Lemonade Renters Insurance Review 2020

The specs

The claim

Forget everything you know about insurance because Lemonade is different: it offers instant claim fulfillment, great prices and a transparent corporate structure. Even its business model is different: the company takes a set amount for expenses, and all other profits get paid out in claims. Anything left over goes to charity.

Is it true?

Yes, but it isn’t the whole picture. Lemonade is different. Its reliance on technology rather than agents allows you to purchase a policy and make a claim quickly and easily. Those policies offer fairly basic coverage for great prices without hidden fees or complex fine print that limit your policy and make payouts next to impossible to obtain.

But there are some caveats. Without the ability to customize your policy with endorsements, your coverage is generic. Lemonade renters insurance does offer a wide array of endorsements that you can add to your policy to make it more comprehensive.

The sticking point with Lemonade is, ironically, what the company considers its greatest strength. By relying on tech instead of live human beings, you may have difficulties if you have a specific situation that requires the finesse that only a dedicated agent can give you. But no need to worry, you can easily contact an agent by phone.

Our deep dive

• Rock bottom rates: Lemonade’s overhead is lower than that of traditional insurers because it’s not paying for an army of agents. It passes that savings on to you in the form of premium rates that are among the industry’s lowest. For renters, those rates start at $ 5 a month.
• Giveback program: Do good while insuring your home or belongings. At the end of the fiscal year, any money left over after claims are paid goes to benefit the social good through Lemonade’s donations to charity.
• Get quick results: Lemonade’s chatbots can give you a quote in minutes after you answer a few questions. When you need money quickly after a claim, the company comes through with nearly instantaneous claim fulfillment in many cases.
• Financial stability: Lemonade has an A (“Excellent”) rating from financial services analysis firm Demotech. It has not been rated by AM Best.
• Transparency: Lemonade’s policies don’t include the confusing fine print you find on traditional policies. Everything is above-board and clear, and an extensive FAQ section on its website answers most questions.
• Extra coverage: Lemonade renters insurance offers extra coverage for jewelry, fine art, cameras, bicycles and musical instruments. Unlike its standard coverage, there is no deductible, and it protects against accidental loss, damage and theft.
•  Other insurance available: In addition to renters insurance, Lemonade offers competitively-priced policies if you own a home, condo or co-op. Unlike most insurers, Lemonade doesn’t have auto, life or other policies that would allow you to save by bundling several policies.
• Customer service: Lemonade scores an .81 on the National Association of Insurance Commissioners national complaint report — that’s less than the industry average. But there’s lots of anecdotal evidence online that indicates its customer service is lacking, and when we reached out with questions via the website help button, it was several days before we got an answer.

Cost rundown

Because cheap renters insurers take many factors into consideration in writing your policy, it’s impossible to predict what your policy cost would be. You don’t have to guess, though. Lemonade’s chatbots can write you up a policy in seconds. There’s no cost and no obligation.

The basic Lemonade policy covers the following:

• Fire and smoke damage
• Crime and vandalism
• Wind, lightning and hail
• Hurricane damage
• Water damage
• Medical payments to others
• Liability (the legal costs if you are sued)
• Loss of use (if you need to stay in a hotel while your place is repaired)

The important factor here is that you are protecting your belongings. The structure itself is covered by your landlord’s policy, so you don’t need to worry about the building itself.

Although a Lemonade policy will probably cover you for whatever happens in your apartment, there are two perils that are not covered: earthquakes and flooding. These claims are generally so expensive that it would increase your premiums exorbitantly to include them. Flood insurance is available, though not from Lemonade. The company does offer earthquake insurance in California and Arkansas.

Cheaper alternatives

Lemonade renters insurance won’t take up a big chunk of your change, but there are a few things you can do to make sure you’re paying as little as possible at the maximum value.

• Pay attention to your credit rating. Insurers may take your credit score into consideration when writing a policy, so it pays to clean up yours and pay off old debts.
• Get multiple quotes. Although we found Lemonade’s rates to be the most inexpensive of those we polled, your results may be different. It’s worth checking with some of the more traditional insurers to see what they can offer you.
• Encourage your roommates to purchase a renter’s policy, too. This may not save you money in the short term, but in the case of a disaster, it’ll make rebuilding your life easier if you are all covered.
• Have your landlord install fire and burglar alarms if you don’t already have them. Like most insurers, Lemonade offers a small discount for them.
• Consider your deductible. It’s simple: the higher your deductible, the lower your premium costs. If you can afford to pay out, say, $ 1,000 or even $ 2,500 in the event of a disaster before the claim kicks in, you’ll pay less each month in premiums

The competition

• American Family: The top company in the J.D. Power Renters Insurance list, American Family covers your stuff, along with medical and legal expenses if someone is injured at your place and hotel costs if you need a place to stay while repairs are done. You can add standard identity protection coverage and equipment breakdown coverage. American Family has discounts for everything from autopay to a smart home discount.
• State Farm: State Farm has a reputation for good customer service and competitive prices. It offers a few—but not many—discounts, including multiple line if you bundle your auto with your renters insurance and one for safety devices such as burglar alarms.
• Allstate: Although it scores in the middle of the pack with rating organizations like Consumer Reports and J.D. Powers, Allstate has a nice range of add-ons, like identity theft protection and increased coverage if you use your apartment for business purposes. You can also score some nice discounts, such as easy pay plan, claims-free discount and one if you’re over 55.
• Geico: Customize your Geico policy with innovative endorsements that provide increased or replacement coverage or that cover you and your merchandise if you run a small business—such as selling on eBay—out of your apartment.

What others are saying

Forbes describes Lemonade as a “millennial-loved fintech unicorn,” and says that by using artificial intelligence, a mobile app and other tech-centric methods, the founders are drawing in big investments from funders and creating a new model for an old, and arguably stodgy, business.

Insurance Nerds, meanwhile, is less impressed with Lemonade. Writer Nick Lamparelli says that beneath the bells and whistles, Lemonade is functionally no different from any other insurance company. Although the technology is great, sometimes live agents can be helpful. “[Can] the robot handle the firestorm that comes when the company is hit with their first major natural catastrophe?”he asks.

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