What is Lemonade Insurance?

08 Jun
What is Lemonade Insurance?

Lemonade Insurance is not a peer to peer insurance company and on closer examination the only peer to peer component is that you will be lumped in with similar customers when it comes choosing a charity to donate their excess profits.

Homeowners insurance is boring. It’s a product that is absolutely necessary but one that has changed very little over the years which is why the introduction of Lemonade Insurance to the marketplace has made such a splash.

Lemonade Insurance has gotten a lot of press lately, it’s being touted as the next step in homeowners insurance. A homeowners policy for modern day, tech savvy consumers with the added bonus of super quick claim payouts as well as support for your favorite charity.

While all of hype sounds great, the truth behind Lemonade is not near as exciting. In reality it’s not that much different than standard homeowners insurance. Here is an overview of Lemonade Insurance and what makes it different, and more importantly, the same, as regular old homeowners insurance.

Peer to Peer

One of the big selling points of Lemonade is that they were calling it peer to peer insurance. Unfortunately, it’s not a peer to peer insurance company and on closer examination the only peer to peer component is that you will be lumped in with similar customers when it comes choosing a charity to donate their excess profits.

In reality, Lemonade is a standard homeowners insurance company that collects premiums from their customers and pays claims out of their general fund pool. The company does not have peer groups that are insuring each other, it is simply a standard insurance model.


Lemonade is definitely a tech heavy insurance company. In fact, you can only buy a policy online or through their app. Their bot, named Maya will guide you through the policy buying process and will recommend coverages. They claim a policy can be purchased in as a little as 90 seconds.

While all of that is great, it isn’t really a game changer, it is possible to purchase a policy online from almost every insurance company out there. It does eliminate the expertise of an agent though and when it comes to insurance that may put you at a disadvantage. Agents can often recommend coverage levels and coverages you may not be aware of, as well as notify you of discounts that can help you save money.

Unlike websites such as ours, Homeinsuranceking.com, Lemonade will not compare quotes from a variety of insurance companies, and show you the best price, they only quote their product so you will never know if a better deal is out there.

Donating Profits to Charity

This is a great idea, and great for publicity, but there is no guarantee that it will actually happen. The Lemonade site makes it clear that the “Giveback” is not a guarantee. “Sometimes, peer groups will not have any money left to giveback because the claim they paid depleted the giveback pool. Paying claims is our top priority, and in extreme circumstances could come at the expense of the Giveback.”

Insurance companies need to have significant reserves in place because at some point they will experience massive losses due to a particularly destructive natural catastrophe. While the charity component of Lemonade is certainly praiseworthy and an honorable goal, if they fail to make a meaningful donation most years, the shine will quickly wear off.

Super Fast Claims

Lemonade also likes to tout their Super Fast claim payment. Time estimates vary but on their site they mention three minutes for payment and that most routine claims can be paid almost instantly.

While everyone wants their claim to be paid as soon as possible, this can also make Lemonade a magnet for fraudsters. Insurance fraud is big business and if a less than honest policyholder can get a claim paid without having to deal with a claim adjuster or by simply submitting a photo, Lemonade may become their favorite target.

If fraud takes off at Lemonade it could easily affect their viability as well as the amount of profit that they have to donate to charity.

Like all new things, it will take the test of time to see if Lemonade truly lives up to the hype or if they find their business model is difficult or impossible to sustain. In the meantime, your best option may be to stick with a traditional insurer until Lemonade has proven that it has what it takes to succeed in the homeowners insurance market.

The easiest way to compare quotes is to use our online quoting application, HomeInsuranceKing.com can easily compare up to 12 competitive quotes and coverage options. Get Free Homeowners Insurance Quotes Today and Save!




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