Lemonade Insurance Review: An Industry Newcomer Embracing Digital-first Affordable Coverage

GOBankingRates Score

4.5
Quick Take: Lemonade is a relatively new company that entered the insurance industry in 2015. It's become a favorite among millennials and Gen Z due to its digital-first approach and simplification of the insurance process. Although Lemonade hasn't been around as long as some other industry veterans, it has quickly built a strong brand and reputation. The company continues to gain traction, and at the end of 2021, 1.3 million people had insurance policies with Lemonade.
  • Cost
    5.0
  • Coverage Types
    5.0
  • Availability (States)
    3.5
  • Discounts Available
    4.5
How did we calculate this?

Pros

  • Affordability
  • Quick payout of claims
  • Easy to make changes and switch insurers
  • Donates to charitable organizations

Cons

  • Limited support
  • Products are not available in all states

Lemonade Overview

Lemonade operates a little differently than other insurers. Lemonade is a B-Corporation, or what is known as a public benefit company. This framework is based on five pillars:

  1. Governance
  2. Workers
  3. Environment
  4. Customers
  5. Community

Lemonade’s business model operates in a way that aims to balance profitability with charitable giving. It does this by using a flat fee structure to cover expenses, reinsurance, employee wages, claim payouts and profit from each policy. Then, the remaining amount of any unclaimed premiums is donated to a charity of its customers’ choosing.

Key Features

Here are some key features that Lemonade’s insurance plans offer.

Affordability

Lemonade currently offers renters, homeowners, condo, co-op, car, pet and life insurance. The following list details the minimum pricing for each option.

Types of Coverage Starting From
Renters $5 per month
Homeowners $25 per month
Co-op and Condo $25 per month
Auto $30 per month
Pet $10 per month
Term Life $9 per month

Lemonade frequently adds new insurance coverage options, and customers can track all of their policies in one place. However, it’s important to understand which policies are available in each state as Lemonade is yet to launch nationwide.

Availability

Lemonade Car is only available in Illinois and Tennessee. However, the company has recently taken ownership of the pay-per-mile insurer, Metromile, which is available in seven additional states. That means Lemonade may expand its auto insurance offering in the near future. 

As for Lemonade’s other insurance products, Lemonade offers renters, homeowners, co-op or condo, pet and life insurance. However, in certain regions, the offerings are currently limited. To see if Lemonade is available in your state of residency, check the Lemonade website.

Various Coverage Options

Lemonade initially just offered renters insurance, but it has since expanded its product offerings. Customers should be aware of the breakdown for each type of policy, including what is covered, what isn’t covered and what add-ons are available.

Renters Insurance

Renters insurance protects your items and provides financial compensation in cases where your home becomes uninhabitable or someone is injured on the property. The breakdown for Lemonade renters insurance is as follows:

What is Covered What isn’t Covered Available Add-ons
Personal property  Natural disasters  Valuable items 
Temporary living expenses  Car-related theft  Equipment breakdown coverage
Personal liability Undocumented items  Accidental damage
  Insect infestations Lost items coverage 
  Property damage  
  A roommate’s belongings  

Homeowners Insurance

There are a lot of steps to take when buying a house, and a primary residence is often the most valuable asset to an individual. So it’s crucial to protect the property’s value by having the right coverage in place. 

Dwelling coverage protects the policyholder from what is defined as “standard perils.” This includes fire, theft, vandalism, smoke, riots, damage from vehicles and more. Certain incidents are excluded or available as an add-on, such as earthquake insurance.

Additional structure coverage protects other elements connected with the property, such as fences or a detached garage. For example, coverage would be in place if a tree fell on your fence.

Personal liability protection covers policyholders if someone is injured on the property and the injured party files a claim or wants to take legal action. Medical expenses also provide coverage for the policyholder in the case of an injury on the property.

Here is a breakdown of what is and isn’t covered with Lemonade homeowners insurance: 

What is Covered What isn’t Covered Available Add-ons
Dwelling coverage Mold Valuable items
Additional structure coverage  Sewer backups  Equipment breakdown coverage
Living expenses  Insect infestations  Accidental damage
Theft  Pool accidents (dependent on state)  Lost items coverage
Personal liability protection  General wear and tear  Coverage for a significant other
Legal expenses Damage caused by construction work  
Medical expenses Injuries caused by dogs (dependent on breed)  
Personal property More than $200 of cash stolen  
  Nuclear hazards  

Co-Op or Condo

Similar to renters insurance, co-op coverage spans personal property, temporary living expenses, personal liability and medical payments to others injured on your property. Additionally, dwelling coverage protects an individual’s unit.

Term Life

Term life policies cover you for a certain period, for example, 10, 20 or 30 years. Generally, it is a more affordable form of life insurance, and it offers what’s known as a death benefit. This is a tax-free payout to beneficiaries or loved ones in the event of an untimely death.

In contrast to whole life policies — which are valid throughout a policyholder’s lifetime — there is no coverage once the defined term date is up for term life policies. Once the term finishes, the policy will expire, worthless, and a new policy will be required for continued coverage.

Pet Insurance

Lemonade offers a base pet insurance package and gives the option to add on any extras that may be required. The add-on coverage ranges from vet-visit fees to physical therapy and an end of life or remembrance add-on. The standard package covers the following:

  • Diagnostics
  • Injury from accidents
  • Cancer
  • Allergy medicine
  • Arthritis medication

Lemonade also offers the Puppy or Kitten Preventative Package, which covers the costs of microchipping and spaying or neutering. It’s important to note that Lemonade will not pay out for preexisting conditions or repeat incidents that cause sickness.

Auto Insurance

Lemonade Car is a customizable policy that allows customers to pick and choose what coverage suits them. All policies have liability coverage, which covers damage or injury caused to others where the policyholder is at fault, as well as physical damage coverage, which protects the policyholder’s vehicle. 

A number of add-ons are also available:

  • Collision coverage pays for repairs.
  • Comprehensive coverage pays for damage sustained from things out of the driver’s control, such as theft or fire.
  • Temporary transportation coverage pays for policyholders’ transport if the vehicle is undergoing repairs.
  • Windshield and glass coverage is for when your windows or mirrors get chipped or crack.
  • Uninsured driver coverage offers protection if an accident occurs with an uninsured or underinsured driver.
  • Personal injury protection pays the medical expenses of the driver and any passengers in the event of an accident.

Be aware that there are certain limitations. Damages caused by the following are not covered:

  • Unnamed cars or drivers on the policy
  • Damage as a result of racing
  • Nuclear waste-related damage
  • Intentional damage
  • Wear and tear
  • Freezing 
  • Rideshare drivers
  • Damage to modifications or custom parts
  • Stunt driving

Discounts

Lemonade offers a discount on car insurance only if a customer signs up before the policy start date, so preparing in advance can help save money on the premium. Note that this does not apply to the other products in Lemonade’s offerings. Other steps to reduce the overall premium include enabling location-based technology on your policy.

Maintaining low mileage and owning an electric vehicle can help avoid a hike in the cost of car insurance, too. Lemonade also offers savings of up to 10% on each policy if a customer decides to bundle up products.

How To Get Insurance Coverage With Lemonade

Users can download the Lemonade app via Google Play or the App Store. Alternatively, they can head to Lemonade’s website to calculate the premium.

Once on the app or the site, users need to:

  1. Create an account by signing up with an email address and creating a password.
  2. Choose an insurance product to purchase.
  3. Run through some standard questions so that Lemonade can determine the risk and premium.
  4. Pay using a bank-issued debit or credit card and choose monthly or annual installments.

From there, everything is organized to keep track of your coverage through the app. If you need to update any information, add coverage for specific items or adjust any sums insured, changes can be completed in a few simple steps. Once a customer signs up, insurance will annually renew unless instructed otherwise.

Lemonade vs. Competitors

Lemonade doesn’t have the same long-standing history as competitors such as State Farm, Allstate, Liberty Mutual and Geico. While that long-standing history is what helps build trust between insurers and customers, Lemonade performs well when it comes to pricing, coverage and customer satisfaction.

The app interface takes the hassle out of the insurance process and attempts to simplify a topic that often induces stress and difficulties for consumers. The charitable element of the business is also a great incentive for getting new people signed up with Lemonade. 

However, two limiting factors affect the company: customer support and nationwide availability. Lemonade isn’t available to everyone in the U.S., and some customers have reported frustration with the inability to get in touch with someone to resolve issues.

Using these advantages and disadvantages as methods of comparison to other well-known insurers, GOBankingRates has determined how Lemonade fares against contenders.

Lemonade vs. State Farm

Lemonade currently has a limited selection for insurance so it may not fit the needs of all consumers. Contrary to Lemonade, State Farm excels when it comes to options, with insurance for auto, home, renters, life, pets and more. 

State Farm offers several variations of life insurance policies, including term life, whole life and universal life, as well as a number of specific health insurance policies. It also serves farm owners, business owners and sole traders, not just general consumers. 

Lemonade vs. Allstate

Similarly, Allstate has a wider array of insurance products. However, Allstate has a more complex claims process than Lemonade. Certain claims will require contacting particular numbers or filling out claims forms online. Lemonade, on the other hand, can process claims within seconds or minutes if it isn’t too intricate. 

Lemonade vs. Liberty Mutual

Liberty Mutual, uniformly with Lemonade’s other competitors, is more widely available to U.S. citizens. Lemonade has little to offer on a nationwide basis compared to the larger corporations. This puts Lemonade at a disadvantage, simply because some consumers cannot get insurance with the company. 

Liberty Mutual has representatives who can be contacted by text, phone, email, social media, mail or through an online account. Lemonade offers chatbot support, and customers can also contact Lemonade via email, phone and SMS.

Lemonade vs. Geico

Geico has some of the most comprehensive insurance offerings. In particular, it is extremely competitive with car insurance in comparison to Lemonade. Geico gives discounts for the installation of precautionary measures such as air bags and anti-theft systems — up to 15% off for military personnel and up to 25% off for multivehicle policies. Geico also rewards accident-free drivers.

Lemonade, on the other hand, will give discounts to hybrid or electric vehicle owners and to those who maintain low mileage or enable location-based tracking.

Good To Know

The Lemonade app is free to download on Apple and Android devices, so customers can manage insurance policies from a PC, laptop, tablet or mobile device. It has one of the most sophisticated user interfaces on the market with easy-to-use functionality.

Final Take

Lemonade is great at explaining complex insurance terms and coverage in a straightforward and easy-to-understand manner for people who are not well versed in insurance. It’s a great option for someone looking to obtain insurance coverage quickly and efficiently at a relatively low price.

The claims process is extremely efficient with Lemonade. In fact, 30% of claims across its product offerings can be handled instantly. The customer support provided by Lemonade is primarily through its app, but the majority of customers are satisfied with this format.

Lemonade Insurance FAQ

Here are the answers to some commonly asked questions about Lemonade.
  • Why is Lemonade so cheap?
    • Lemonade is able to charge lower premiums in certain circumstances because of its digital-first approach. The AI capabilities help the business evaluate risks more efficiently and offset costs. Lemonade doesn't guarantee it will be the cheapest insurance option every time, but it tries to be.
  • Is Lemonade good at paying out claims?
    • Simple claims can be resolved with payouts received by the insured within minutes. However, it may take much longer if a claim is more complex.
  • Is it easy to move to Lemonade?
    • Once a new policy is set up with Lemonade, it will inform the previous insurer to cancel the old policy.
  • Does Lemonade have good customer service?
    • Lemonade has an excellent track record with customers. There have been over 68,000 reviews combined between Trustpilot, Google Play and the App Store. The platforms rate Lemonade 4.5 stars, 4.6 stars and 4.9 stars, respectively. Most customer requests, queries and issues are handled through Lemonade's AI bots, Maya and Jim. However, if an issue is more complex, Lemonade also offers phone and email support. Any policy changes can be managed directly from the app.

Information is accurate as of June 8, 2022.

This article was updated on June 8, 2022, to correct details on discounts, payment options, customer support and claims processing timelines.

Editorial Note: This content is not provided by Lemonade. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by Lemonade.

GOBankingRates maintains editorial independence. While we may receive compensation from actions taken after clicking on links within our content, no content has been supplied by any advertiser prior to publication. We always recommend reviewing the terms and conditions of any offer before signing up or applying.

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About the Author

David is a qualified financial advisor in the Republic of Ireland. He has a bachelor's degree in business and entrepreneurship, as well as over five years of investing experience.

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