Insurance newcomer Lemonade is beginning to offer auto insurance, but slowly. As of January 2023, Lemonade insurance covered cars in just four U.S. states – Ohio, Illinois, Tennessee and Texas..
If you live in one of those, read on to find out the pros and cons of Lemonade car insurance, how it works, pricing and more.
Lemonade Car Insurance Pros and Cons
- Telematics-based and AI-powered
- Rates are great for most users
- Quotes available online and through the app
- Giveback program lets you choose a charity
- Claims are processed instantly in some cases
- Technological surveillance can feel invasive
- Pricing isn’t transparent, relies on personal info
- App is the only point of contact with company
- Tendency to avoid or ignore customer complaints
- Only available in four states currently
Lemonade car insurance is telematics-based, an innovative new system most auto insurers are beginning to offer. It passively measures driving behavior and location through technology on your phone or devices you can install in your car, including how often and how far you drive.
The information collected gives Lemonade the data it needs to calculate your rates, specifically tailored to each driver’s profile and driving habits. Therefore, safer driving can lead to lower premiums, as can low mileage.
Lemonade uses its technology to calculate your carbon footprint while driving, and has a reforestation program that plants trees to offset your driving. Lemonade also donates part of your unused premiums to a charity of your choice after taking their profits when you pay and holding onto the rest until you renew or don’t need coverage. At the end of the year, Lemonade Giveback lets you choose a charity to receive any premiums you didn’t use during that year.
Rates are good for any budget
Beyond the usage-based telematics system discounts, there are also discounts for electric vehicles (EVs) and hybrids. Lemonade is known for its sometimes drastically low rates on other forms of insurance, such as renters, homeowner or pet insurance. If available, Lemonade car insurance is no different. They also provide tips on how to lower car insurance premiums.
Quotes available online
You can get a quote for Lemonade car insurance or a Lemonade bundle on the company’s website or through the app. The process is personable, attractive and even fun. A marginally quirky AI helper asks a series of questions to arrive at your specifically tailored quote, which you can then purchase on the spot.
Can make claims through the app
The usage-based technology makes claims a lot easier to file since they already have many of the details they’ll need to approve your claim. The AI helper is good at using the information you actively provide, combined with what you passively supply by agreeing to use the app in the first place.
How much is car insurance worth if you can’t get it in your state or if you can’t get the app to handle your case? Lemonade doesn’t offer SR-22 insurance (so certain driving violations on your record mean Lemonade is not for you), nor can it insure cars used for commercial purposes, including rideshare driving. Explore other cons below:
Not available in all states
Lemonade is currently available in Ohio, Illinois, Tennessee and Texas. Other Lemonade products are already available nationally, and the company promises to roll out car insurance in more states soon. They recently acquired Metromile, a metered insurance that’s available in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. Presumably, those are the next states to be added to their list of offerings, although Lemonade has not announced a timeline for expansion.
Low customer ratings
Many complaints and low ratings seem based on the inaccessibility some consumers feel when confronted with an app-only company. When something goes wrong with a policy or claim, the app may not respond as you want or in the timeframe you need. There is an app, but if it can’t help, there is not a lot of recourse available.
Lemonade does not currently hold accreditation by the Better Business Bureau and has earned an F rating for its closed or ignored complaints. We found that customers complain about delayed or denied claims and may show frustration with using the app.
Lemonade Car Insurance Plans and Offerings
Lemonade breaks your coverage up into liability coverage and physical damage. Lemonade car insurance is highly customizable to your situation.
For example, you can elect temporary transportation coverage (which pays for a rental or rideshare if you can’t drive your car) or extended glass and windshield coverage.
Liability coverage refers to bodily injury or property damage to other people resulting from an accident you caused. Lemonade will also pay for your lawyer and cover the damages if you get sued after an accident.
Underinsured and Uninsured motorist coverage
Uninsured and underinsured driver coverage protects you when you’re in an accident with someone without liability insurance, or enough insurance, to cover any damage they cause.
Personal Injury Protection (PIP) and medical payments coverage
Lemonade makes no distinction between medical payments coverage and PIP, which can be mandatory depending on the state and covers medical bills and lost income.
Collision and comprehensive insurance
Collision coverage refers to mishaps like car accidents, where your car collides with another object or car. Comprehensive coverage refers to other things you can’t control, such as weather, fire, vandalism, theft and even hitting an animal.
Emergency crash and roadside assistance
Lemonade offers emergency services as part of its policies and provides the option to purchase temporary transportation and roadside assistance coverages as add-ons. Assistance includes:
- Emergency crash assistance will call you if there is an accident and alert emergency services (law enforcement, ambulance, fire department, roadside assistance) if you don’t respond.
- Roadside assistance provides complimentary towing and winching, jump starts, tire changes and vehicle key replacements for customers that have opted to drive using the Lemonade app.
Lemonade Car Insurance Pricing
Car coverage premiums are calculated for your entire household, meaning every car, driving record, insurance history and so on for everyone in the house is taken into account. Lemonade claims your premiums will likely drop on renewal thanks to the location-based technology monitoring your driving.
To save on premiums, Lemonade also suggests paying annually, bundling with other Lemonade products where possible, choosing a higher deductible, maintaining the car regularly, keeping a clean driving record and driving an EV or hybrid. Simply participating in the telematics program comes with a discount, as well. Their website implies that prices can be as low as $30 a month, but the specifics aren’t available.
Lemonade Car Insurance Financial Stability
Lemonade claims a Financial Stability Rating of A (Exceptional) from Demotech, a well-known rater. According to Lemonade’s website, some of the industry’s most known brands, including Swiss Re, Munich Re and Hannover Re, reinsure it. Reinsurance is also known as “stop-loss” insurance and means insurance for the insurance company. It’s an industry practice that helps cut the risk to the provider.
Lemonade Car Insurance Accessibility
One aspect of Lemonade car insurance that’s currently pretty underwhelming is its availability.
At the start of 2023, Lemonade car insurance was only available in four states: Ohio, Illinois, Tennessee and Texas, but the company claims to be expanding rapidly.
Lemonade is accessible online and through the app, but that’s all. A phone number for emergencies is not helpful for claims, customer service or quote inquiries. Do keep this in mind because, in stressful situations that require insurance claims, there’s often no substitute for talking to a real person.
Lemonade’s phone app has a smooth, clean, fun interface. This interface allows you to get new coverage and file claims from within the app, something that appeals to younger generations. It’s also nice to know they also use their app to track the number of trees they need to plant to help combat the CO2 emission from cars on the road.
Lemonade Car Insurance Customer Satisfaction
In the car insurance business, we hear a lot from the squeaky wheel, i.e. dissatisfied customers who feel cheated out of a claim, or that Lemonade misrepresented their services to the consumer. In researching these complaints, we did come across enough unanswered complaints and questions that it’s a bit easier to see the downside to an all-digital, app- and AI-based provider.
Potential customers disliked Lemonade’s mandatory tracking feature. Some car insurance companies offer tracking, but they offer it as an option and incentivize its use by offering discounts in exchange for participation. Lemonade requires tracking in order to insure your vehicle. This doesn’t sit right with some customers.
How we evaluated Lemonade Car Insurance
To evaluate Lemonade car insurance, we collected information from its website, searched J. D. Power and the Better Business Bureau for ratings and complaints and Google Play and Apple App Store reviews.
We looked at other telematics-enabled, usage- and location-based apps to see if there were any distinctions between their services or complaints, finding that most digital-first agencies get the same complaints. Considering Lemonade car insurance is only available in four states, it’s not surprising that they have fewer complaints overall.
Summary of Money’s Lemonade Car Insurance Review
Lemonade car insurance is inexpensive, provides good coverage and makes itself fully available online or through the app. Lemonade offers a wide array of coverage options, add-ons and discounts and uses telematics to establish your premium based on driver data.
Be aware, however, that the digital-first experience some customers enjoy can be a nightmare for others, who may want a customer service representative or manager to walk them through a problem with a claim. Also, if you’re uncomfortable with the technical analysis of your driving, you are best served to look elsewhere. Lemonade is, first and foremost, a usage-based insurer, and while that represents a bright future for some, it can be a real burden for those accustomed to dealing with “real people” or a brick-and-mortar insurer.
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