Lemonade Insurance Review: Rock-Bottom Rates For Basic Coverage

Lemonade Insurance Review: Rock-Bottom Rates For Basic Coverage

Low rates combined with basic coverage features make this company a new entrant with a lot of potential.

Good for

  • Cheap home and renters insurance coverage
  • Someone looking for instant coverage
  • Those who appreciate having their insurance premiums donated to nonprofit organizations

Bad for

  • Limited to homeowners and renters insurance coverage

Editor's Rating

3.5/5.0

Lemonade offers some of the best-priced home and renters insurance policies, but in exchange for those lower rates, customers give up access to some extra features, like in-person customer support. Lemonade’s home and renters insurance policies are fairly standard, so they may not be the best choice if you're looking for an insurance company that offers a lot of specialized coverages. However, for anyone just looking for basic coverage at affordable rates, Lemonade is an excellent choice.

Lemonade Insurance: Excellent Rates For The Basics

Bottom Line: If you're looking for the lowest home or renters insurance rates and are OK with sacrificing endorsement options and policy add-ons, Lemonade is a great choice. Although the company has limited discounts, customers are unlikely to miss them due to Lemonade's extremely favorable rates.

Lemonade's strongest feature is its low rates. Furthermore, Lemonade’s mobile app is easy to use. As a result, prospective policyholders can receive quotes and sign up for coverage in under a minute. If you need to file a claim, you can do so through Lemonade’s mobile app. While customer support can be accessed by phone, most users’ needs can be handled through Lemonade’s mobile app, such as increasing coverage limits and adding coverage for a spouse or a partner.

Another perk from Lemonade is the Giveback program, which was launched in 2017 and allows customers to select nonprofit organizations that will receive donations from the insurer. Any money paid toward a premium but left unused is eligible to be donated to the nonprofit that you select when you sign up for a policy with Lemonade. In the first year of the program, Lemonade gave $53,174 to 14 charities, representing 10.2% of its revenue for the year.

If you are looking for great rates, Lemonade is an outstanding choice, but the company's biggest drawback is its limited coverage area. Currently, Lemonade's policies are only available in the following states:

  • Arizona
  • California
  • District of Columbia
  • Georgia
  • Illinois
  • Iowa
  • Maryland
  • Michigan
  • Nevada
  • New Jersey
  • New York
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Texas
  • Wisconsin

Lemonade Home Insurance Coverage

While Lemonade only offers one endorsement, the high coverage limits are unique. Furthermore, Lemonade, like other insurance companies, provides its customers the option to adjust their deductibles, subsequently affecting the cost of a home insurance policy. The higher the deductible that you select, the lower your home insurance rates will be.

Extra Coverage Endorsement: Valuable items, such as fine art and jewelry, are typically covered by standard home insurance policies, however, the items are only covered up to a certain limit. Lemonade's home insurance policies limit the amount that you can recover for valuable items to $1,000. If you have items that are worth more than $1,000, you should purchase the extra coverage endorsement, which substantially increases your coverage limit. For instance, Lemonade allows you to purchase jewelry insurance coverage with a limit of $50,000. The high limits that Lemonade makes available to its customers sets it apart from other insurance companies that offer the same form of coverage.

What's Covered by a Lemonade Policy?Details
Reconstruction costs for your homeProvides coverage for damage to your home if it's caused by a covered accident.
Personal propertyProvides coverage for your possessions for damage, destruction and theft anywhere in the world.
Personal liabilityPays when you're legally liable for another person's medical expenses or for legal fees.
Medical payments to othersCovers medical costs associated with injuries that occur to others on your property.
Loss of useReimburses you for living expenses if you're unable to stay in your home due to a covered loss.

Lemonade's Home Insurance Discounts

Lemonade lacks many discounts that are typical of home insurance companies. The discount for protection equipment that Lemonade does offer is also available through most other insurance companies.

Protection Equipment Discount: Receive a home insurance discount if you have protection equipment set up, such as fire and burglar alarms. Even if you don't have any of these systems, Lemonade will reduce your homeowners insurance rate based on your proximity to key city services like fire and police stations.

A notable discount that Lemonade policyholders miss out on is a bundle discount. With other insurers, customers would typically save around 15% on total insurance costs when they purchase homeowners and auto insurance through the same company. Lemonade doesn't offer auto insurance coverage, meaning that customers can't take advantage of this common discount. While the bundle discount is insignificant if you're simply searching for home insurance, it can be quite valuable for someone shopping for homeowners and auto insurance.

Lemonade Home Insurance Quotes Comparison

Lemonade consistently offered the best home insurance rates across all of the home insurance policy limits that we studied, significantly outperforming its peers' rates. For a home insurance policy with a $400,000 limit, Lemonade offered an annual rate that was lower than its competitors' average by $344, which results in savings of $29 per month.

How Do Lemonade's Home Insurance Quotes Compare to Other Insurers?

Lemonade Renters Insurance Coverage

Most renters insurance companies provide similar coverage, however, Lemonade sets itself apart by offering its Zero Everything feature and high-limit valuables coverage. While insurance companies typically allow you to adjust your deductible, it's not common for one to allow you to select a $0 deductible.

Extra Coverage: A standard renters insurance policy typically only provides coverage for items up to a certain limit. That means expensive items, like bicycles and cameras, might not be covered for what they are worth. The extra coverage policy add-on allows customers to provide additional protection for items that are worth more than $1,000. Lemonade allows you to add thousands more to your policy limits for valuable items while just having to pay a few dollars more per month.

Zero Everything: Lemonade's Zero Everything feature serves as a policy modification rather than an add-on, allowing you the option to select a $0 deductible in exchange for a slightly more expensive renters insurance policy. The option is great for people who own a ton of small electronics. For instance, if you own a $300 pair of headphones, the Zero Everything feature allows you to recover the entire amount from Lemonade in the event of a claim. If you had a $100 deductible, you'd only be paid for up to $200 of the total cost of the headphones. An added benefit of Zero Everything is that Lemonade guarantees not to increase your rates, as long as you only make two claims or less per year.

What's Covered by a Lemonade Policy?Details
Personal propertyProvides coverage for the total value of the stuff that you own up to your coverage limit.
Personal liabilityIf someone gets hurt on your property, then your personal liability coverage protects you against related medical and legal expenses.
Medical payments to othersProvides medical expense coverage for guests who are injured on your property.
Loss of useReimburses you for living expenses in the event that you're unable to stay in your home due to a covered loss.

Lemonade's Renters Insurance Discounts

While Lemonade might reduce your renters insurance rate based on your perceived risk profile, there is only one discount that you can actively take advantage of.

Protection Equipment: Lemonade awards a discount to customers who have safety equipment installed in their home, such as a sprinkler system or a smoke alarm. Most other insurance companies provide the same discount and more.

Other insurance companies, like Allstate, typically offer its customers additional discounts, such as one for setting up automatic bill payment and going a certain period of time without filing a claim.

Lemonade Renters Insurance Quotes Comparison

While Lemonade provides limited discounts, it makes up for it by offering extremely low renters insurance rates when compared to the rates offered by its competitors. For a renters insurance policy with a $10,000 personal property coverage limit, Lemonade offered rates that were half or more than half of what its competitors offered. Based on our study, you're unlikely to find better renters insurance rates through another company, regardless of the policy limits that you're searching for.

How Do Lemonade's Renters Insurance Quotes Compare to Other Insurers?

Lemonade Insurance Reviews, Complaints and Financial Strength Ratings

Renters and homeowners shouldn't worry about whether Lemonade, as a new entrant in the industry, can afford to pay insurance claims, as the company is in great financial health. While Lemonade Insurance isn't rated by A.M. Best Rating Services, a popular insurance rating agency, it does have sound financial metrics, namely a high liquidity ratio and a favorable balance sheet. A higher liquidity ratio indicates the better a company is equipped to pay customer claims. Lemonade currently has a liquidity ratio of 13, which is within healthy operating range. Furthermore, the company has more than $25 million in assets compared to just more than $8 million in liabilities.

The company has also been well-reviewed by its current customers. In fact, there have been no official complaints filed with the National Association of Insurance Commissioners (NAIC). While the company was only founded in 2015, it's rare for an insurance company not to carry any official complaints. Furthermore, Lemonade's claims process is favorably reviewed by current customers—likely due to the speed at which claims are handled. A quarter of its claims are paid in less than three seconds, and the ones that aren't paid quickly are sent to Lemonade's staff to review.

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