Lemonade Is Here to Change the Way You Buy Insurance

insurance companies

At some point in life, you’re going to need insurance to protect your house and everything in it.

The only problem? Dealing with insurance companies is something most of us would rather avoid.

The process traditional insurance companies use can be confusing, overwhelming, and time-consuming for new homeowners. These are some of the many issues that new insurance company Lemonade wants to fix.

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What is Lemonade?

Lemonade is a licensed insurance carrier that provides homeowner’s and renter’s insurance to residents of New York and renter’s insurance to residents Illinois.

They don’t use brokers, which helps make the insurance and underwriting process faster. Everything is based online, too, which means no forms or paperwork.

The company was founded by seasoned tech entrepreneurs Daniel Scheiber and Shai Wininger in 2015. Wininger founded Fiverr in 2010; Scheiber was a general manager at SanDisk and then president at PowerMat, a wireless charger company.

To date, Lemonade has raised $60 million in funding. The company might be able to credit their unique mission as a fintech insurance company for their capital-raising success.

While there are other peer-to-peer insurance companies out there, Lemonade is the only one that’s fully licensed right now. The others, including Friendsurance and Guevara, operate as independent brokers.

What sets Lemonade apart from other insurance companies

Lemonade’s clean and modern-looking website boasts that they provide “instant everything. Killer prices. Big heart.”

Those aren’t phrases one would normally associate with an insurance company, but Lemonade’s process is dedicated to fulfilling these promises to their customers.

“Instead of making our money from denying claims, as is the norm within the industry,” explains the company’s blog, “we treat your premiums as your money (shocking!), take a flat fee for our services, and return what’s left to a cause of your choosing.”

That flat fee is 20 percent. If there is money left over — because you didn’t file a claim and cash in on your policy — Lemonade donates this at the end of the year to causes like animal health care, homeless services, or employment for veterans.

“Big heart” means charitable donations

When you sign up with Lemonade, the portal will prompt you to choose a cause that you care about. Then you’re matched with other like-minded customers (this is where the “peer-to-peer” part comes in) who chose similar causes.

Together, you make up a group of policyholders. Everyone pays premiums into a pool. Lemonade takes their 20 percent, but the rest goes to pay claims.

If there are leftover funds when each policy period expires, Lemonade gives the money to the charitable cause you indicated when you signed up.

Aside from being an attractive option for people who want to give back, this system can demotivate people from filing false claims. Doing so means taking money away from those in need and the causes customers care about.

No one wants to cheat a good cause out of money — at least, that’s the idea behind Lemonade’s “big heart.”

Sign Up For Lemonade

How Lemonade provides insurance

Lemonade isn’t kidding when they say “killer prices.” Renter’s insurance policies start at $5 per month and homeowner policies start at $25.

The company also designed their process to eliminate the friction most customers experience with traditional insurance companies while signing up, filing claims, receiving payment for claims, and dealing with customer service.

Their entire platform is optimized for mobile use. That helps make communication with Lemonade more convenient than traditional insurance companies that feature call centers and wait times to speak to someone who can resolve a problem or answer a question.

For faster customer service, Lemonade uses helpful chatbots named Jim and Maya who are based on real people in the company. Users can message the bots from their phone instead of making a call.

Users can also use the platform to perform actions like switching from old insurance companies to a new Lemonade account. Normally, this would require a period of back-and-forth with the insurance companies, multiple calls, and physical forms. Lemonade makes it convenient and straightforward.

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Know what insurance company is best for you

Right now, Lemonade is only available in New York, but the company has plans to expand to other states.

When it comes to significant financial decisions like getting home insurance, it’s best to do thorough research. In this case, shop around for rates before picking an insurance company. Ask yourself how much coverage you need. How much would it cost to replace your items or repair your home if something happened?

Everyone has different needs and is working with a different budget, and the cost of monthly premiums may be a big deciding factor for choosing a policy. But don’t forget about other aspects of the experience.

All home insurers aim to provide reliable coverage for your house and assets, but how they handle claims and customer service is crucial.

With insurance companies like Lemonade emerging on the market, you can now choose a policy based on other factors, including how you want to communicate with your insurer. Or, in Lemonade’s case, you can have a say in what happens to your money if you don’t file a claim.

Lemonade wants to make the home insurance process easier, less intimidating, and focused on social good instead of corporate profits.

The company’s process and mission aim to take dishonesty, fraud, and bureaucracy out of the equation. Lemonade hopes to accomplish this by remaining transparent about what they do with their customer’s money in a way that traditional insurance companies simply aren’t.

While most people see insurance as a necessary evil, Lemonade might start changing that image.

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