Lemonade Insurance Review: Pros and Cons

Lemonade offers homeowners and renters insurance at low premiums with instant claim handling. As the first P2P insurance, can they provide the coverage you need? Read on to find out.

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Lemonade Pros

• Instant Access With App: Their mobile app makes it easy to access your policy. You can handle all transactions digitally, including sign-up, bill pay and more.

• Claims Settled Quickly: Many of the claims filed with Lemonade are handled by Lemonade's AI, Maya. Even better, most of those are handled within seconds.

• Low Premiums: Basic renters insurance starts at $5 per month, while homeowners insurance starts at $25 per month.

• High Coverage Limits: Lemonade offers high limits with the option to add additional coverage. For example, personal liability coverage can extend up to $1 million.

• Discount Options: Policyholders who live close to a fire or police station, own a security system, or have good credit may be eligible for discounts.

Lemonade Cons

• New and Untested Model: It's unclear how Lemonade would handle high volumes of claims over the course of many years.

• Slow Human Claims Team: If your claim isn't automatically settled by AI, it'll go to Lemonade's human claims team, which may take several days.

• No Option to Bundle: Lemonade only offers renters, condo, co-op, and homeowners insurance. You won't be able to bundle it with other policies, like auto insurance, to save money.

• Limited Availability: Lemonade offers coverage in only 26 states and the District of Columbia. They plan to expand to more states.

  Coverage is currently available in Arizona, Arkansas, California, Colorado, Connecticut, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia, Washington D.C., and Wisconsin.

  Updates about coverage availability are made on Lemonade's Facebook and Twitter pages.

Read on to learn more about Lemonade Insurance. We will discuss:

• How Does Lemonade Work?
  
• Pricing
  
• Coverage and Features
  
• What Does Lemonade Not Cover
  
• How to Sign Up For Coverage
  
• How to File a Claim With Lemonade
  
• Giveback Program
  
• Competitors

How Does Lemonade Work?

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Lemonade is a homeowners and renters insurance company.Their peer-to-peer insurance platform means customers are put into groups that pool their premiums to cover claims.

Customers are put into these peer groups based on the charity they choose when they sign up. At the end of the year, any money left over in the group is donated through the Giveback program.

By keeping overhead expenses low and letting customers choose exactly the coverage they need, they keep their premiums low.

Lemonade can save you time, too. Rather than dealing with the red tape of a traditional insurance plan, Lemonade uses an online-only platform for faster service 24/7. Many claims and services are even handled instantly by their AI chatbot. More on this later.

Pricing

Lemonade's renters insurance begins at $5 per month, while their homeowners insurance begins at $25 per month.

Prices are based on how much personal property will be insured and how much your items are worth. Customers can also add coverage on individual items like:

• Jewelry
  
• Bikes
  
• Cameras
  
• Fine art
  
• Musical instruments

Lemonade's app and website make it easy to customize coverage and receive a quote. You can make changes to your coverage at any time or adjust your deductible, and your updated premium will be available immediately.

Your personal rate will also be influenced by factors like:

• Recent claims
  
• Credit history
  
• Property size, age, and quality of construction
  
• Potential threats to the property by severe weather damage or fires

You may receive discounts if you live near police or fire stations, or if you own protection equipment like fire and burglar alarms.

Coverage and Features

Lemonade covers your belongings whether they're kept at home, in a storage locker, or stashed in a hotel room. Their coverage options include:

• Reconstruction Costs
  If you damage your home, insurance will cover the cost of repairs.

• Personal Property Damage
  Lemonade covers the damage or destruction of many personal items.

• Personal Property Theft
  Customers will be reimbursed for personal property stolen, regardless of where it's located. You'll need to file a police report and submit the information with your claim.
  52% of Lemonade's claims are for theft or vandalism.

• Other Person Liability
  This includes medical expenses, legal fees or other costs that occur when someone else is hurt on your property and you are held responsible.

• Loss of Use
  This covers any living expenses or other costs incurred if you are forced to leave your home for covered reasons.

• Family & Familiars Coverage
  Lemonade covers all family members at no additional charge, as well as a landlord if needed. Family members include anyone living in your household that is related to you by marriage, blood, or adoption.

  For an additional charge, users can add a significant other to their plan, but roommates will need to get their own policy.

• Zero Everything
  Renters and condo or co-op owners in California, Illinois, Nevada, and Texas can opt for the Zero Everything plan. This lets you file a claim for stolen or damaged items with no deductible and no increase in pricing.
  The Zero Everything policy is good for two claims per year without a deductible or rate hikes. The third claim will have a $250 deductible and could increase your rates when you renew your policy.
  

• 16 Perils
  Lemonade fully pays out the replacement cost of items damaged due to the "16 Perils," including:
  
  • Theft
    
  • Vandalism
    
  • Fire Damage
    
  • Smoke Damage
    
  • Bad Weather Damage (Flood damage is separate)
  Medical payments to others and liability insurance are included in the 16 Perils promise. If necessary, Lemonade will hire a lawyer to defend you.Lemonade covers all 16 named perils on their website.
  

• Earthquake Insurance
  Only customers in Arkansas and California can add earthquake coverage, but the company plans to expand to other states.

• Dog Bites
  Lemonade's homeowners insurance provides coverage if your dog bites someone, as long as the dog doesn't have a history of biting and isn't considered a vicious breed.

What Does Lemonade Not Cover?

Under their standard homeowners and renters insurance policies, Lemonade doesn't offer coverage for:

• Power, water, or heat outages
  
• Damages and costs incurred due to pests, including mice and bedbugs
  
• Accidental loss or damage
  
• Damages and living expenses incurred due to floods or sinkholes
  
• Damages and living expenses incurred due to earthquakes
  
• Vehicle or auto damage
  
• Undocumented items
  
• Your roommate's belongings
  
• Physical damage to the building you live in (if renting)

How to Sign Up for Coverage

You can sign up for Lemonade coverage through their website or mobile app (available on Android and iOS). Lemonade's AI insurance bot, Maya, will guide you through the process.

1. Answer a series of questions.

2. Provide your age and email address. You'll then be asked to accept the Terms and Conditions.

3. Receive your quote. The website will roll out a quote in one minute. You can change or add additional coverage, and it will update in live time.

4. Approve and purchase the policy. Choose your start date and enter your credit card details.

5. Pick your cause. You can choose the charity you'd like to support through the Giveback Program.

How to File a Claim With Lemonade

Lemonade provides fast, digital claims settlement on their website and app. To start the process, customers submit documentation stating the damage or loss. They also submit a video explaining what happened.

Lemonade's AI runs through 18 anti-fraud algorithms to arrive at a decision. If your claim is approved, money will be transferred to your account in seconds so you can fix the damage or replace the item.

If the claim can't be automatically approved by AI, it'll be transferred to their human claims team for review.

Their median time for manually settling a claim is still relatively fast at 1 day, but it doesn't quite meet their "instant everything" promise.

Giveback Program

Lemonade is a B-corporation. The nonprofit B Lab issues this certification to companies that "balance performance and profit".

To achieve this balance, Lemonade takes a flat rate of 20% of your premium for overhead expenses. Another percentage goes to reinsurance coverage, and the rest goes to claims. Anything that's left at the end of their fiscal year goes to charity.

Lemonade claims that in 2018, they donated more than $162,000 across fifteen charities, like the American Red Cross, Teach for America, and the New York Prevention of Cruelty to Children.

Giveback is not always guaranteed. During years with unusually high claim volumes, they'll use that money to cover claims.

And if you cancel your policy, you also forfeit the chance of having your money go to charity.

Competitors

Lemonade competes with traditional companies like Allstate, Progressive, Geico, and Liberty Mutual.

Lemonade's peer-to-peer platform has some clear advantages.

• Low premiums (though not guaranteed cheaper)
  
• No hidden terms meant to help the company deny claims
  
• Profits are earmarked for charity

But purchasing traditional insurance also has benefits.

• Live customer support
  
• Established processes
  
• The ability to bundle policies, like auto and life, (with discounts)

Bottom Line

Lemonade's easy-to-use platform, affordable premiums, and innovative technology make it competitive against traditional insurance companies.

As with any insurance purchase, make sure you do your research. Compare prices and features before deciding the best company and policy for your needs.