Lemonade Auto Insurance Review

Is Lemonade Insurance all it’s cracked up to be? Before getting your auto insurance from Lemonade, read our review for all the details you need.

by Quiana Darden Updated March 21st, 2022

What is Lemonade Insurance? 

The Lemonade Insurance Agency is a full-stack insurance provider that promises a transparent experience to its customers. It’s fully licensed and regulated operating in both the United States and Europe. Lemonade offers renters and homeowners insurance, car insurance, pet, and life insurance along with underwriting policies and paying claims.

The company is known for its unique business model. Unlike other insurance companies, it takes a fixed percentage from every premium to pay for operating costs, like salary and rent. That fixed fee means Lemonade doesn’t have any incentive to avoid paying claims; the business is already profiting from the premiums. Then, it takes any money that remains after it pays claims and expenses and donates it to charity through a program called Lemonade Giveback.

The result is you get the benefits of a traditional car insurance company, with the satisfaction of knowing a portion of your premiums are supporting good causes.

Lemonade Auto Insurance Payments

You can make your insurance payments monthly or annually. Opting for annual payments can help you to save money, and you don’t have to worry about making those monthly payments.

To make your payments, you’ll need to use a credit card, but you can also save the card in the app and set up recurring payments so you don’t miss deadlines. If your credit card is declined and you don’t replace it with another one, your policy will be canceled, but Lemonade will be sure to get in touch with you first.

If you decide to pay for the entire year but then cancel or adjust your policy before that year is up, Lemonade will refund you any remaining time that you’ve already paid for.

Rate Increases at Lemonade

Like any insurance company, Lemonade periodically needs to increase its rates, but the company is dedicated to keeping car insurance affordable.

Many factors can affect your premiums. The Lemonade app tracks your driving habits, so if you’re a safe driver, you’ll see a decrease in your rates. Rates are also based on your car’s model, your location, and your driving history.

If you’re at fault for an accident, don’t follow safe driving practices, and live in a heavily populated area where accidents are more likely to occur, you’ll see higher rates. However, maintaining good driving habits and avoiding at-fault accidents can help to keep your rates lower.

The type of car you drive also plays a role. Buying a new car that would be expensive to repair or replace can increase your rates, while opting for an older model used car with less value could reduce your rates.

If you’ve recently seen your car insurance rates increase, it might be the perfect time to shop for a new policy.

With Compare.com, all you need to do is fill out a single quote request form, which takes about five minutes. You’ll receive personalized quotes from up to 65 top insurance providers, so you can shop around for a new policy without having to contact all of these companies individually. Drivers who use Compare.com save an average of $720 per year on their car insurance.

Filing Claims With Lemonade Auto Insurance

Lemonade explains that it pays out claims quickly, so you can replace or repair your vehicle and get back on the road. You can report a claim using the Lemonade app, and during that process you’ll be asked for your bank account information. When Lemonade pays your claim, that money will be deposited directly into your account to make the process as simple and fast as possible.

When you submit a claim, Lemonade asks you to include a video where you explain the claim in your own words. Recording a video helps Lemonade better understand the incident and process your claim appropriately.

If your car has sustained damage, Lemonade will conduct an appraisal to determine its fair market value. An estimator may review the damage at a body shop to determine the cost of the repairs. They will also consider other elements, like your car’s year, make model, mileage, and the trim level, upgraded features, safety features, and your vehicle’s overall condition to determine your vehicle’s value. Lemonade works to conduct this process quickly, so your car can be repaired or replaced.

Common Lemonade Insurance Discounts

While Lemonade works to offer affordable car insurance, the company also offers many discounts that can help you to save more money.

Good Driver Discounts

If you allow the Lemonade app to monitor your driving it will determine whether you’re practicing good driving habits. You can earn discounts for being a safe driver and practicing safe habits like stopping slowly and staying within the speed limit.

This app tracking option offers a major advantage in comparison to how other insurance companies handle premium pricing. Most insurance companies lump drivers into risk brackets based on their age. For example, a teen driver will always pay more for coverage because they’re inexperienced, and senior drivers can also see rate increases, despite good driving habits.

With Lemonade, your rates depend on your driving habits, and you’re not placed into an age bracket. A teen who drives safely may see their premiums go down as they prove that they’re a safe driver over time. The app gives you more control over your rates and rewards good drivers, no matter how old they happen to be.

Mileage-Based Discounts

If you have a short commute or only use your vehicle occasionally, you might be eligible for a low mileage discount. When you let the Lemonade app track your location, it will monitor how much you drive. Since you’re less likely to get into an accident when you spend less time on the road, Lemonade rewards you for that reduced risk.

As an added benefit, if you have the option of taking public transportation to work or carpooling with friends, you can bring down your driving mileage and increase your discount eligibility.

Early Signup Discounts

If you plan ahead and sign up for Lemonade car insurance before your desired coverage start date, you can save on your car insurance rates. Planning ahead pays off.

Hybrid/EV Discounts

Lemonade not only offers car insurance for your hybrid or electric vehicle, it also offers special discounts for these vehicles, too. You’ll be offered a lower rate for your hybrid or EV policy, and Lemonade will also cover emergency charging and damage that might occur to your wall charger.

Multi Policy Discounts

When you have multiple policies with Lemonade, you can bundle them together for additional savings. Since Lemonade offers homeowners, term life, pet health, and renters insurance, there are plenty of ways to take advantage of this multi-policy bundle discount.

Lemonade Auto Insurance Coverage Options

Lemonade offers several coverage options that can protect you and save you money. Just a few of those situations include covering repairs from a car accident, fixing your vehicle after damage from weather or vandalism, repairing glass like your windshield and moonroof, and covering the costs of a lawyer to defend you if you’re ever sued for liability.

Here are the coverage options listed on their website

  • Collision Coverage: Collision coverage helps to pay for expenses that result from an accident. These expenses might include towing, bodywork, and other damage.
  • Comprehensive Coverage: Comprehensive coverage gives you additional protection against non-accident damage, like that caused by extreme weather or falling trees. Typical expenses might include towing and repairs to your vehicle.

  • Liability Coverage: Required by most states, liability insurance covers you for damage that’s caused by your car. That might be damage to someone’s personal property, like a fence, or injury to someone during an accident.
  • Roadside Assistance: While other insurance companies offer roadside assistance as an add-on, Lemonade includes it for free. This assistance includes tire changing, jump starting, winching, and towing help to get you back on the road.

When you choose a Lemonade policy, you can customize it to your needs, ensuring you have the right amount of coverage. All coverages have maximum and minimum limits, and you can choose deductibles that work for your budget. Once you buy a policy, you can use the Lemonade mobile app to edit those coverages as needed.

Keep in mind that Lemonade requires you list all of the cars and licensed drivers in your home on your insurance policy. If you have lots of drivers and cars, your premiums are likely to be higher. Unlike other insurance companies, Lemonade doesn’t give you a choice in this matter, and if you don’t list a driver on your policy but they’re in an accident with your car, their coverage could be voided.

To find out all of the coverage options available from Lemonade, it’s best to get a quote. Want to compare your Lemonade Insurance quote with others?  Compare.com makes that easy. It takes about five minutes to fill out Compare.com’s quote request form. Then, you’ll receive up to 65 personalized quotes from top car insurance companies. You can easily compare the quotes, find the policies that are best for you, and make sure that you’re getting the best deal.

Where is Lemonade Insurance Available? 

Lemonade is already available in most states:

  • Alabama
  • Arizona
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • District of Columbia
  • Florida
  • Georgia
  • Illinois
  • Indiana
  • Iowa
  • Maryland
  • Massachusetts
  • Michigan
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Tennessee
  • Texas
  • Utah
  • Virginia
  • Washington
  • Wisconsin

Lemonade will be available in additional states soon, so be sure to check back if your state isn’t yet listed.

Customer Reviews for Lemonade

Lemonade Insurance currently has an F rating with the Better Business Bureau, and 239 customer reviews give it an average of 3.8 out of 5 stars which is more promising. The company has closed 154 complaints in the last three years, and 68 complaints in the last 12 months.

Many of the customer complaints describe frustration with the process of filing a claim using the app and not being able to speak with a person. Many customers were frustrated at the lack of customer service, and many described denied claims and frustrating interactions with the company.

Pros and Cons of Lemonade Insurance

If you’re considering Lemonade Insurance, it’s important to be familiar with the pros and cons of the company.

Pros of Lemonade

  • Affordable insurance rates: Lemonade’s business structure and the use of its app location tracking means Lemonade is able to keep rates affordable and competitive. Good driving habits will help you get even better rates.
  • Lemonade plants trees: Since cars emit carbon dioxide every year, Lemonade uses its app to track how much its insured drivers travel. Then, Lemonade plants trees, based on that mileage, to help reduce your carbon footprint.
  • Lemonade does social good: Lemonade donates a portion of your premiums to charities, so your car insurance payments are doing good.

Cons of Lemonade

  • The app is required: As a customer, you’re required to have the Lemonade app on your phone. The app tracks your driving habits to ensure that policies are priced fairly – but this could earn you discounts, too.
  • Poor reviews: At six years old, Lemonade is a relatively young company, but it’s accumulated plenty of negative reviews. Be sure to review frequent customer complaints, many of which have to do with the claims process.

FAQs About Lemonade Insurance

Why is Lemonade Insurance so cheap? 

Lemonade offers many affordable insurance options because of its business structure. Rather than profit off of your entire premium, Lemonade takes a fixed percentage out of premiums, then donates remaining money to charity. Other strategies, like basing car insurance premiums on your driving habits, also help to keep costs low.

What types of policies does Lemonade Insurance offer? 

In addition to car insurance policies like collision and liability, Lemonade Insurance also offers renters, condo, homeowners, life, co-op, and even pet health insurance. You can bundle policies together for additional savings.

What types of charities does Lemonade donate to? 

Lemonade donates to a wide selection of charities, including the Humane Society of the United States, To Write Love on Her Arms, American Forests, Born This Way Foundation, The Malala Fund, March for Our Lives, and The Trevor Project.

How can I add on or change a policy? 

You can easily add and change policies right within the Lemonade app. If you buy a new car, Lemonade offers same-day coverage so you can drive it right away. You can also use the app to adjust your deductible and coverage limits.

How quickly are claims paid? 

Lemonade works to pay claims quickly, but the time required will depend on your claim. If the company needs to wait for an appraisal of damage to your vehicle and repair costs, that requirement can extend the amount of time you have to wait to be paid.

Does Lemonade offer insurance for Uber and Lyft drivers? 

Currently, Lemonade car insurance is available for personal use only, and excludes business and commercial use.