Lemonade is an online insurance company based in New York City. It provides low-cost homeowners insurance (as well as renters, co-op and condo insurance). Although Lemonade is a new insurance company, it is reinsured by syndicates of Lloyd's of London, which give it a Financial Stability Rating of A- Exceptional. Lemonade is only available in New York, California, and Illinois.
Lemonade operates as a mutual insurance model with a twist. The underwriting engine is powered by AI and behavioral economics, and instead of returning dividends to shareholders they donate it to charity. The modern insurance model is based on an adversarial relationship where the interests of insurance company and clients are opposed. The less an insurance company pays out in claims, the
The modern insurance model is based on an adversarial relationship where the interests of insurance company and clients are opposed. The less an insurance company pays out in claims, the better off the shareholders will be. This creates an incentive to deny claims. In Lemonade’s peer-to-peer model (aka mutual insurance), the insurance company (i.e. Lemonade) charges a flat fee (20% of the premium) per customer. The rest of the money is used to pay clients’ claims and buy reinsurance from large insurance companies, such as Lloyd’s of London. Any money left over is distributed to charities selected by the clients.
What Are Lemonade Home Insurance’s Ratings?
Lemonade has received a Financial Stability Rating of A- exceptional, and they are reinsured by some of the industry's biggest names, such as Lloyd's of London.
How much does Lemonade’s home insurance cost?
The basic homeowners insurance costs $25 but this can change based on many factors, such as your neighborhood, claims history, distance to a fire hydrant, and risk of extreme weather among other variables.
What Coverage Does Lemonade Home Insurance Offer?
Lemonade offers homeowners, renters, co-op, and condo insurance.
Homeowners insurance policies cover reconstruction costs from damage caused by fire and smoke, bad weather and water damage (does not include flood insurance), crime and vandalism. It also protects from liability (such as getting sued because your dog bites a guest) and medical payments to others.
- Personal property (~$175K)
- Personal liability (~$100k)
- Loss of use (~$105k)
- Medical payments to others (~$1,000)
The coverage amounts represent the basic coverage as of September 2017. You can increase the coverage for a fee.
Belongings are covered even if they are stolen outside of your home. Lemonade offers replacement value on your things. That means you will receive the cash amount you would need to buy again the item you lost – or a similar one if no longer available. Check your policy for limits on the amount you can claim for your stuff and covered events. You can increase your coverage on expensive items, such as jewelry or works of art.
How Does Lemonade Compare with Other Home Insurance Companies?
- Low cost. Lemonade's standard homeoners insurance costs around $25 a month.
- Easy to set up
- Donates unused money to charity
- Reduces conflict of interest between insurance company and client
- Insurance company charges a flat fee (20%)
We don’t like
- Not available in all states
- You don’t get to deduct the donation to charity