If the AI software is not able to approve the claim, it turns the claim over to Lemonade’s team of humans to handle as soon as possible.
How is Lemonade different from more traditional insurance companies?
Lemonade is disrupting the insurance industry in a few ways. The company’s use of AI is unprecedented and allows Lemonade to quote your policy, put your coverage in place and pay your claims much faster than most insurance companies. One of Lemonade’s unique features is its business model. Traditional insurance companies make their profit with the amount of money left over after paying claims and covering expenses. Lemonade profits from what it calls a “flat fee,” then takes any unused premium and donates it to a charity or organization of your choice.