Although the peer-to-peer phenomenon is still in its infancy, heaps of industries have already been impacted. Whether it’s crowdfunding loans, real estate ownership, or taxi apps – peer-to-peer systems reduce an ever-growing reliance on third-party middlemen.
With that being said, have you ever considered how the peer-to-peer space could revolutionize the multi-trillion dollar insurance industry?
One such company that is looking to take the bull by the horns in this respect is Lemonade Insurance.
The platform offers competitively priced homeowners and rental insurance at the click of a button. In fact, by simply downloading the app and stating where you live, the Lemonade Insurance AI bot will quote you on the spot.
However, the benefits of using a new-age insurer like Lemonade goes far and beyond just instant quotes. On the contrary, the app utilizes a peer-to-peer system to pool money together, which is then used if and when a claim needs to be made. Moreover, the company also drives the social responsibility vehicle by distributing unclaimed premiums to charity.
There’s quite a lot to take in with what Lemonade Insurance does, so it’s best that you read through our in-depth review before signing up. Within it, we’ll cover the ins and outs of what Lemonade Insurance actually is, what it offers, what’s covered, who is eligible, and more.
What is Lemonade Insurance?
- 1 What is Lemonade Insurance?
- 2 Eligibility
- 3 What Does Lemonade Insurance Cover?
- 4 How Does Lemonade Insurance Work?
- 5 The Claim Process
- 6 Peer-to-Peer Premiums
- 7 Social Responsibility
- 8 Customer Support
- 9 Conclusion
- 10 Lemonade Insurance
- 11 Pros
- 12 Cons
In its most basic form, Lemonade Insurance is an insurance firm that specializes in homeowner insurance and rental insurance.
Depending on the policy you opt for, this could include cover on personal liability, damage or theft to your possessions, and accommodation costs if you need to vacate your home.
As such, the policies offered mirror that of any other home-based insurance plan available in the market. However, this is where the similarities stop.
First and foremost, Lemonade Insurance utilizes cutting-edge technologies to streamline the end-to-end insurance process. This starts at the very offset with the initial application.
Instead of having to fill out super-complex forms that are jam-packed with legal jargon, the Lemonade Insurance app will ask you a few simple questions.
- This includes your current address, whether you rent or own your home, and the type of insurance you’re looking to obtain.
- The underlying AI-bot will then present an instant quote.
Next, Lemonade Insurance has installed a peer-to-peer styled system which sees policyholders pool funds together. The process is somewhat difficult to understand at first glance, so we’ll explain the fundamentals further down in our review.
Nevertheless, the main concept is that your insurance premiums will be pooled together with other customers, with Lemonade Insurance taking 20% of each premium.
In doing so, this could allow the platform to pay claims out in an almost instant basis. Crucially, any premiums that are leftover at the end of each June will then be donated to charity. This removes the incentive to play hard-ball on claims, not least because unclaimed premiums will be donated as opposed to realized as profit.
In terms of pricing, Lemonade Insurance is super competitive. While the specific rates will depend on a range of variables such as where you live and the type of policy you require:
- Prices start at just $5 per month if opting for renters insurance.
- If you’re a homeowner, then this starts at a minimum of $25 per month.
So now that you have a general idea of what Lemonade Insurance actually is, in the next section of our review we are going to explore who is eligible for coverage.
Whether or not you are eligible for a Lemonade Insurance policy will depend on the US state that you live in. In fact, it will also depend on the type of coverage that you require.
For example, only those based in Arkansas and California will be eligible for earthquake coverage. Similarly, those based in New Mexico will only be able to take out renters insurance and not homeowners insurance.
As such, we would suggest going through the 3-5 minute application process to see what you are covered for. The app will tell you as soon as you enter your address. With that being said, Lemonade Insurance notes that it is looking to increase its nationwide coverage by adding more eligible states throughout the year.
What Does Lemonade Insurance Cover?
The specific coverage that you are offered by Lemonade Insurance will depend on what you require, although the policies on offer can generally be broken down into two. This covers renters insurance if you are simply renting a home, or homeowners insurance if you actually own a home.
As is the case with most providers, homeowners insurance is a lot more extensive than renters insurance, not least because it covers the building itself.
You’ll need to browse through your individual policy to assess exactly what you are and aren’t covered for, so please use this section as general guidance only.
Both the renters and homeowners insurance will cover your household belongings. This includes anything of value, such as your TV, washing machine, or laptop.
Your Lemonade Insurance policy will also cover you in the event that your household items are damaged or stolen. Regarding the former, this could be because of a fire or flooding.
Theft Outside of the Property
If you opt for a plan that covers personal property theft, the policy permits claims even if your household item was stolen outside of the property. For example, if you took your expensive laptop to your local coffee shop and somebody stole it, you would likely be able to make a claim.
When it comes to personal liability, Lemonade Insurance offers you the chance to cover non-personal injuries. In other words, if somebody got injured while on your property, and the individual deems that you were responsible, your Lemonade Insurance policy might cover any subsequent claims.
Home Becomes Inhabitable
Finally, Lemonade Insurance can also cover you in the event that your house becomes inhabitable. This could be because of a gas leak or a fire, meaning that you require accommodation outside of the property.
How Does Lemonade Insurance Work?
If you’ve got a general understanding of how insurance works, forget it – as Lemonade offers a completely new way of facilitating homeowners and renters insurance policies.
With that being said, it’s probably best that we guide you through the process step-by-step so that you have a firm understanding of how things work.
The Application Process
First and foremost, you will need to obtain a quote as you normally would with any other insurance platform. You can either do this on the main desktop website or via the Lemonade mobile app. Either way, you will initially need to let the platform know whether you are renting your property or own it. Next, you then need to input the address of the property.
- For those unaware, there is a huge disparity in US insurance premiums depending on the location you are based. For example, while homeowners insurance in the state of Florida averages $3,575 per year, the very same policy would cost just $1,521 in Tennessee.
- This disparity can also vary on a regional basis. For example, the average annual homeowners insurance plan in the Californian towns of Water Springs and Santa Clara amounts to $1,299 and $553, respectively.
Nevertheless, Lemonade Insurance will then ask you a range of basic questions. For example, you’ll need to state how many people live at the property, and whether or not you have a burglar’s alarm.
Next, you’ll then need to state whether you own any valuable possessions.
Viewing and Adjusting Your Cover
The initial questionnaire outlined in the above section should take no more than a few minutes to fill out. The platform makes the multiple-choice questions really simple to answer, and there are no overly intrusive questions. Once you’ve completed it, Lemonade Insurance will then populate your monthly premium.
It is able to do this because of the underlying technology. Fully supported by a cutting-edge AI-bot, you’ll receive your quote instantly.
Take note, this will be the absolute basic policy on offer, so you will now get the chance to add additional metrics. Once again, this is really simple, and you merely need to click through the multiple-choice questions.
For example, if you’ve got certain high-value possessions like jewellery, fine art, or a bike, you can easily add this to your policy. As you do, the monthly premium will increase. Moreover, if you need to increase the coverage limit, you simply need to adjust the scrollbar.
Read Your Policy Documents
Once you are happy with the fundamentals outlined in your policy, you can then enter the dates that you would like to be covered. Before moving to the payment page, it is absolutely crucial that you read through the policy documents that are presented to you.
This will outline the ins and outs of what you are actually covered for – and for how much. Failing to understand the specifics could be devastating when it comes to making a claim. As such, take as much time as you need to read through the policy before returning to the application page. When you’re ready, you can easily do this by clicking on the link that is sent to your email address.
Setting up a Payment
If you do want to proceed with your chosen policy, you will pay for your first monthly premium upfront. Thereafter, Lemonade Insurance will automatically take your monthly premium on the same date of each month.
The Claim Process
So far, so good – everything appears reasonably straightforward at this point of the process. Hopefully, you will continue to meet your monthly premiums and never have a need to make a claim. However, life has a funny way of throwing the unexpected at us, so it’s crucial that you understand how the claims process works at Lemonade Insurance.
Here’s what you need to know.
- Claim Through the App
To get the ball rolling, you will need to load up your Lemonade Insurance app and click on the ‘CLAIM’ button. As we’ll explain shortly, you need to do this through the app because you will be required to submit a video explaining the claim.
- Is the Claim an Emergency?
You will now need to enter some information about the claim. Essentially, you need to select the type of claim you are making (e.g. stolen bike), the value of the claim, and when the incident occurred.
Most importantly, you need to state whether or not the claim is an emergency. For example, this would include instances where you have water damage and require an emergency plumber to come and make repairs, or you require immediate temporary accommodation because of a fire.
Whatever the emergency is, the 24/7 Lemonade Insurance incident team will call you straightaway. You will then need to explain the situation, and Lemonade will proceed to make arrangements.
- Record a Video
If the claim isn’t an emergency, you will then be required to record a video. This will be to fully explain the claim in your own words, and to show Lemonade evidence of the claim. You won’t always be able to show evidence, especially if an item was stolen.
- Getting Paid
When it comes to getting paid, Lemonade Insurance claims to offer the unthinkable – claims that are settled instantly. However, this won’t always be the case, as Lemonade might need to manually review the claim. This will likely be the case if you are claiming for a large sum.
Lemonade Insurance itself notes that liability and damage claims will almost always take longer to settle. This will also be the case if you are claiming a loss for the second time.
When making a claim, Lemonade Insurance might be required to ask you for supporting documentation. This mainly centres on receipts for items that you are claiming for.
The platform notes that providing receipts will “help us help you”, although it does understand that doing so is not always possible. Moreover, Lemonade suggests keeping receipts for any purchases made for $250 or more, after the policy is taken out.
As noted throughout our review thus far, Lemonade Insurance utilizes a peer-to-peer style premium system.
Here’s how the phenomenon works.
In the traditional insurance space, companies will pool premium payments together each month to cover the eventual claims that are made. These premiums will almost always surpass the actual money that is paid out in claims – otherwise, the insurance company wouldn’t make any money.
As such, all of the premiums that are leftover at the end of the financial year will then be kept as profits – subsequently appearing on the firm’s income statement. This process is repeated each and every year, with the premiums increasing as per increased exposure.
Although the process employed by Lemonade is somewhat similar, insofar that the platform pools premium payments together, it never keeps hold of surplus cash at the end of the year. Instead, Lemonade Insurance will retain 20% of all premiums as and when they are paid.
This is extremely beneficial for you as a customer for one key reason – there is no incentive for Lemonade to reject claims for the purpose of increased profit. Why? Well, at the end of June of each calendar year, the remaining balance of premiums will be paid out to charity. That’s right, everything goes to social responsibility causes, which is awesome.
What we really like about the social responsibility program hosted at Lemonade Insurance is that you get to choose from a list of causes. For example, the platform was able to fund a water system for a regional African village last year.
However, it is important to note that there is no guarantee that the social responsibility program will come to fruition at the end of each year. The reason for this is that it cannot be said with any certainty whether or not Lemonade will have premiums leftover come June.
As noted by Lemonade Insurance itself – “Paying claims is our top priority, and in extreme circumstances could come at the expense of the Giveback.”
Some would argue that such an outcome is not beyond the realms of possibility, especially when you consider the eagerness of honoring claims in an instant manner.
If you’ve read our review up to this point, then you’ll know that much of the Lemonade Insurance concept is based on automation. By using cutting-edge FinTech technologies, it not only allows the platform to automate many of its processes, but it reduces costs. This is how Lemonade is able to offer super-competitive policies.
As such, customer support is somewhat limited at the platform. There is no live chat facility, so you will need to send enquiries through the website or app. This is formatted as a ticket and you will receive a reply via email.
Although Lemonade Insurance does list a telephone support line, this is only to be used in extreme emergencies when you need to make a claim.
Lemonade is an innovative insurance product aimed at renters and homeowners which provides a new take on the age-old insurance industry. We loved the fact money left over goes into the the social responsibility program rather than lining the company owner’s pockets.
The website and accompanying app are very well designed and super simple to use – they are beautiful in fact, you won’t find any clunky and hard to use websites here.
The company offers excellent rates and the claims process couldn’t be easier, this is backed by excellent customer reviews all over the internet.
Honestly, we couldn’t find fault with them so we recommend you check them out.