Lemonade reinvents home and renter’s insurance

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Lemonade reinvents home and renter’s insurance
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Move over, Beyonce! There’s a new Lemonade on the scene…and this one’s for people in need of home insurance and renter’s insurance!

Read more: 7 kinds of insurance you can skip buying

A new way of thinking about insurance

You know the classic insurance sob story: You pay your premiums month after month, year after year, and then suddenly when you need your insurer to pay a claim, it becomes a big fight!

Well, The New York Post reports there’s a startup that aims to remove that adversarial nature from insurance by turning it over to the people à la the peer-to-peer (P2P) lending business model.

Some estimates suggest there’s nearly a 40% fraud rate in the insurance industry. That means up to four out of every 10 customers will file false claims that drive up premiums for the rest of us and make insurers suspicious of legit claims when they do happen.

Enter Lemonade, which bills itself as the ‘world’s first P2P insurance company.’

Homeowner’s insurance starts at as little as $35 a month with Lemonade, and renter’s insurance starts at just $5 a month. That’s a steal of a deal!

Just looking at the latter one for a minute, the average renter’s insurance policy costs a little less than $200 annually. But with Lemonade you’d pay more in the $60 range!

Lemonade takes a flat fee of 20% out of premiums for administration and makes everything else available to pay claims quickly. And in years when the startup has money left over, they’ll donate it to a charity of your choice.

Key to keeping the cost of premiums down is Lemonade’s use of chatbots instead of brokers to get you the right policy.

The low prices, the ease of getting a quote through your phone, the friendly chatbots…that’s all part of Lemonade’s strategy to win over customers and build a relationship that customers won’t want to compromise with false claims.

Want to know some other ways Lemonade is doing all it can to keep you honest? Check this out:

  • You have to shoot a video of yourself on your phone explaining the loss or damage when you file a claim.
  • Signing up requires you to put your signature on an honesty pledge—one that’s reportedly overshadowed by an ominous FBI crest!

Lemonade only serves the five boroughs of New York at this point. But there’s no question their approach is innovative and it could spread across the country if it does well in the N.Y. market.

Read more: Is pet insurnace worth the price?

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Theo Thimou About the author:
Theo is director of content for clark.com. He has co-written 2 books with Clark Howard, including the #1 New York Times bestseller Clark Howard's Living Large in Lean Times.
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