Lemonade is a bitter pill for competitors to swallow, but a sweet deal for many Americans looking for affordable, smarter homeowners insurance.
Home protection has a lot of moving parts. These might include alarm systems, security cameras, and video doorbells.
But you know what it always includes? Your homeowners insurance. As we always say: Home insurance is a critical element of home security.
That’s why today we’re going to look at one of the most innovative insurers in the industry. Before we fully unpack Lemonade, though, let’s take a look at their primary coverages.
One thing you’ll notice right away with Lemonade is that they don’t bloat their coverage with a huge menu of extras you need an insurance glossary to decipher. I’m totally on board with this approach, even if there are a few places I actually wanted a little more detail. Check out my hands-on Lemonade review for the complete story on that.
The other thing you should know about Lemonade is that you won’t see all your coverage options until you start building your actual quote. So don’t worry if you get to the website looking for the lowdown on bike insurance or portable electronics insurance (two of my Lemonade favorites) and you don’t find them right away. You will.
|Dwelling||Valuables (jewelry, bike, fine art, cameras, etc.)|
|Other structures||Water back-up|
|Personal property||Appliance breakdown|
|Portable electronics (up to $6,000)||Buried utilities|
|Medical payments to others|
|Loss of use|
Homeowner’s Tip: Feel like you could use a refresher course on basic homeowners coverage? Check out our Ultimate Guide to Home Insurance, written by experts (us!) for future experts (you!).
Did You Know: While property theft has actually been going down in the U.S.,3 we lose and damage our laptops, tablets, and smartphones all the time. The fact that Lemonade lets us cover our portable electronics separately is going to make a lot of us gadget-owning homeowners very happy.
FYI: One inch of floodwater can set you back $25,000, and unfortunately your homeowners insurance doesn’t cover against floods. The good news is that FEMA can help you find an affordable plan.4
Lemonade homeowners policies start as low as $25 per month. That’s really low. But chances are, that’s not going to be you. There are any number of reasons why.
You could own an expensive house, or an older house. (Remember, the average U.S. home was built in 1985 and costs about $250,000.) Insurance providers award lower premiums to newer (or newly renovated) houses in that price range. If it’s not your home’s age, it could be a subpar roof or lackluster home security protections driving up your premium.
Too many variables? This will all make a lot more sense if we look at an actual Lemonade quote. But first, a quick look at their rates versus the national median.
|Lemonade monthly premium||Lemonade yearly premium||Average monthly premium in the U.S.||Average yearly premium in the U.S.|
Lemonade’s rates might seem all over the place, but — house condition and insurance score aside — there is some logic behind it. Safer areas are less risky to insure. Safer to an insurance company, by the way, means less theft, and less risk of extreme fire, rain, or wind damage. So if your Lemonade premium is over $1,600, it’s a pretty safe bet you live in a higher-risk area. But again, actual figures will help a lot. And I’ve got some for you.
My Lemonade quote ($122 per month) was at the high end of the provider’s $25-$159 range. But the house I was insuring was old, due for a new roof, and way above the median national value. I also went with the reconstruction costs they recommended.
Let’s see what happens if I try to insure a newer house (1994) with a better roof that’s closer in price ($260,000) to the U.S. average.
Did You Know: Speaking of states, Lemonade only covers 22, and none of them in the tornado or hurricane belt, which is another reason its median premiums may be lower than a lot of competitors.
$106 per month is looking a lot better. In fact, it’s pretty close to the rates Nationwide quoted me for a comparably priced house.
Keep in mind that for a $260,000 house built in 1994, Lemonade suggests $375,000 worth of coverage, the amount their AI thinks I’ll need to rebuild, inflation (presumably) included. I can go lower, however. For example, I can drop my coverage to as low as $310,000. With those numbers, I’d be looking at a $90 monthly bill.
It might not actually be wise to refuse the extra rebuilding coverage, but you get the point. Every homeowners quote has tons of moving parts. The choices you make — and the home you choose — can transform a rather hefty $122 home insurance bill into an affordable $90 premium.
How does Lemonade’s stripped-down $90 premium compare to the rest of the providers we reviewed this year? Pretty nicely. In fact, Lemonade’s premium is almost as low as the rate State Farm quoted me for their bargain basement auto and homeowners bundle.
Lemonade offers some standard perks with their auto insurance, like free emergency crash and roadside assistance, and discounts for hybrid and electric vehicles. But they also boast lightning-fast claims resolution courtesy of Maya, their AI bot, and some neat green incentives I haven’t seen elsewhere.
For instance, you’ll pay a lower premium if you drive less. You can also piggybank some cash if you bundle your home and car policies (more on that below). And — the coolest perk in my book — Lemonade keeps track of our yearly CO2 emissions via their app and plants trees to suck back up some of that pollution.
Lemonade doesn’t offer as many life insurance options as some of the bigger, older names. You won’t be able to grab a whole or universal life plan like you would with, say, a more flexible Liberty Mutual life insurance policy. But if you do go with Lemonade, and you’re relatively healthy, you can take advantage of a more affordable term life policy (for 10, 15, 20, or 30 years) that’s completely digital, i.e., no medical exam required.
If pets could write an insurance policy for themselves, I’m guessing it would look a lot like Lemonade’s. Neutering, microchipping, flea protection, vaccines and boosters — all included. Plus dental, yearly wellness exams, and free medical advice via the Lemonade app. A show of hands: How many humans out there get dental with their health insurance?
FYI: One coverage Lemonade doesn’t offer is Identity theft protection. If you want to prevent this type of fraud, we suggest reading our review of Aura. Identity theft happens constantly. Make sure you’re not the next victim.
Bundling is a double incentive for homeowners. It’s less paperwork when you consolidate your bills, sure. But Lemonade makes homeowners (and renters) a deal they won’t be likely to refuse: 10 percent off each of their premiums. Let’s crunch those numbers.
Take my first Lemonade homeowners quote ($122 per month). Add pet insurance, which starts at $10, and base auto insurance for another $30. That’s $162 per month. Ten percent off each of my premiums would yield me a little over $16 in savings per month. In other words, over the year, bundling with Lemonade would save me nearly $200.
Homeowner’s Tip: Lemonade isn’t the only insurer we like that bundles quotes for extra savings. Progressive, J.D. Power’s second highest-rated insurance company for customer satisfaction last year,5 also offers some very attractive bundles. In fact, Progressive home and auto bundles can trim your total bill by up to 5 percent.
Lemonade’s pricing is competitive just by virtue of their less-is-more approach to home insurance: less physical overhead, less bloat, fewer barriers to claims processing. (Not to mention that 10 percent bundling discount we unpacked above.) Still, discounts are discounts, and we’ve come to expect them from our homeowners insurance providers. Here’s what Lemonade delivers in the bonus savings department.
Homeowner’s Tip: Looking for a homeowners option that offers discounts for new homes? Check out my experience with State Farm in my in-depth State Farm homeowners review.
Faster, smarter, more affordable home insurance that ditches the jargon for coverage we can actually understand may seem too good to be true. But Lemonade gets most of that right. We saw bloat-free premiums well below the national average, bundles that save big money, and instant AI claims settlement.
With rates that low, there’s not much more in the way of discounts Lemonade can offer, but they do manage to squeeze in a hearty protective devices bonus for safe homes.
It’s true, new homeowners aren’t going to score any savings, and inflation protection isn’t part of the deal. But other than that and limited national availability (for the moment), Lemonade is the best home insurance in our eyes.
We recently got in touch with the folks at Lemonade to ask some burning questions about home insurance. They obliged, and we walked away with a better sense of what it means to insure a home. We also learned some pretty neat background on the company, their mission, and how they seek to change the insurance landscape. (No pepperoni pizza was harmed in the making of this.) Here it is!
Why is homeowners insurance so important?
“Chances are that your home is your most valuable asset, and homeowners insurance protects it, along with your personal property. Essentially, your homeowners policy is a contract between you and your insurer in which your insurer agrees to help cover the costs of any losses you might suffer during an event outside your control – like a fire, hail storm, windstorm, vandalism, theft, lightning, and more.
In exchange for this protection, you pay a monthly premium. This rate is determined by the deductible you choose (i.e., how much you have to pay to cover your losses before insurance kicks in), along with an assessment of your property’s risk level, among other factors.”
Do we really need it?
“As a matter of fact, yes. First of all, almost every mortgage lender requires you to provide proof of homeowners insurance. And even if you aren’t required to carry it, having homeowners insurance simply makes sense. With it, you have the peace of mind of knowing that your most valuable asset is protected. Without it, you’re on the hook for anything that could go wrong.”
How much should home insurance cost me?
“That depends on a range of factors – where your home is located, its exposure to major risks like hurricanes or wildfires, and more. At Lemonade, we offer our policyholders affordable premiums starting as low as $25 per month.”
What should home insurance cover, at a minimum?
“A homeowners insurance policy covers the full scope of your property. Let’s start with the obvious one: Your home itself! Additionally, you’ll want to make sure you have chosen sufficient coverage for any other structures on your property – detached garages, fences, pools, sheds, and the like – as well as your personal property inside the home.
By the way, homeowners insurance can help cover the costs of your damaged or stolen property even if something happens to it outside the home. Say your laptop gets stolen at a coffee shop. Once you’ve filed a police report for the theft, you can file a claim with Lemonade and we can help cover the cost of replacing it.”
What’s one “pro tip” for shopping around for home insurance?
“Make sure that you’re working with a provider that actually makes insurance comprehensible. Sure, there’s plenty of legalese and insurance-speak in the industry, but you want an insurer who breaks it all down for you in plain English and makes every step of the journey as seamless as possible.”
No other insurance company has a graphic of a pepperoni pizza on their website. You guys do things differently (in a refreshing way). What’s the motivation behind this?
“Refreshing is exactly what Lemonade wants to be for our customers. Everything about Lemonade – from the way we allow our customers to sign up for a policy quickly via our mobile app, to our no-BS way of explaining insurance to our customers, to our advanced technology – it’s all about creating a refreshing customer experience in an industry that hasn’t seen much change in over a century.”
Other than feel-good marketing, what makes Lemonade different than other providers?
“Feel-good marketing is only worth anything if what you’re trying to sell actually has value. Lemonade stands apart from other insurers because of the amazing experience we provide our customers, backed by advanced technology that enables a 100% digital experience for our users. Getting a policy, filing a claim, updating your coverage amounts, and adding on specific coverages can all be done via our easy-to-use app.
We’re pleased that our Net Promoter Score, which basically measures how likely our customers are to recommend Lemonade to their friends and loved ones, stands at 70, which is more than twice the industry average. We see our number one job as delighting our customers, and we’re grateful that so many of our users not only love their Lemonade insurance, but have become our biggest champions.
Lemonade is also a B-Corp, a values-driven company, and we’ve built that into our business model through initiatives like our Giveback program.”
What is your Giveback program all about?
“Lemonade’s business model is unique in that we collect only a flat portion of our customers’ annual premiums. By taking a flat fee and using the rest to pay claims, we minimize conflict with our customers. If there’s leftover premium, it goes to charities chosen by customers – so Giveback is baked into our business model.
In our first Giveback, the Lemonade community donated to 14 charities; in 2021 that became 65 charities, making each year’s Giveback more wide-ranging and global in impact. To date, the Lemonade Giveback has donated more than $4 million to non-profit organizations tackling a range of challenges, including homelessness, racial justice, climate change, global poverty, animal welfare, LGBTQ rights, education, and more.”
Why the name ‘Lemonade’?
“Our founders liked the name, and you know the saying, ‘When life gives you lemons, make Lemonade!’”
You’ll save 10 percent on each of your policies.
Lemonade pays out claims instantly if their AI can figure out a solution. If your case needs a human eye, it will take a little longer.
No. At this time, Lemonade doesn’t offer new home discounts.
Homeowners quotes are rarely apples to apples. That said, our analysis shows that Lemonade’s rates can be lower than both the national and industry average.
In our experience, their plans varied from as low as $90 per month to $122. For comparison, the industry average is somewhere around $104 per month.
Associated General Contractors of America. (2021, June). CONSTRUCTION INFLATION ALERT.
The Washington Post. (2021, Apr 5). The Rise of the Pandemic Shed.
Federal Bureau of Investigation. (2019, Jun). Preliminary Semiannual Uniform Crime Report, January–June, 2019.
FEMA. (2022). Find a flood insurance provider.
J.D. Power. (2021, May). Property & Casualty Insurers Stuck at Providing Only “Good Enough” Digital User Experience, J.D. Power Finds.