Lemonade Insurance 2019: Home & Renters

Lemonade offers both homeowners and renter’s insurance on a peer-to-peer platform that relies on technology to underwrite insurance policies and make claims decisioning.

Lemonade uses artificial intelligence (AI) to make the fastest claims decisions in the world, topping out at 3 seconds. Some claims are handed instantly, , and the rest are handled by a team of professionals dedicated to resolving your claims. Lemonade even has an almost 5-star rating on its mobile app.

Despite its user-friendly website and mobile app, incredibly easy signup process, and competitive pricing, there are some drawbacks to Lemonade. First, they only offer homeowners and renter’s insurance, so you cannot get any kind of bundling discount. Lemonade is currently available in about half of the states right now, though they have active plans to expand into additional states.

How does Lemonade Insurance work?

• Lemonade offers low-cost homeowners and renter’s insurance made easy online.
• Limited to a few select states, though high ratings in those states.
• Automatic claims processing on up to 30% of its claims.
• Peer-to-peer platform that gives back to charity when certain financial requirements are met.
• Lemonade Insurance reviews are mostly positive.

Lemonade Insurance Overview

The Claim

The innovative new company, Lemonade Insurance, promises to change the game with their new homeowners and renter’s insurance policies. They claim that they offer “instant everything”, taking only 90 seconds to get insured and 3 minutes to get paid for a claim. They also claim to have some of the lowest starting prices for homeowners and renter’s insurance, at $25 per month and $5 per month, respectively.

Is Lemonade’s claim true?

Sort of. Lemonade Insurance falls a little short on some of its claims, and they’ll even admit it, but overall they have a very high customer satisfaction rate, which lends a lot of credibility to the company. While it does take only a few seconds to get insured, they only instantly approve 30% of their claims. That means over half of their claims require a manual override to get approved. This falls short of “instant everything” by a long shot. Their starting prices are some of the lowest in the industry. Homeowners insurance starts at only $25 per month, and renter’s insurance starts at just $5 per month. They’ll even help you switch to Lemonade by helping you cancel your old insurance.

The Simple Dollar’s deep dive

Lemonade makes their insurance policy accessible to everyone on their website. Some of their coverage and perks include:

• Flexible insurance plans: you can adjust your coverage with Lemonade so that you are only getting the coverage you need, or so that you’re getting the coverage you want. Adjustments can be made to your liability insurance as well as your property coverage. If you have more valuable items in your home, you want higher property coverage limits. They even offer separate coverage for electronic devices like your laptop or smartphone, so your property coverage isn’t depleted with those items.
• Lowest monthly prices available: renter’s insurance starts at $5 per month, but it goes up quickly from there depending on where you live and what coverage limits you select; homeowners insurance starts at $25 per month and goes up from there depending on what coverage limits are selected.
• Quick insurance policy: boasting an approval time of 90 seconds, Lemonade offers a fast signup application so you can get started with your insurance policy in a matter of minutes. This will require some information from you, like personal information and vehicle information, so try to have that handy when you get ready to sign up for their insurance.
• Easy mobile app: with all of the modern conveniences, Lemonade offers a mobile app that is very user-friendly. You can sign up for insurance through their app, file claims through the app, and even upload photos of your accident through the app. It’s very comprehensive, designed with you in mind.
• Instant claims approval: though only 30% of claims are approved instantly, most claims are paid quickly. Any claim that isn’t automatically approved by their AI technology will be approved manually by their professional team. Claims can still be paid in as little as three minutes.
• Peer-to-peer platform: Lemonade has a unique platform in that they operate differently from other insurance agencies. Rather than keeping all of the profits for themselves, Lemonade keeps a flat fee of 20% to cover expenses, reinsures the rest of the money, and whatever is left between reinsurance and expenses is given back to charity. Lemonade doesn’t keep profits for themselves, so their priorities are a little different than most insurance companies.
• Giveback program: Lemonade lets its insured customers choose charities that the company will donate its profits to. You choose that charity when you sign up with Lemonade, and every year they send the unclaimed money to the charity of your choice. They limit the donations to 40% of their income, but that’s a pretty big donation either way it goes.

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 $5 for renter’s insurance and $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.

Alternatives to Lemonade

When you get a quote from Lemonade, we recommend shopping around and getting quotes from 2-3 additional places. To compare prices accurately, make sure to choose the same coverage limits for property and liability that you choose with Lemonade. However, once you have a base premium and know which option is best for you, then you can choose a company that has additional coverage in line with what you need. Compare prices carefully and read the fine print. You want to make sure what natural disasters and events are covered under your policy.

If you would rather not purchase homeowners or renter’s insurance, you’ll need to take some steps to protect yourself and your property. The first thing we recommend is to start an emergency fund or savings account. You’ll want to put money up every month, rather than paying monthly premiums, so that when something does happen, you can cover the expenses. This is especially important if you have a pool or a dog, which are common liabilities that can cost a lot of money to a homeowner or renter.

If you do choose to invest in homeowners or renter’s insurance, you want to be sure your coverage actually covers everything you need it to cover. For example, if you have a dog that bites someone, that can cost upwards of $75,000 per incident. The standard liability amount is $100,000, which would cut it close with a dog bite. If you have multiple dogs, or dogs that interact with people frequently, it may be wise to increase your liability coverage in case something does happen with one of them.

Take some time to do some research and work out the numbers for yourself. Keep in mind that if you have a mortgage or rent an apartment, you may be required to have insurance, especially for liabilities. A homeowners insurance policy can save you money when it comes to things like a leaking water heater or busted pipe, and renter’s insurance can protect your property if something happens to your apartment. And if you choose not to go with insurance, make sure to put enough money aside to handle any property damage you incur.

The competition

There are a lot of options on the market for homeowners and renter’s insurance. Lemonade Insurance is a great choice for people who don’t need to bundle their policies and only need basic coverage. But what if you want additional coverage for your business, or you want to protect your hedges? If you want a different kind of company, try out one of these competitors:

• Allstate: One thing Allstate has everyone beat in is their optional coverage and discounts. With Allstate, you can get optional coverage for water backups, yard and garden property (including landscaping), and business property, among other things. Discounts include a welcome discount, a discount for theft or fire protection and discounts for safety features on your home, like hail-resistant roofs and storm shutters.
• American Family: American Family offers fairly basic coverage for homeowners insurance, but they do offer some additional optional coverage options that may be more beneficial to some homeowners, like credit theft protection and matching siding coverage. They also offer additional coverage options for their renter’s insurance policies.
• Assurant: If you just need renter’s insurance, and don’t need a policy for a home or a car, Assurant is a great choice with competitive prices. They only offer renter’s insurance, so they are specialists in that area. This is a great choice for apartment dwellers, and you can get connected to Assurant through other insurance providers or through their website directly.
• Nationwide: Nationwide is a great choice for people who want to bundle their homeowners/renter’s insurance with their auto policies, pet insurance, and personal umbrella policies. Nationwide offers plenty of additional coverage options, like flood insurance and replacement cost coverage. If you want a full-service insurance provider, Nationwide may be the right fit.
• State Farm: State Farm is one of the leading providers of insurance in the United States, and they have ratings to prove it. What they don’t have is a comprehensive overview of their additional coverage options and discounts. You’ll need to speak to an agent for the best quotes with State Farm.

What Others Are Saying

• Forbes touts the benefits of automation and technology in their review of Lemonade’s insurance policies. They also highlight the high marks Lemonade received from customer reviews. Forbes says of the agency, “Automation also allows Lemonade to offer policies at a very low price: renters insurance starting at $5 a month and homeowners starting at $25. On the review site Clearsurance, Lemonade ranks second in customer satisfaction for renters insurance, behind only USAA.”
• Inc.com highlights Lemonade’s technology and company culture, but points out some of the complications with an automated claims process. “This approach works only in the simplest situations,” says David Paige, an attorney who has spent 28 years representing and advising insurance companies. “I think the only people who will respond favorably will be the people who have a very uncomplicated property claims with relatively low dollar amounts.”

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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.

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