There are many annoying things about traditional insurance companies. Just getting insurance is annoying, because you have to fill out a lot of paperwork and talk to brokers who try to sell you policies you don’t need and confuse you with their sales talk. Then when something goes wrong and you need to make a claim, there are large deductibles and tons of hurdles to getting a payout for your claim. When you make a claim, it’s because something unexpected and awful just happened, and filing your claim only makes it more frustrating.
Lemonade Insurance is handling renters and homeowner’s insurance in a very different way. They built their business model around the idea of cutting these awful annoying things out.
To begin with, you don’t speak to a broker. You can sign up for insurance without having to speak to another human being. When you sign up with Lemonade Insurance, you talk to their bot, Maya, on their website. The bot asks about your needs for renter or home insurance, and within a couple minutes, you’re done.
The company then takes a flat 20% fee. This is a significant factor in what sets Lemonade apart.
Typically, the way traditional insurance companies work is that they get money when no one makes a claim. The fewer claims they have to pay, the more they make. This is why they fight their customers so much on paying out when claims are made and why they seem to pinch every penny at a time when you need them to be on your side.
Lemonade Insurance doesn’t make any more money if you don’t make a claim. They were paid 20% of your monthly bill, and that’s it.
Instead, if you don’t make a claim, the money is donated to non-profit organizations. You can choose from a list of non-profits at sign up so you decide where that money goes.
This means when you make a claim, they don’t have an incentive to cheat you out of your claim money. It also means you are participating in their Giveback program. With traditional insurance companies, if you never make a claim, you know your monthly bill will make a corporation rich. With Lemonade Insurance, your money will do something you can still feel good about.
In the event you need to make a claim, you need to chat with Maya, the Lemonade Insurance Bot, and briefly list out what damages have happened, and submit a video telling more fully what the situation is. The claim is filed without having to fill out a ton of paperwork or talk to anyone, just like when you signed up.
Meanwhile, the company still offers similar insurance plans to traditional insurance companies. The plans offer the same kinds of insurance people have always wanted, but the business model is set up to meet the desires people have today. Mostly, that insurance companies stop being quite so annoying.
Lemonade Insurance was founded in 2016 and, so far, is available in 19 states, plus Washington DC. So far, their business model is unique in the United States.