Startup Lemonade Enters California Homeowners, Renters Insurance Markets

May 10, 2017

Insurance startup Lemonade is now selling homeowners and renters insurance in California.

California marks the third state of entry for the insurtech that is built on artificial intelligence and behavioral economics. It first launched in New York last September and in Illinois six month later.

The company said it hopes to become available to 97 percent of the U.S. population during 2017. It has filed for licenses to operate in 46 states and the District of Columbia.

Lemonade uses software, called bots, to deliver insurance through its app and at lemonade.com. Consumers also file claims with the bot, which can pay claims instantly and without human intervention.

Renters policies start at $5 per month and homeowners at $25 per month.

Homeowners insurers collected more than $7.4 billion in premiums in 2015 in California, according to data from the National Association of Insurance Commissioners. State Farm, Farmers, Allstate, CSAA and Auto Club are the largest writers.

Shai Wininger, president and cofounder, Lemonade, said expanding to California is a key milestone for the peer-to-peer company. “The tech capital of the world deserves insurance powered by AI, and the people of California deserve to see insurance underwriting profits funding their nonprofits,” he said.

Lemonade takes a flat 20 percent fee and donates any underwriting profit to causes chosen by customers.

“The amazing tech and social impact of Lemonade was the reason we joined the company as investors,” said actor Ashton Kutcher, co-founder of Sound Ventures.

Lemonade founders Daniel Schreiber and Wininger have attracted veteran insurance executives from AIG and ACE for Lemonade’s executive team.

In 2015, Lemonade attracted $13 million in seed funding from outfits including California’s Sequoia Capital and Aleph.

Last December, Lemonade disclosed that it raised $34 million in new venture funding. General Catalyst led the round, with participation from GV (formerly Google Ventures), Thrive Capital and Tusk Ventures. Existing investors XL Innovate (the investment arm of XL Catlin), Aleph and Sequoia also participated.

Everest Re, Hiscox, Lloyd’s of London, XL Catlin and Berkshire Hathaway’s National Indemnity are among Lemonade’s global reinsurance partners.

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