As much as we want to, we can’t provide a quote for everyone.
If you were one of the customers we said no to, it’s not because you’re a bad person, or a bad risk. As an insurance company, we have the responsibility to ensure we have your best interest at heart. We can’t sell something that isn’t right for you – that would be wrong.
In order to build an insurance company for the long-run, we choose to focus on certain types of properties. That said, we’re constantly updating our underwriting algorithms, and as we expand and improve, our guidelines will too.
Since transparency is one of our guiding principles at Lemonade, we’re here to tell you exactly why we sometimes have to say no.
What we look for when writing a policy
Risks we’re not ready to handle: Lemonade could sell an insurance policy for a 22-bedroom mansion, but that homeowner will probably need more unique coverages than we can offer today (for that Andy Warhol on the wall!) .
High-risk properties: Risks are always tricky to determine; a ‘high risk’ policy doesn’t mean these people don’t need insurance, or are not good customers. It simply means the right price for them is much higher than for typical customers. If we decide to insure them, we need to price them accurately, and differently from everyone else… Otherwise we’d have to raise the price for everyone to cover that risk. And that’s not necessarily fair either. We’re working on perfecting this.
Risks that are unique: Lemonade has to exclude certain types of homes because the risks involved are unique. For example, in a multi-family home, you need to make sure the insurance is a good fit. Who is responsible for the roof? The grounds? What is the ownership structure of the home? These are complex questions we need to understand to get the coverage right. We’re not quite there yet.
Potential for catastrophe: Insurance catastrophes are things like wildfires or hurricanes. If we insure a lot of homes that could all potentially get damaged by the same event at the same time, it might be too risky for us at our stage and size. That means we currently limit coverage in areas with significant exposure to wildfire, hurricanes, etc.
It’s not easy being brutally honest, but Lemonade is built on transparency and trust, so we want to be sure to be open with you when we, unfortunately, have to decline your business.
The silver lining? Almost all of these reasons for saying no are just no for right now. We are working on all of them, and will be expanding our guidelines soon.
Since we’re running a real insurance company, we know our limits – and when we decline, we’re doing so in the interest of everyone – customers, the charities we support, and in the interest of building a new 100-year-old company for the long-term.