Lemonade Auto Insurance Review 2024: Pros and Cons

Lemonade exclusively sells pay-per-mile and telematics-based car insurance policies. Lemonade car insurance may be a good fit if you don’t drive much and are comfortable having your driving behavior monitored remotely.

Lemonade pay-per-mile car insurance is available in Arizona, Oregon and Washington, and telematics-based insurance is available in Illinois, Ohio, Tennessee and Texas.

In July 2022, Lemonade acquired Metromile. When their policies end, all Metromile policy holders will either be offered policy renewals through Lemonade or given a non-renewal notice if they’re in a state where Lemonade doesn’t offer coverage.

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Lemonade offers two types of car insurance policies, but the type available to you depends on your state.

Telematics-based insurance. In Illinois, Ohio, Tennessee and Texas, Lemonade uses tech that collects driving data — including speed, how much you drive and when you drive — to price its policies. You’ll get an automatic discount for signing up, and then Lemonade will adjust your premium at renewal based on the data it collects. Data is collected from either a device you plug in to your vehicle or a mobile app.

Pay-per-mile insurance. In Arizona, Oregon and Washington, Lemonade’s pricing is based on how many miles you drive.

Premiums are broken into two parts: a base rate and a per-mile rate, typically a few cents per mile. The base rate and cost per mile are initially determined using typical factors, such as your location, driving history, your vehicle’s make and model, plus the coverage you choose. Your monthly cost equals the per-mile rate multiplied by the number of miles you drove in the past month, added to your base rate.

It depends on the type of policy you buy and how much you drive. Here are a couple of examples on how much you could pay with a pay-per-mile policy.

Let’s say you have a base rate of $40 per month and pay 5 cents per mile:

• If you drive 500 miles in a month, your monthly premium would be $65. Here’s the math: (500 x $0.05) + $40, which totals $65 ($25 + $40).

• If you drive twice as much in a month, or 1,000 miles, your total would be $90 ($50 + $40).

But say your Lemonade base rate is $60 and your per-mile rate is 10 cents:

• Your cost for a month in which you drove 500 miles would be $110 ($50 + $60).

• If you drove 1,000 miles in the same month it would be $160.

If you take the occasional road trip, don’t worry; your habit won’t result in a staggering insurance bill. Lemonade limits mileages charges 250 miles per day.

Lemonade suggests considering their pay-per-mile policies if you typically drive less than 1,200 miles per month. Be sure to estimate your own costs based on how many miles you average per month to be sure Lemonade pay-per-mile insurance will actually be cheaper for you than a standard auto policy.

• Have low monthly mileage.

• Use public transit or work from home.

• Have another vehicle that’s rarely used.

When you’re shopping for car insurance coverage, it’s important to understand what car insurance coverage you want and what you’re required to buy. For instance, most states require a minimum amount of car insurance to drive a vehicle. Alternatively, if you want extra protection, you may be interested in full coverage insurance. Read about the most common types of car insurance coverage to see how they work.

Lemonade offers all the usual types of auto coverage you would expect, with add-on options available, including:

• Temporary transportation: If you have collision and comprehensive insurance on your policy, you can add this coverage to pay for transportation costs up to a certain amount every day your car is in the shop for a covered repair, for up to 30 days. This coverage is slightly more flexible than rental reimbursement coverage, as it can be used to pay for a rental car, public transit or rideshare services.

• Pet injury protection may be included with Lemonade’s comprehensive and collision coverage in certain states. It pays out if your dog or cat is injured or killed in an accident.

• Extended glass coverage reduces or eliminates your deductible for repairs to your windshield, windows or sunroof after a covered incident, as long as your policy already includes comprehensive coverage. How much you pay for the reduced deductible, if any, depends on your state.

Lemonade auto insurance discounts vary by state. Depending on where you live, you may be eligible for a discount for:

• Bundling two or more policies through Lemonade.

• Driving an environmentally friendly car, such as an electric vehicle or hybrid.

• Driving a car with smart technology features.

• Driving fewer than 9,000 miles per year.

• Paying your premium in full.

• Having had continuous auto insurance coverage in the past.

• Meeting Lemonade’s safe driving standards for three years.

• Having had no claims or accidents over the last five years when switching to Lemonade.

• Having an anti-theft device in your car.

• Taking a defensive driving course.

• Driving a car with certain equipment, such as a homing device, daytime running lights, anti-lock brakes and airbags.

• Having your VIN etched on your car.

Lemonade had far more than the expected number of complaints about auto insurance to state regulators relative to its size, according to three years’ worth of data from the National Association of Insurance Commissioners.

Lemonade offers home, renters, term life and pet insurance. Learn more in our reviews below: