HOUSTON – Whether you rent or own your own home, insuring your property is just smart. But it can also be expensive, confusing and frustrating when you need to use your insurance. A relatively new company called Lemonade Insurance wants to change the industry.
What is Lemonade Insurance?
Lemonade is a company started in 2015 by two tech businessmen. It uses artificial intelligence and bots to sign customers up for homeowner's and renter’s insurance policies and when those customers make claims. All transactions are conducted through the app or online. The company says using AI instead of brokers saves them a lot of overhead. They then use that savings to offer lower prices to customers.
Renters insurance policies start at $5 a month. Homeowner's policies start at $25 a month. Lemonade is licensed and regulated by the same government agencies as traditional insurance companies, which also means they are backed financially by reinsurers.
A Different Model
Lemonade's Yael Wissnerlevy says traditional insurance companies are incentivized to deny claims.
“Every dollar an insurance company pays out to you in claims is a dollar less for them in their bottom line,” she explained.
She says Lemonade keeps only a flat fee from your premium and uses the rest for paying claims.
If you don't make any claims, you can choose a charity and gift the remaining money at the end of the year.
How it Works
Download the Lemonade app on your phone. Create an account. Then answer a few questions from “Maya.” She’s a bot, not a real person. In minutes, you will get a policy emailed to you. If you accept it, you pay your premiums by automatic withdrawal from your bank each month.
Lemonade says filing claims is also fast. Some claims are paid instantly. When Veda Gupta’s belongings were stolen from her father’s car when she was visiting in California, she remembered that her renter's insurance policy through Lemonade covered her property. She logged into the app to file the claim by answering a few questions about what was stolen and then uploading a copy of the police report.
“It was about another 10 minutes, and they said ‘You have been approved for reimbursement of $3000,’” Gupta told consumer expert Amy Davis.
The money was transferred to her bank account in about 3 days.
While we didn't talk to anyone who uses Lemonade for homeowner's insurance, we did request a quote to compare with a homeowner's policy from Travelers Insurance. We found the monthly premiums and deductibles to be about the same. The pay-out in one category (if someone was hurt on the homeowner's property) was much less on the Lemonade policy than with Travelers.