Lemonade is a new face on the homeowners and renters insurance scene, but it’s already receiving tremendous feedback from consumers. Reinsured by huge names including Lloyd’s of London, Lemonade breaks the traditional insurance mold with low rates, a mutual insurance model, high-tech solutions, and transparency that is a welcome change from the norm.
Lemonade is stirring up a lot of commotion “reversing the traditional insurance model.” Its homeowners’ insurance model really does something revolutionary with its services. Shifting the focus from revenue to benefits, it’s a combination of innovative technology, flexible policies, and modern thinking. Not sure what that all means? Let me show you what Lemonade is all about.
How Does Lemonade Peer-To-Peer Insurance Work?
Lemonade is a peer-to-peer insurance provider. That means people pay their premiums into a communal pot, and claims are covered by the money that’s in the jar.
The peer-to-peer model has recently expanded to several areas throughout the industry, with companies like Prosper and LendingClub offering specialized social loans. This P2P model is certainly a refreshing twist to the gray and outdated insurance industry.
That’s already vastly different than the standard every-man-for-himself model, but Lemonade goes further. Traditionally, insurance companies tried to lure you to pay the highest premiums possible because that meant more money in their pockets. Then, they’d use red tape and hidden terms to deny your claims because the less money paid out in claims, the more revenue the company gets to keep.
The most amazing feature of Lemonade’s business model is this: After covering expenses, updating technology, and paying employees, Lemonade will donate leftover money to charity. This is a really unique, innovative way to make sure that you and your insurer are not on opposite ends of a battlefield.
If you have a claim, a traditional insurer is incentivized to fight you, because if it doesn’t pay that claim, it will pocket that money as profit. Lemonade won’t get that money in any case because it will be earmarked for charity. We’ll dig deeper into this Giveback Program later in the article.
What Lemonade covers?
Lemonade offers three types of insurance policies: condo, co-op, and homeowners. If you own a co-op or condo, your insurance needs are different from a homeowner’s. With homeowners insurance, the dwelling, as well as all your belongings, are covered in the event of a loss. It also covers damage to certain exterior structures like detached garages, pools, and fences.
For condo owners, Lemonade covers loss from the outermost wall of your unit inward. This includes any personal items you have in your unit. Co-op owners get coverage from the sheetrock walls of your unit inward.
Lemonade provides coverage for perils listed in its policy declarations. Those include fire, wind, tornado, theft, or vandalism. Earthquake insurance can be added in just a few extra minutes. Flood insurance has to be purchased under the National Flood Insurance Program.
How much does Lemonade cost?
Obviously, it’s impossible to predict how much each person will be charged for Lemonade insurance. Your premiums are going to depend on many unique factors, such as how much personal property you have and whether you choose any extra coverage items. That said, Lemonade insurance policies start at just five dollars a month—far lower than traditional insurance companies.
You can adjust the amount of coverage you want on the Lemonade app or site and immediately see your corrected quote. Higher payouts demand higher premiums. You can also increase the level of coverage you have on specific valuable items. Currently, those are jewelry, fine art, bikes, cameras, and musical instruments. Extra coverage for these items includes coverage for loss, accidental damage, or theft anywhere in the world.
Lemonade offers a number of impressive features, including:
Renters and condo and coop owners in California, Texas, Nevada, and Illinois can choose the Zero Everything policy. This means there’s zero deductible, so if any of your possessions are stolen or damaged you can get them all replaced through your Lemonade insurance without having to worry about whether or not it’s financially worth making a claim. The policy is also good for two claims per with no rate hikes.
Transparent extra coverage add-ons
Adding valuable items for extra coverage is easy, and Lemonade shows you how much extra you’ll pay in premiums for every extra $1,000 you want to insure.
You can purchase a policy also through our website. We currently offer renters, condo, and homeowners insurance in Arizona, California, Colorado, Connecticut, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia, Washington D.C., and Wisconsin; renters and condo insurance in Rhode Island; and renters insurance in Arkansas and New Mexico (homeowners and condo coming soon). Lemonade will be rolling out additional states in the coming year.
Lemonade insurance automatically covers all your family members at no extra charge, as well as your landlord if your tenant agreement requires you to add them. You can add your significant other for an extra cost when you take out the policy, but roommates will have to get their own insurance.
Lemonade’s coverage pays out the replacement value of all relevant items so that you can get your life back together quickly. It also covers 16 ‘perils’ that include fire and smoke damage, theft and vandalism, bad weather damage such as rain, hail, or snow, and water damage (but not floods). That’s still a lot more than most renters insurance covers.
Medical payments to others and liability insurance is included, while earthquake coverage is available as an add-on. If your dog bites someone, you’ll be covered for liability and medical payments as long as it doesn’t have a history of biting and isn’t a “vicious breed.”
If your possessions are in a self-storage locker outside of your building, they’re also covered for a value of $1,000 or 10 percent, whichever is greater.
Instant, digital settlement
Most property claims are settled almost instantly. You’ll just need to send a list of what has been lost along with a video explaining what happened.
Is Lemonade Worth the Cost?
Easily one of its most prominent features is the low-cost of having Lemonade insurance. When compared to the competition, Lemonade wins hands down in the rates department. No matter which policy and competitor I compared it to, Lemonade was at least $10 cheaper, and more often than not it was $200, $300 or even $400 less.
My experience using Lemonade
To give you a full and balanced Lemonade insurance review, I signed up for Lemonade’s renters insurance. You can register either through the Lemonade website or the app (available on both Android and iOS).
I used the Lemonade website, and the whole experience was smooth and easy. It took me just a minute or two to complete Lemonade’s initial questionnaire. Maya, Lemonade’s AI ‘insurance-bot,’ asked me for the address that I wanted to insure and whether I rent or own (I’m renting). I told her that I have no roommates and answered a few more questions about my security setup.
Lemonade homeowners insurance cost rundown
Lemonade Insurance will have different prices for different people living in different homes. Construction material may be a factor in your insurance premiums, as will the location in which you live, the size of your home, and the coverage limits you select for your property. Monthly premiums start at $25 for homeowners insurance. Increasing your coverage limits will increase your premium.
If you can afford the higher coverage limits, you should definitely purchase them. This will ensure that all of your physical property is covered in the event of a flood, fire or theft. (A side note: flood insurance is separate coverage provided by the National Flood Insurance Program. Ask about it if you live in a flood-prone area.) However, don’t purchase more coverage than you need or you’ll be throwing away your money on insurance that doesn’t have any benefit.
To determine how much coverage you need, there are some things to consider. One important consideration is how much property you own. To determine this number, do a physical inventory of your whole home. Make a list of everything you own, then find approximate retail values for them. Once you have a total of what everything in your home costs, you can then choose insurance coverage that will fit that limit. You may be surprised at how much everything in your home is worth!
One last thing to note: you may not have a lot of flexibility with your liability limits, but that’s okay. If anything is going to be high, you want it to be the coverage you need in case someone gets hurt at your home. If you have a dog or other pet, you may want to consider increasing your liability insurance in case of a bite.
The Bottom Line
With their generous giveback program and low premiums, Lemonade is a great choice for people looking for basic, easy homeowners and renter’s insurance policies. Lemonade Insurance reviews are positive and encouraging, and their mobile app has an extremely high rating. While they may not offer discounts for bundling services, the other benefits may outweigh that particular disadvantage for some people. Lemonade Insurance is your best bet for affordable premiums and fast, convenient service.