In a Nutshell
- Free smart home security system from Notion
- Pays out on almost all claims
- Profits go to charity
- Only available (currently) in 24 states
- Fewer discount opportunities than other insurers
- No A.M. Best financial security rating
Lemonade at a Glance
Quote in: 1-2 minutes
24/7 help: Yes
Discounts available: Fire alarm, burglar alarm
Financial stability rating: A for Exceptional (Demotech)
Additional coverage options: Accidental loss, damage, or theft; enhanced jewelry coverage; no deductible
Any homeowner that has lots of expensive possessions or lives in an area with a high risk of break-ins should consider Lemonade. Thanks to its unique business model, Lemonade pays out quickly on virtually all legitimate claims. In addition, new customers get a Notion smart home security system valued at over $100 for free. If someone breaks into your property and steals your expensive valuables, you’ll be thankful you chose Lemonade.
What Coverage Includes
Lemonade processes claims in a unique way but offers a similar level of coverage as other home insurance companies. Lemonade offers full coverage for all 16 “named perils” (fire and lightning, vandalism, theft, etc.). Each June, Lemonade sends any leftover premiums to charities approved by its own customers as part of its Giveback initiative. Although the amount varies each year, Lemonade’s data scientists estimate that around 40% of premiums go to charity in any given year.
The basic Lemonade policy includes:
- Coverage for reconstruction costs for your home and other structures on your property.
- Coverage for personal property.
- Personal liability coverage (for when someone is injured in your home).
- Loss of use coverage, encompassing emergency services such as temporary housing, water or fire damage cleanup, or having a designated specialist come to your home.
- Zero Everything, available to home owners in selected locations. With this program, the policy holder receives claims payments with no deductible and no rate hikes, up to 2 claims per year. Zero Everything can only be activated once per policy. From the third claim onwards, a $250 deductible is automatically tied to the claim and the claims will be counted toward a possible rate hike.
The basic policy is fairly comprehensive and covers all furniture, personal electronics, and clothing. At an additional cost, policy holders may purchase extra coverage against accidental loss (which isn’t covered in the basic policy), damage, and theft, worldwide. Extra coverage covers items such as jewelry, fine art, cameras, bicycles, and musical instruments. Extra coverage only applies after items are submitted and approved by the Lemonade team. Lemonade also offers a no-deductible option.
Lemonade offers to discount your rate if you install or have previously installed fire protection or theft protection devices in your home. Aside from that, it uses the age of your building and the materials your home is made of to calculate your rate.
We tested the application process a few times and found that it could be completed in 1-2 minutes. Lemonade asks for the same sorts of details as other insurers, such as your name and contact details, the type of property, and a few finer details about things like square footage and fixtures.
Applications can be made online or using Lemonade’s mobile app. Homeowners insurance is currently offered in these states: New York, California, Illinois, New Jersey, Nevada, Georgia, Pennsylvania, Maryland, Arizona, Michigan, Connecticut, Indiana, Ohio, Wisconsin, Oregon, Texas, Tennessee, Virginia, Iowa, Colorado, and the District of Columbia.
How Safe is It?
All of Lemonade’s insurance policies are underwritten by Lemonade Insurance Company, which is headquartered in New York. Because Lemonade is a relative newcomer to home insurance, it doesn’t yet have a rating from A.M. Best, the best-known credit rating agency in the insurance industry. Lemonade has an A (Exceptional) rating from Demotech, which is similar to an A or A- rating from A.M. Best.
Claims & Customer Support
Lemonade’s claims service is probably its strongest feature. As mentioned, Lemonade has created a business model where it has no incentive to reject claims—meaning it’s more likely to pay out than other insurance companies. Lemonade has a full-featured mobile app for iOS and Android where users can apply for insurance, file claims, and track all claims and payments.
To file a claim, just open the Lemonade app and click the “Claim” button. Lemonade will ask you to record a short video during the claims process. According to Lemonade, it does this because “there’s no better way for us to understand your incident than by having you tell us in your own words.” Lemonade promises to use your video solely for the process of handling or reviewing your claim.
Again, it’s worth emphasizing that Lemonade approves more claims than most home insurance companies. What’s more, it’s committed to paying out instantly so that funds arrive in your bank account by the next business day.
The home insurance industry is ripe for innovation and few providers can claim to be more innovative than Lemonade. The problem with most insurers is that they happily collect premiums but do their utmost to avoid paying out on claims. With Lemonade, that problem disappears. By taking the profit incentive out of its own business, Lemonade has no reason to reject legitimate claims. The end result is that it pays out more often and more quickly than its competitors.