Lemonade car insurance review: Premiums based on your driving habits, but limited availability

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Editors’ take: Lemonade car insurance could be an excellent choice for people interested in a usage-based insurance model — though it’s only available in select states. Lemonade uses telematics to gain insights on your driving safety and mileage to calculate insurance premiums. If you’re environmentally conscious, you’ll be happy to know that Lemonade plants trees based on the number of miles you drive to offset carbon emissions. Plus, drivers of electric vehicles can save on their policies. Lemonade is app based, so if you’re looking for a human connection, you may want to consider a different insurer.

Lemonade auto insurance at a glance

Availability	Available in Illinois, Ohio, Oregon, Tennessee and Texas
J.D. Power customer satisfaction ratings	Not listed
How to get an insurance quote	Online or the via app
How to submit a claim	Via the app

Pros

Usage-based premiums and discounts
Easy claims process
Tree-planting program

Cons

Not available in most states
Location tracking required

What you need to know about Lemonade auto insurance

Founded in 2015, Lemonade offers renters, homeowners, car, pet and term life insurance. The company uses artificial intelligence to help users buy insurance, file claims and receive payouts. Lemonade takes a flat fee from your insurance policy and donates the leftover money from premiums to charity.

Usage-based premiums and discounts

Lemonade uses location-based information, called telematics, derived from its mobile app to determine how much your car insurance premium should cost. Your premium is based on how much and how safely you drive, not by demographics.

Fast and easy claims process

Lemonade’s claims process uses artificial intelligence to make payouts quickly. Users file a claim on the Lemonade app, and the AI runs anti-fraud algorithms. If the claim is approved, Lemonade pays it out “instantly.” Otherwise, Lemonade’s person-run claims department handles the claim. According to the company, 30% of claims are handled instantly.

Tree-planting program

Using its app, Lemonade tracks how many miles you drive. It offers lower rates to lower-mileage drivers. It also uses your mileage data to plant trees. The more you drive, the more trees Lemonade plants to offset your carbon footprint. Electric vehicles and hybrids are eligible for additional policy discounts.

Auto coverage offered by Lemonade

Lemonade offers full-coverage auto insurance (typically defined as liability, comprehensive and collision), with a few extras, like temporary transportation coverage, extended glass coverage and roadside assistance. Other coverage options include medical payments coverage, personal injury protection and underinsured/uninsured motorist coverage.

Auto insurance discounts offered by Lemonade

Lemonade claims to offer car insurance policies for as low as $30 a month. One of Lemonade’s main draws is its use of app-based telematics, which collects data about how often and how safely you drive via the Lemonade mobile app. That means safe drivers, as well as low-mileage drivers, may pay less. Here are some other car insurance discounts Lemonade offers.

Discount for enabling app permissions
Discount for signing up before your coverage start date
Discounts for electric and hybrid cars, including coverage for emergency charging and damage to your wall charger
Discounts for bundling car and home, renters, pet health and term life insurance policies

Is Lemonade good at paying claims?

Lemonade uses artificial intelligence to pay some claims quickly. According to the company, 30% of claims are paid out “instantly.”

How is Lemonade insurance so cheap?

Lemonade claims to offer car insurance policies for as low as $30 a month. The company collects location-based data and your safety score to price your premium, and it leans on artificial intelligence to handle and pay out claims.

Is Lemonade a real insurance company?

Yes, Lemonade is an insurance carrier and carries real insurance coverage. It is a publicly traded company on The New York Stock Exchange.

Not sure if Lemonade auto insurance is right for you? Consider these alternatives.

Progressive: Progressive could be another good option if you’re looking to save money by tracking your driving habits.
Safeco: If you’d prefer to work with a local agent, you may want to check out this insurance company.

About the author: Sarah Sidlow is a freelance writer and editor based near Detroit. She has a master’s degree in journalism from Georgetown University. Sarah’s work has appeared in Luxembourg’s national newspaper, Washington City Paper… Read more.