After a lemon of a homeowners insurance bill, I went for Lemonade

How much has your homeowners or renters insurance gone up?

Note I didn’t ask whether it’s gone up. With all the claims from wildfires, hurricanes, tornados, and floods and with increases in rebuilding costs, insurance companies have increased homeowners premiums an average of 24% over the past three years, according to the Consumer Federation of America. In Illinois, the three-year increase is 50%, the second highest in the country.

I was shocked when I opened my renewal notice from Country Financial. My premium increased 44% from a year ago! 

When I moved into a South Loop condo 12 years ago, Country Financial had the lowest premium I found, even including a mandatory Illinois Farm Bureau membership that amused this urban high-rise resident. Until this year premium increases were reasonable, so I ignored advice to shop around every time a renewal notice came.

After getting the recent Country Financial bill, I solicited quotes from other companies online. The only response was from Lemonade, a digital insurance company that has no storefronts or agents. Its quoted premium was $181 less than Consumer Financial’s for the same coverage.

I’d heard of Lemonade as a highly rated provider of pet insurance, for which its name sounds suitably whimsical. For homeowners insurance, “Lemonade” conveys less gravitas than an insurer with Financial in its name, but the company, which also sells auto and term-life insurance, has earned a respectable reputation in just 10 years of existence. 

Lemonade has an A rating for financial stability from credit rating agency Demotech and an excellent rating on TrustPilot. It is Money’s pick for best online insurance company. 

“Lemonade is an excellent choice for people looking for basic coverage at affordable rates,” says financial research website ValuePenguin. 

Basic coverage is what I was looking for because I don’t expect to have a claim. It’s unlikely that my ninth-floor condo would be robbed or that my friends would hold me liable for injuries on the premises. If I have a bad experience, I can change insurers again next year.

An insurance policy without local agents, without any agents, seemed strange to me, but I’m behind the times. People have been banking online since the 1990s. Although Lemonade has a customer service phone number, nearly all of its business is done digitally, even claims, which are made through its phone app.

After I paid for Lemonade’s policy, I received a pleasant surprise. I was asked to select a charity from a list of dozens. At the end of every year Lemonade donates money that hasn’t been paid out in claims. Maybe it’s a marketing strategy, maybe the company has a social conscience — or both — but I like that.