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Lemonade Homeowners Insurance Review

A new player in the insurance game promises to revolutionize the industry through AI ​
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Lemonade is a relatively new player in the homeowner’s insurance market focused on technology-based account management. The company incorporates artificial intelligence into claims processes, making it a popular choice for young adults between 25 and 34 years old. Its fast claims payments earned Lemonade a spot in our list of best homeowners insurance companies in the U.S.

Lemonade’s claims to change the traditional insurance business model by taking a flat fee for its services and donating the surplus from policies that didn’t submit claims to causes its policyholders care about. Unfortunately, to make this a viable business model, Lemonade is more risk-averse than many other traditional insurers. While this company isn’t right for everyone, we encourage you to check our Lemonade homeowners insurance review to decide if it will fulfill your needs. 

Lemonade Overview

In business since:
2016
J.D. Power Score: J.D. Power scores are based on surveys for customer satisfaction and product quality.
N/A
AM Best Financial Strength Rating: AM Best rates insurance providers creditworthiness. Ratings are based on the provider’s ability to follow through with a payout when a consumer files a claim.
N/A
States served:
24 states

Lemonade is part of a group of new digital insurance companies that leverage technology to improve processes and customer experience. Since Lemonade homeowners insurance has only been in business for four years, many of the major rating companies have not yet published scores on the company. However, a smaller rating company that focuses specifically on insurance companies, Demotech, Inc., gives Lemonade an A-Exceptional rating for financial stability. 

The Better Business Bureau rates Lemonade with a “B+”, but shows an overall average customer rating of 4.5 stars. Popular rating site YouGov reports that Lemonade doesn’t even break the top 52 most popular insurance companies, which brings into question the brand’s satisfaction among its customers but could also be related to being a fairly new company.

PROS

  • Fast claims processing: The company uses artificial intelligence and technology-based account management, providing a fast payout on claims.
  • Transparent policy handling: Lemonade shows how much customers would pay for extras and charges only a flat fee for their services.

CONS

  • Difficulty accessing live customer support: While they do offer a phone number and email for customer support, getting a hold of live customer service is harder with Lemonade.
  • Policy approvals not guaranteed: Lemonade has a lower tolerance for risk so if you have a low credit score and recent insurance claims it will probably reject you altogether.
  • Scarce ratings available: Since Lemonade is still relatively new, the company does not have enough third party information to score their ratings.

Lemonade Homeowners Insurance Highlights

Pricing
Coverage
Customer Experience
Deals, Discounts, and Add-ons

Lemonade homeowners insurance starts as low as $25/month, but these advertised prices don’t include any specifics regarding coverage levels or add-ons. 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. It returns the  money not used to pay claims  to policyholders in the form of donations to philanthropic causes.

The factors that usually affect the cost of homeowners policies still apply, like age, location, size, and construction quality of the property. Recent claims history or poor credit can also affect your policy cost or make you ineligible entirely for coverage through Lemonade’s home insurance.

In addition to the traditional coverage for home repairs, liability coverage, and personal property damages, Lemonade home insurance 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.

We wrote an article about how Lemonade insurance works where you can learn about the company’s unique approach to insurance.

 

Of the 85 negative Lemonade homeowners insurance reviews listed on the Better Business Bureau (BBB) website, 63 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 7.69 complaint index rating, which is 7 times higher than the industry average of 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.

Due to its unique organizational structure, Lemonade doesn’t offer promotional discounts or special deals. Instead, the company offers regular low prices and returns premiums to customers whenever possible in the form of no-hassle claims service.

As for deals, homeowners insurers can bundle additional personal property coverage to pay for the flat service fee at once, reducing overall insurance costs.

Methodology

We evaluated the company based on their customer rating and experience, financial stability, and coverage to determine Reviews.com score and create our Lemonade Homeowners Insurance Review. To compare this company with home insurance companies across the board, we then compared each Reviews.com score based on the following:

  • Customer Ratings — Customer ratings are an indication of satisfaction with the process of filing a claim. We measured this using J.D. Power Homeowners Satisfaction ratings.
  • Coverage — As there isn’t one company to fit everyone’s needs, we evaluated companies by the amount of coverage options and add-ons available. 
  • Confidence — It is extremely important for insurance companies to fulfill customers’ claims. Companies with sound financial strength will not have issues paying out claims, regardless of the amount. However, companies with weak financial strength might not be able to pay out claims. We measured this using AM Best’s ratings, which specializes in assessing the financial strength of insurance companies.
  • Customer Experience — The number of complaints a company receives is an indicator of the overall customer experience as it expresses dissatisfaction. We have based this measure on the NAIC National Complaint Index.

The Competition 

CompanyReviews.com ScoreAM Best Financial Strength RatingJ.D. Power 2019 ScoreNAIC Customer Complaints
Lemonade**N/A N/A More complaints than average
Progressive3.75A+809/1000Fewer complaints than average
State Farm 3.75A++831/1000Fewer complaints than average
Allstate4A+814/1000Fewer complaints than average
Geico2.75A++N/A More complaints than average

*All information accurate as of 09/10/2020.

**New providers may not have enough third party information to calculate a score.

Lemonade vs. State Farm

Lemonade and State Farm are both on our list of best homeowners insurance companies in the United States. While Lemonade stood out for fast claim payments, State Farm was highlighted for offering the best web experience among competitors. In this case, we were not only evaluating the technology but also the ease of use that each platform offered. 

As for customer satisfaction, State Farm fares better with fewer complaints than average. There’s also a big gap in availability, as Lemonade homeowners insurance only serves 24 states, while State Farm offers their policies all across the U.S.

Still, where it’s available, Lemonade’s premium will be more affordable than State Farm’s, and the transparent pricing structure is another big advantage.

Lemonade vs. Geico

To compare Lemonade with Geico, we evaluated discounts, customer complaints, and the digital experience that both companies offer. Both companies lack a wide variety of discounts and deals for their customers and have a higher complaint index.

Even if Lemonade focuses on a more high tech technology experience for its users, Geico also does a great job of having an impressive digital platform. The only noticeable difference is that Geico has more convenient live access than Lemonade.

Another noteworthy difference is that Geico’s main business is auto insurance, and partners with other providers to offer home and business policies. On the other hand, Lemonade only has homeowners, renters and pet insurance, which limits your opportunities to bundle policies for savings or convenience. 

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 ratings leave some unanswered questions regarding its long-term viability as a reputable insurer. But 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.

Younger homeowners with good credit might appreciate the self-service features and fast claims processing provided with this policy. Overall, customers who value plain-language policies and self-management features, the straightforward home insurance coverage of Lemonade homeowners insurance could be a great fit. 

Lemonade Home Insurance FAQ 

About the Authors

Nina Rodríguez-Quirós

Nina Rodríguez-Quirós Feature Writer

Nina Rodríguez-Quirós is a feature writer for Reviews.com. Over the last year, she has covered insurance providers, claims handling, coverage and more. She has been featured in Allconnect.com and holds a Master’s Degree in Theory and Research of Communications from the University of Puerto Rico. Her favorite review is Millennials and Auto Insurance.

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