Lemonade Insurance promises a more affordable way to insure your apartment or home. This newer company takes the mystery out of buying renters insurance.

Lemonade takes a small fee for underwriting. Excess premiums go to nonprofits you choose. It’s simple, affordable, and you just might make a difference in the world.

Home insurance companies get a bad rap — and, in part, their reputation may be well deserved. After all, only about 5% of homes have a claim each year, but everyone pays premiums and rates keep rising.

What is Lemonade insurance?  

• Lemonade was founded in 2015 as Lemonade Inc. Lemonade launched its insurance division in 2016. Founded as an alternative to traditional insurance, Lemonade brings a high-tech twist to protecting your home and belongings. You can think of Lemonade as a sort of crowdfunding — but for insurance.

• Lemonade provides insurance for homes. This includes coverage for renters, homeowners, condo owners, and co-op dwellers. While the company offers affordable home coverage, you won’t be able to bundle your policies. Lemonade doesn’t offer other insurance types, such as auto.

• Excess premiums benefit charity. Insurance is a game of estimates. When insurers estimate the cost of insurance on the high side, consumers often don’t benefit from the excess. Instead, Lemonade uses a different approach. Lemonade’s AI predicts insurance costs more accurately. Excess premiums go to a nonprofit you choose. Rather than building the wealth of a large company, your excess premiums can help build a better world.

Lemonade insurance pros and cons

Lemonade might not be the right fit for every renter or homeowner. Consider these pros and cons.

Pros

• Low cost: In our quotes, Lemonade’s rates compared well against other insurers.

• Fast claims: In many cases, you can settle a claim in minutes, or even seconds.

• Easy-to-understand policies: Lemonade uses plain English to explain coverage.

• Wide range of deductibles: Choose a deductible ranging from $250 up to $10,000.

Cons

• Not available everywhere: People in 26 states can buy coverage, but more states are coming soon.

• Online-focused help: You won’t be able to visit a local agent. Instead, Lemonade uses online help and support.

• No bundling options: Because Lemonade only offers home insurance, you can’t earn a multi-policy discount.

Lemonade insurance availability

Although growing, Lemonade isn’t available everywhere yet. So far, you can buy Coverage in 26 states as well as the District of Columbia. However, the company plans to expand to 22 more states soon.

State laws govern the insurance industry. It isn’t uncommon for insurers to offer coverage in only certain states, and then expand to more states over time.

You can buy Lemonade insurance in these states:

AZ, AR, CA, CO, CT, GA, IL, IN, IA, MD, MA, MI, MO, NV, NJ, NM, NY, OH, OK, OR, PA, RI, TN, TX, VA, WI, and DC

Expect Lemonade insurance soon in the following states:

AL, AK, DE, FL, HI, ID, KS, KY, LA, ME, MN, MT, NE, NH, NC, ND, SC, SD, UT, VT, WA, and WV

If Lemonade insurance doesn’t offer coverage in your state yet, just sign up to get notified when coverage becomes available.

Also, be aware that all products may not be available in all areas yet. For example, renters and condo insurance are available in Rhode Island, but not homeowners insurance.

Similarly, residents of Arkansas or New Mexico can buy renters insurance, but homeowners and condo insurance are coming soon.

How does Lemonade insurance work?

Lemonade insurance shares some similarities to traditional insurance but also has some key differences.

• Peer-to-peer insurance: Lemonade bills itself as a peer-to-peer (P2P) insurance company. But in practice, the company acts more like crowdfunding — with the excess going to charity. Your peers don’t pay your claims, so the P2P model differs from other P2P platforms. Instead, you (and your peers) pay premiums to Lemonade. Like other insurers, Lemonade pools premiums to pay claims. The company also uses reinsurers to help manage costs and to ensure there is always enough to pay claims.

• Maya AI: With Maya, Lemonade’s online AI system, you can get quotes fast. We were able to complete a quote in just a few minutes. At the end of the process, you’ll have the option to adjust your coverage. Your quote also adjusts in real time. If you get stuck, don’t worry. You can connect to a rep through chat.

• Mobile app: Lemonade offers an app for iOS as well as for Android. You’ll find all the features you’d expect. Get a quote, fine tune your coverage, or even place a claim. Maya walks you through the process, offering hints at each step to help you make sense of your options.

Lemonade renters insurance policy

Insurance rates vary based on several individual factors. We took Maya, Lemonade’s AI quoting system, for a spin and got a renters quote. Overall, policy price and options stacked up well against other insurers.

Renters insurance coverage options

With Lemonade, you can adjust your coverage amounts as needed. For example, personal property coverage amounts can range from $10,000 up to $250,000. The default on our quote was set to a sensible $50,000 for personal property.

A separate coverage for personal electronics allows you to focus your coverage where you need it most. After all, many household items probably aren’t worth much — but your laptop and phone might be expensive to replace.

You can add extra coverage if you have valuable jewelry or fine art. You can also insure other valuables, such as cameras, bikes, or musical instruments.

Lemonade also offers add-ons for water back-up or to insure a significant other. Coverage for spouses comes at no extra cost. 

What is covered for renters?

Covered risks parallel what you’ll find with most renters policies. Your Lemonade policy covers damage due to fire and smoke as well as damage caused by bad weather. However, flood coverage isn’t included.

You’ll also get coverage for crime and vandalism. With a renters policy, your policy focuses on your belongings because you don’t own the building. If your personal property is stolen or damaged due to a covered risk, your policy can help.

Renters also face personal liability risks. Coverage options start at $100,000 but you can choose up to $1 million in coverage. A separate option called medical payments to others provides no-fault payment for minor injuries to people outside your household.

Lastly, loss of use coverage can help pay temporary expenses if your home is unusable due to a covered claim. Lemonade’s base option protects you for up to $15,000.

Discounts

If your home features protective equipment such as fire alarms or burglar alarms, you may qualify for a discount.

Policy Cost

We got a quote for renting a 2,000 square foot home in NJ. Choosing the base options with Lemonade, our quote came in at about $18 per month. However, you might want to adjust the coverage amounts for your policy.

For example, you may want to change the insured amount for personal property or personal liability. The default options for both of these could be low for some households.

Lemonade homeowners insurance policy

Lemonade’s Maya AI system also offers an easy way to get quotes for homeowners insurance. We used a 2,000 square foot home in NJ as our example quote.

We chose a $300,000 coverage limit for the house itself. However, Maya will attempt to match your coverage if you have an existing policy.

Homeowners insurance coverage options

Extra options include water back-up or coverage for a significant other. You can also add coverage for earthquakes, but only in California or Arkansas.

If you have valuables, Lemonade lets you insure these items so you’re well-covered if you have a claim. From jewelry to bikes to musical instruments, Lemonade can help cover your loss. Your coverage also extends to a wider range of risks for some valuables.

Lemonade considers the build quality of your home when pricing out your quote. If your home has custom features, you have the option to adjust your policy to ensure you’re fully protected.

What is covered for homeowners?

Your Lemonade homeowners insurance policy covers the major risks you’d expect, such as fire and smoke damage. Your policy also protects your home against many weather risks, like wind, lightning, and hail.

Standard homeowners policies don’t cover flood damage, however. If you need flood coverage, you’ll have to buy a flood policy elsewhere.

Homeowners can choose liability limits of up to $1 million, which compares well with other insurers. You’ll also get coverage for medical payments to others with options of up to $5,000.

These policy choices can help protect you against many types of lawsuits or minor injuries at your home. If a covered claim puts you out of your home temporarily, your loss of use coverage can help cover the extra housing costs.

With options of up to $200,000, Lemonade offers better loss of use protection than many other insurers.

Discounts

Many adjustments to your rate happen during the quoting process. These include the distance from the fire department, your home’s age, and other factors. In a way, these act as hidden discounts if your home has less risk than others.

You’ll also see discounts based on construction materials or protection equipment. For example, expect to pay less if your home has wind, fire, or theft protection. Water leak detection may earn a discount as well.

Location matters. If your home is in a gated community, for instance, expect to pay a bit less for your policy. Theft coverage is part of your policy, so safer areas should see lower rates.

Policy Cost

Home insurance rates weigh many factors. But our quote came in at about $140 per month for a 2,000 square foot home in suburban NJ. This compares well against competitors.

To be fair, however, one thing missing is that we can’t bundle auto and home insurance to earn a discount.

Lemonade insurance reviews and ratings

• Customer service: Lemonade earns an average rating on Trustpilot from consumers in the tough-to-please insurance segment. However, the company’s BBB rating outshines others, with Lemonade scoring an “A-” rating.

• Financial strength: Lemonade’s financial strength rating by Demotech excels with an “A” (exceptional) rating. Lemonade is not yet rated by AM Best.

• Underwriting: Lemonade Insurance Agency, LLC acts as the underwriter for policies. However, policies are issued under Lemonade Insurance Company, a New York company. Lemonade also uses reinsurers. A reinsurer can help cover claims if claim volume outpaces collected premiums.

Bottom line

Lemonade offers a solid choice for renters and home insurance. Many policy options offered by the company outshine offerings from competitors. Rates were also affordable in our quotes.

With all financial products, it often pays to shop around and compare. If you’re ready to buy renters insurance, put Lemonade on your shopping list along with other companies you’re considering.

Related Articles

• Lemonade Insurance Review: Affordable Coverage for Renters and Homeowners
• 23 Homeowners Insurance Questions You Should Ask Your Insurer
• Universal Life Insurance: A Policy that Combines Life Insurance with a Cash Account
• What Does Renters Insurance Cover, and How to File a Claim in 6 Easy Steps

The post Lemonade Insurance Review: Affordable Coverage for Renters and Homeowners appeared first on Plain Finances.