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 personal; it’s probably because of our underwriting guidelines.
As an insurance company, we have the responsibility to keep your best interest at heart. In order to build our business for the long-run, we choose to focus on certain types of properties, which means we can’t insure every type of property.
That said, we’re constantly updating our underwriting appetite, 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 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 (protecting that Warhol on the wall, for instance!). The same goes for pet insurance. When it comes to your furry friends, Lemonade loves all animals—but right now we can only offer coverage to dogs and cats who meet our age guidelines.
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, pets, and cars because the risks involved are unique. For example, homes that are rented out for short-term stays are a larger liability and theft risk since they are often unoccupied. Homes that are under construction propose an increased risk of fire since they don’t usually have people on-site at all times.
When it comes to cars, if you have an antique, classic, exotic or high-performance car, we’re, unfortunately, not quite ready to offer the special coverage and attention they require.
There are many more variables with these risk types, and in order to get the coverage and pricing right we need to consider and understand the complexities. 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, and so on.
It’s not easy being brutally honest, but Lemonade is built on transparency and trust. We want to be sure to be open with you when we, unfortunately, have to decline your business.
We’re an insurance company that knows our limits—so 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.