Lemonade Renters Insurance Overview (2022)
For as long as I’ve written this column, I’ve been a big advocate of renters insurance. Unfortunately, despite my best efforts, it seems the majority of apartment dwellers and the like still don’t carry policies to protect their belongings. Luckily, Lemonade is changing that by flipping the script on the insurance model and making it easier to get a policy.
Let’s take a look at what Lemonade is, how their policies work, and how you can apply for coverage.
How Lemonade Renters Insurance Works and What Makes Them Different
Lemonade uses technology to make insurance easier (and faster) than you may think of it today. They also offer diverse products including renters, homeowners, car, pet, and term life insurance. The company has a unique business model, with social good built into its core, so they’re quick to point out the inherent conflict of interest that exists in the insurance industry. The way traditional insurance companies profit is by collecting your premiums and hopefully not having to pay out any claims. Obviously this isn’t a simple problem to fix, but Lemonade does have a few ideas.
First of all, instead of holding onto unclaimed funds as profit, Lemonade instead takes a flat fee from premiums paid, uses the rest of the money to pay out claims, and donates any leftover funds to charity via their Giveback program.
In 2017 that leftover cash amounted to $53,174 going to charity while that figure rose to $162,135 in 2018. Amazingly, in 2021,$2,303,381 went to more than 65 non-profits thanks to the program. Additionally, Lemonade is a registered Public Benefit Corporation and a Certified B-Corp.
Although Lemonade once described its business model as peer to peer insurance, it seems they’ve phased out that phrasing. While you can still hear it mentioned in the 2016 “Science Behind Lemonade” video linked on their homepage, it doesn’t show up in many other places. However, in their FAQ, they do still reference peer groups in terms of their Giveback program.
Lemonade insurance policies: what’s covered and what isn’t
As we’ll discuss later, Lemonade does a commendable job of disclosing what its policies cover.
Losses due to the following are covered under Lemonade’s renters insurance policies:
- Fire and smoke
- Wind, lightning, and hail
- Crime and vandalism
- Water/burst pipe
It also covers medical payments to others as well as liability.
However, losses due to the following are not covered:
- Earthquakes (although additional coverage is available in California and Arkansas)
- Dog bites from “high-risk breeds”
Additionally, Lemonade notes that their policies do not cover items you lose nor does it apply to the belongings of your roommates — although you can include your spouse in your policy for free or add a “significant other” for an additional fee.
It should also be noted that Lemonade offers replacement cost coverage as opposed to actual cash value. This means that your payout will be equal to the current as-new market value of the items you’re claiming. For example, if you file a claim for an iPhone X, your payment will allow you to purchase a new one — but keep in mind that, if you paid $1,000 for the phone originally but it now sells for $900, your payout will only be for $900 (minus your deductible).
Like any insurance product, your monthly premium with Lemonade will depend on a number of factors, including your location, the amount of coverage you need, and more. However the company notes that renters insurance policies start as low as $5 a month. Meanwhile the company also offers homeowners insurance, with policies starting at $25 a month.
Switching to Lemonade
If you’re already insured and want to switch to Lemonade, the company says they’ll take care of the hassle for you. In their FAQ they write, “If you’re a renter, we’ll simply ask for your current policy number and insurer, and email your provider notifying them of your change in policy. If you’re a homeowner, we’ll notify your lender and handle your escrow payments (if relevant) to switch you over seamlessly to Lemonade.”
Applying for Coverage on Lemonade
Where Lemonade offers coverage
Before we dive into Lemonade’s application process, I should note that their renters insurance coverage is not yet available in all states. However, the company is making its way across the country and has its sights set on being nationwide. If you learn that Lemonade is not yet available in your state, you can enter your e-mail address to get updates from the company.
As of June 2022, the list of states where Lemonade renters insurance is available is: Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, 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, and Wisconsin.
The application process
When I initially wrote this article, Lemonade had yet to launch in Missouri. Luckily, that’s no longer the case — so I was able to go through the application process for myself. What I found was a super simple process including an easily customizable quote.
To obtain a quote on Lemonade, all I needed to do was answer a few basic questions such as where I lived, if I had any roommates, if I had any expensive electronics, etc. Lemonade then used this data to provide me with a basic monthly quote. However, what’s nice is that they clearly label each element of your proposed policy and allow you to make changes. Plus, almost immediately after you edit an element of your policy–like adding more coverage for your personal property– your quote will update to reflect the new price — it’s pretty nifty.
For what it’s worth, Lemonde ended up recommending me a plan that cost $18.92 a month (or $215 for a year if paid upfront). This rose to $22 a month if I lowered the deductible from $1,000 to $250. Of course, there were many other options to customize my policy, but that was the starting point.
There are five main Coverage Amounts you can adjust when applying on Lemonade:
- Personal Property
- Portable Electronics
- Personal Liability
- Loss of Use
- Medical Payments to Others
On top of that, you can purchase additional riders for things like:
- Fine art
- Musical instruments.
Perhaps the most important option you can select when setting up your policy is your deductible. As a reminder, this is the amount you’ll need to pay out of pocket before your coverage will kick in. So, if you make a claim for a covered loss on a $1,000 laptop and have a $500 deductible, your payout will be $500. For the policy I was looking at, Lemonade allowed me to select a deductible as low as $250 and as high as $2,500. Something to note is that lowering the deductible from the highest to the lowest level only increased the premium by a few dollars a month. Therefore you’ll want to carefully consider which option is right for you.
As I mentioned earlier, Lemonade allows you to add a spouse to your policy for free. Meanwhile, if you wish to include a significant other’s belongings in your policy, your premium will likely increase slightly. On a separate note, you can also add a landlord, property manager, or other “interested party” to your policy for free.
Understanding your policy
Continuing the application process, before you actually purchase your policy, Lemonade does a great job of laying out exactly what’s included and what is not. They also provide definitions and examples for each coverage option so you can better understand them. Moreover, the site has an extensive FAQ section where you can get more insight if you have any issues. I was also impressed by how they plainly explain basics like deductibles, replacement cost, and other insurance terms that not everyone might be as familiar with.
That said, it’s important to remember that while renters insurance can help cover a wide range of losses, it won’t cover flooding from the outside. That requires a separate flood insurance policy.
Activating your policy
Once you’re ready to buy, you can click the button under “Activate Your Insurance” to make it official. All you’ll need to do is select what day you’d like your policy to take effect and enter a credit or debit card number for payment. Note that I didn’t actually complete this step but I would presume that doing so would complete your purchase.
Other Lemonade Insurance Types
Over the past few years, Lemonade has expanded beyond renters insurance and now offers a number of policy options. Let’s take a look at a few others the company currently offers.
The first new vertical after renters and homeowners insurance that Lemonade added was pet insurance. Offered for dogs or cats, there are a number of plans users can choose from that fit their pet’s needs. Regardless of the plan selected, customers can save up to 10% on their policy by bundling it with another Lemonade product.
As someone considering getting a pet, I did try obtaining a quote for our potential dog. What I found was the standard coverage includes things like diagnostics, procedures, and medications for accidents and illnesses. Then, policyholders can choose to add additional coverage for things like vet visits, physical therapy, and preventative care. Specifically for that last one, there are puppy and kitten plans with varying allowances (for example, the puppy plan includes spaying or neutering). Finally, to further customize your plan, you can select the percentage of your vet bills Lemonade will pay (co-insurance), your annual limit, and your annual deductible.
Currently (as of June 2022) Lemonade pet insurance is available in: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, and Wisconsin
Considering that Lemonade already covered renters, it should come as no surprise that they now offer homeowners insurance as well. According to their site, these policies start at $25 a month and “covers your home and property for damages caused by things like wildfires, extreme weather, crime, and vandalism.” Notably, should your home become unlivable due to a qualifying event, this policy will also cover the costs of alternate living arrangements.
As of June 2022, Lemonade Homeowners insurance is available to those in:
Arizona, California, Colorado, Connecticut, District of Columbia, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin. Lemonade Condo Insurance is currently available in: Arizona, California, Colorado, Connecticut, District of Columbia, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Rhode Island, Virginia, Washington, and Wisconsin.
Lemonade declares this “the best thing to ever happen to car insurance.” Looking at their site, some things that stood out are the fact that EVs and hybrid cars receive a discount, Lemonade will plant trees on your behalf to help to offset your carbon footprint, and that policies apparently begin at $30 a month. Sadly, it seems this particular policy is not yet in Missouri (as I was informed when I tried to get a quote). In fact, as of June 2022, it’s only available in Illinois, Ohio and Tennessee. But, it’s something I’ll be keeping an eye on in the future.
Term life insurance
Finally, we come to the oh-so-happy topic of term life insurance. For those unfamiliar, term life insurance is a life insurance policy where you select the death benefit and how long the policy will be active for. Then, should you die during that time, your beneficiaries will receive the death benefit. If you don’t die, then the policy expires and that’s that.
Lemonade states that their term life offering starts at $9 a month and customers can purchase up to $1.5 million in coverage. Additionally, policies can be purchased completely online with no medical exams. That said, you will need to answer a series of questions about your medical history and a bit about your family’s medical history. There are also a few questions about plans and activities, such as whether you will be traveling internationally soon, whether you plan to skydive, pilot a plane, scuba, go rock climbing, or drive a racecar in the next two years, etc. Lastly, you’ll need to enter your Social Security number.
As an example, I filled out an application and was approved for a $500,000 20-year policy for $46.42 a month. Meanwhile, shortening this to 10 years changed it to $36.42 a month while extending to 30 brought it to $78.50. The lowest possible death benefit amount is $50,000, with a 10-year term, costing $11.17 and a 30-year coming in at $15.21. It’s also worth noting that, according to the site, your policy can be canceled at any time if you choose. Once you cancel, your policy will end and you’ll stop being charged.
(My quotes mentioned are from Lemonade.com for a 36-year-old male, non-smoker on June 15th, 2022.)
Your actual monthly premium rate will be determined based on your individual health answers provided during Lemonade’s application process. Rates may vary by state.
Term life insurance offered by Lemonade is now available in 49 states and the District of Columbia (as of June 2022), with New York being the odd state out.
Final Thoughts on Lemonade
Overall, I was impressed by Lemonade’s transparent policy purchasing process. On top of that, their business model sounds like one I’d like to support. Now that their renters insurance policy is now available in my area, I’m definitely considering whether it’s worth switching. Of course, with them now also offering other options, such as pet insurance and term life insurance, a possible switch will likely be influenced on whether or not I decide to select these additional coverages. For context, I currently bundle my renters insurance policy with my auto insurance, yielding a discount on both.
The bottom line is that, if you’re looking for renters insurance (and you should be if you don’t have it already), Lemonade could be a great option. Plus, with the company expanding into other categories of coverage, there’s even more reason to check them out and keep an eye on them going forward.
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Lemonade Life Insurance Agency is a sub-producer of Bestow Agency, LLC. Life insurance quotes provided by Bestow Agency, LLC dba Bestow Insurance Services in CA, who is the licensed agent. Term Life Insurance Policies offered by Bestow are issued on policy form LS181 and LS182, or state version including all applicable endorsements and riders, by North American Company for Life and Health Insurance®, Administrative Office, One Sammons Plaza, Sioux Falls, SD 57193. Products or issue ages may not be available in all jurisdictions. Limitations or restrictions may apply. Not available in New York. North American is rated A+ (Superior) by A.M. Best. Limitations or restrictions may apply. Our application asks about your lifestyle and health to determine eligibility in order to avoid requiring a medical exam.
*Discounts and premium credits may apply to multi-policy customers on all insurance products issued by Lemonade Insurance Company. Term Life Insurance offered by Lemonade is issued by North American Company for Life and Health Insurance. Discounts and premium credits will never be applied to a life insurance policy, however a life insurance policy is included in the policy count that may help to drive a discount on another policy type. The availability and amount of any discounts or policy credits provided are determined by Lemonade Insurance Company in its discretion and consistent with applicable law.
Also published on Medium.