Lemonade Insurance Company is leading the charge to transform the very business model of insurance.
What does that mean? It means that Lemonade takes a flat fee out of your monthly payments, pays reinsurance (and some unavoidable expenses), and uses the rest for paying out claims.
Traditional insurance companies make money by keeping the money they don’t pay out in claims, which means that whenever they do pay out a claim, they lose profit. According to Lemonade, this is why getting your claims paid fast and in full is sometimes so hard with traditional insurance companies.
Lemonade, on the other hand, aims to provide a fast, affordable, and hassle-free insurance experience by paying as many claims as possible, as quickly as possible. They even return unclaimed remainders in their annual ‘Giveback’ feature.
This means that Lemonade donates any left over money to causes that their policyholders care about.
To give you a better understanding of everything Lemonade has to as well as their different plans and associated pricing.
Lemonade uses a combination of intelligent bots and passionate humans to handle the following:
- They’ll get you insured in as quickly as 90 seconds
- They’ll assist with mortgage stuff
- They’ll notify your lender and handle escrow payments
- They’ll help rebuild your home in case of theft, fire, lightning, and other bad stuff
- They’ll pay out your claims in as quickly as 3 minutes
- They’ll even help you switch insurers if you’re currently with a different insurance company
They accomplish all of this by taking a big chunk of your monthly premium dollars and putting it into “reinsurance”, which they describe as “insurance for insurance companies from the most sound and reputable reinsurers on the planet”.
This allows them to always be able to pay out your claims, no matter what (even if they have a bad year, for example).
As the cherry on top, every year, any money left over after paying out all claims is donated to causes their policyholders care about through their ‘Giveback’ feature.
The exact services offered to you by Lemonade change depending on the information you provide in a short questionnaire when you first sign up.
Note: Before you begin this process, make sure you live in one of Lemonade’s covered areas:
* Arizona, Arkansas, California, Colorado, Connecticut, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia, Washington D.C. or Wisconsin.*
A sample of the questions they’ll ask you:
- Your name.
- The address you want coverage for.
- Whether you rent or own the place.
- Whether you’re closing on a new home or just thinking of switching insurers
- The property type (Single Family Home, Duplex, or Triplex).
- Whether or not it’s your primary residence.
- A description of your home’s exterior & interior (helps them estimate your reconstruction costs in case of damage).
- If you have a fire alarm or burglar alarm.
- If you plan to get a mortgage or loan on the property.
- If you filed home or property claims in the past 5 years (this is very important as inaccurate information may void your policy when filing a claim).
While answering these questions will allow Lemonade to provide you with a tailored monthly coverage plan, you can also choose to answer extra questions to see if you qualify for any discounts.
These additional questions require you to fill in the following:
- Whether you’ve undergone any renovations recently.
- What your home is made of (wood frame or masonry).
- If you have any safety devices installed – wind protection, theft protection, fire protection, etc.).
- Which specific devices you have installed.
- Whether or not you live in a gated community.
It’s worth filling out these questions as they can result in you paying less per month.
Types of Plans/Pricing
Lemonade’s pricing changes based on the needs of the person.
However, at the very lowest, Lemonade offers Renters Insurance starting as low as $5 per month and Homeowners Insurance starting as low as $25 per month.
To give you a more detailed idea of their pricing structure, below is the monthly price provided for a basic two-story townhouse in the suburbs of Ohio.
Price: $153.92 per month (before any possible discounts).
Reconstruction Costs: $525,000
What their experts think it would cost to reconstruct your home if it was destroyed. This doesn’t include belongings, which are covered below.
Personal Property: $262,500
The total value of the stuff you own, such as electronics, clothing, furniture, etc.
Portable Electronics: $1,500
Items like your phones, tablets, laptops and other portable electronics (headphones too!) require coverage separate from the rest of your stuff. This limit is the max they’ll pay in case of theft or covered damages to your electronics.
Personal Liability: $100,000
If someone gets hurt on your property – or if you’re responsible for damage to someone else’s stuff – and legal action is taken against you, this is the max amount they’ll pay to cover damages you’re legally required to pay for.
Loss of Use: $157,500
If your place is unlivable, they’ll put you up in a nice hotel or similar rental home. They’ll also include any additional living expenses to get you back on your feet. This is the max that they’ll pay in such an event.
Medical Payments to Others: $1,000
They’ll cover medical expenses up to this amount if a guest or neighbor is injured on your property.
Extra Coverage Options
For additional fees, you can add any of these extra coverage options:
- Jewelry: $1,000 (extra $.50 per month)
- Fine Art: $5,000 (extra $0.67 per month)
- Bikes: $1,000 (extra $1.42 per month)
- Cameras: $1,000 (extra $0.75 per month)
- Musical Instruments: $1,000 (extra $0.09 per month)
You can add additional options to your policy (for free, in some cases).
Add your mortgagee to your policy, and they’ll send them your proof of insurance.
Free Spouse (Free)
Your spouse is automatically covered by this policy. You can easily add their name if you wish.
Significant Other ($1.67 per month)
Living with your significant other? Easily add them to your policy
Water Back-Up (starts from $9.00 per month)
Covers damage caused by water coming out of your drain or sewer
Extended Reconstruction Cost ($4.09 per month)
Additional coverage for cases where the cost of rebuilding your home ends up higher than expected
Choose Your Deductible
You can choose from $250 to $10,000 to be deducted from any claim payment you may receive.
- Fire and Smoke: A faulty Christmas light or your attempt at deep-frying can cause some smoke and fire damage. They cover you for both.
- Bad Weather: Wind, lightning, and hail are scary. You’re covered for all of them. Flood insurance isn’t part of the basic policy.
- Crime and Vandalism: Your home is full of stuff: furniture, clothing, appliances. They cover you if any of it is stolen or damaged.
- Medical Payments to Others: Your date cuts a finger while chopping veggies for dinner at your place and needs stitches, or the babysitter sprains an ankle running down the stairs to answer the door. Don’t worry. These medical expenses are covered.
- Liability: A person slips and falls at your party breaking a leg. Your friendly dog Fido bites a guest. Stuff happens and you get sued. Not only do they hire a lawyer to defend you, but they also cover the costs to get you out of this jam.
- Water Damage: Your pipes may be feeling a chill, or your neighbor’s bathtub is leaking through your ceiling. Aka, if there’s sudden or accidental water damage, you’re covered.
What’s Not Covered
- Earthquake (Optional): Earthquake coverage is not included in our base policy. You can request it as an Add-on to your policy (currently available only in California and Arkansas).
- High-Risk Dog Attacks: If your dog bites someone you’re covered as long as it’s not considered a high-risk breed, or has a history of attacks.
- Flood: They do not cover structural or personal property damage caused by floods.
With the money you pay to Lemonade each and every month, Lemonade simply aims to accomplish the following two jobs: to ensure they can always pay claims and to “Giveback” money that isn’t needed for claims
Lemonade’s entire business model rides on these two objectives, placing you in the hands of people whose sole focus is to get your claims paid out as quickly as possible.
If you’re tired of the traditional home insurance company or are new to home insurance altogether, signing up to use Lemonade right now is the smartest move you can make.