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 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.
- 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.
- 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
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.
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.
|Company||Reviews.com Score||AM Best Financial Strength Rating||J.D. Power 2019 Score||NAIC Customer Complaints|
|Lemonade||**||N/A||N/A||More complaints than average|
|Progressive||3.75||A+||809/1000||Fewer complaints than average|
|State Farm||3.75||A++||831/1000||Fewer complaints than average|
|Allstate||4||A+||814/1000||Fewer complaints than average|
|Geico||2.75||A++||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
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 the company continues to expand across the U.S.
Lemonade home insurance 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 10 times as many data points as traditional insurance companies. Because this is all handled and processed using artificial intelligence, Lemonade can process applications and issue policies quickly.
Lemonade homeowners insurance protects properties 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.