Lemonade Homeowners Insurance Review
Lemonade is a relatively new player in the homeowners insurance market, but its focus on technology-based account management and incorporating AI into the claims process is particularly popular with young adults between the ages of 25 and 34.
The company’s policies include fairly standard coverages and exclusions, although a few unique features, such as the Zero Everything deductible, support the company’s mission of reinventing the insurance industry.
Lemonade’s claims manifesto is to change the traditional insurance business model by taking a flat fee for its account management services and freely return the rest to policyholders when claims arise. Unfortunately, to make this a viable business model, Lemonade is more risk-averse than many other more financially stable insurers. Where other home insurance companies might charge a higher premium for risky properties or customers with higher-than-average claims histories, Lemonade denies coverage outright. While this company isn’t right for everyone, younger homeowners with good credit might appreciate the self-service features and fast claims processing provided with this policy.
The Homeowners Insurance Factors We Analyzed
Lemonade boasts renters insurance as low as $5/month and homeowners insurance as low as $25/month, but these advertised prices don’t include any specifics regarding coverage levels. The company promises lower rates compared to other insurance companies because it’s structured differently.
Instead of making a profit by minimizing claims losses, Lemonade takes a flat fee for handling the administrative side of managing policies and returns the rest to policy owners in the form of claims and donations to philanthropic causes (which it refers to as the “Lemonade Giveback”).
However, many of the traditional factors affecting the cost of homeowners policies still apply. Age, location, size, and construction quality of a home all factor into the cost of your insurance, and recent claims history or poor credit can also significantly affect your policy cost or make you ineligible entirely for coverage through Lemonade.
Of the 68 complaints against Lemonade listed on the Better Business Bureau (BBB) website, 51 were related to problems with the company’s product or service. Many customers report failure to pay claims as promised or unauthorized charges as the chief complaint, while others reported excessive difficulty in contacting a live person to resolve their issues. On the NAIC, Lemonade has a 7.66 complaint index rating, which is 7x higher than the industry average 1.0 rating.
While Lemonade boasts its creative use of technology and artificial intelligence as a tool to maximize efficiency, sometimes a company that relies too heavily on digital communications can be frustrating for customers who want traditional live customer service. If you’re looking for an efficient signup process, Lemonade’s online quote process and simple mobile app make signup and account management easy to do on your own.
In addition to the traditional coverage for home repairs, liability coverage, and personal property damages, Lemonade policies also cover theft of personal property anywhere in the world. For example, if your laptop is stolen in an airport miles away from home, your homeowners policy can cover a replacement.
Lemonade also offers a unique “Zero Everything” policy that allows customers to erase claims from their records. The feature also comes with zero deductible and no rate hikes for up to two claims per year.
Deals, Discounts, and add-ons
Due to its unique organizational structure, Lemonade doesn’t offer promotional discounts or special deals. Instead, the company offers regular low prices and returning premiums to customers whenever possible in the form of no-hassle claims service.
Lemonade Overview: Financial Strength, Availability, and History
Since Lemonade has only been in business for a little over three years, many of the major ratings companies have not yet provided a rating. However, a smaller ratings company that focuses specifically on insurance companies, Demotech, Inc., gives Lemonade an A-Exceptional rating for financial stability.
Lemonade lists several positive reviews on its own website, but more unbiased sources aren’t quite as favorable. BBB gives Lemonade an “A-” rating, but shows 68 complaints against the insurer in the last three years. NAIC also shows higher than average complaints. Popular rating site YouGov reports that Lemonade doesn’t even break the top 52 most popular insurance companies, which additionally brings into question the brand’s satisfaction among its customers.
- In business since: 2016
- S&P Financial Strength Rating: N/A
- Moody’s Financial Strength Rating: N/A
- AM Best Financial Strength Rating: N/A
- States served: 23
*All information accurate as of May 11, 2020.
The Bottom Line
Lemonade promises transparency and honesty in dealing with customer issues and claims, but the company’s high complaint record and lack of independent ratings leave some unanswered questions regarding its long-term viability as a reputable insurer.
Its creative use of technology does show promising results by way of speedy claims handling, but its only other unique product feature is the Zero Everything deductible. For customers who value plain-language policies and self-management features, the straightforward home insurance coverage at Lemonade may be a great fit.
Lemonade Homeowners Insurance FAQ
Lemonade primarily offers renters and homeowners insurance, with condo and co-op coverage offered in select areas. Homeowners and renters can also bundle coverage with additional personal property coverage, helping reduce overall insurance costs while maximizing coverage for unexpected events.
To make sure you’re properly covered, you should estimate replacement costs for your home, any accessory structures or outbuildings on your property, and all personal property including valuables.
For valuable items especially, it’s important to have an estimated value and receipts if possible, since the replacement value of some items, such as jewelry or antiques, may be limited under a traditional policy and may require additional coverage to be fully insured.
Lemonade homeowners insurance policies are currently available in 23 states: Arizona, California, Colorado, Connecticut, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin. Homeowners can also get coverage in Washington, D.C., and coverage in additional states will be coming soon.
Lemonade uses a process called precision underwriting to underwrite its policies and process claims. This process uses artificial intelligence to gather much more data on Lemonade’s customers and evaluate that data across 10x as many data points as traditional insurance companies. Because this is all handled and processed using AI, Lemonade can process applications and issue policies quickly.
Lemonade insurance protects homeowners for standard damage due to storms or other perils, such as fire or break-ins. Any personal property damaged during a covered event is also protected, and all personal property is covered against theft anywhere in the world. Several other costs, such as medical expenses due to an accident that occurs on your property and extra living expenses, if you’re displaced, are also covered.