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What 23 Year Olds Who Have Never Had Renters Insurance Think About Lemonade’s Upcom

Gen Z Investment Club

Lemonade (LMND) is an insurance “startup” that is set to go public this Thursday, July 2nd, right before the long weekend. The company says forget everything you know about insurance and uses bots to try instantly reimburse you when you make a claim. In this article, we give a brief overview of the service and financials, and we sit down with a 23-year-old who has never had renters insurance to hear his thoughts on the company.

Lemonade’s Homepage

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Our team talked to 23-year-old Will, who moved to New York City last summer after graduating college, to hear his thoughts on Lemonade.

After putting your address in to get a quote what did it look like?

My policy came out to $11.34 a month which included protection of my personal items like my phone, computer, clothes, furniture for 30K, personal liability of 100K, loss of use for 9K ,and medical payments to others for 1k.

As someone who has never had renters insurance before what part of this policy seems advantageous to you?

Well, I honestly have never thought about getting renters insurance or know anyone my age that has it, but still parts of the plan stick out to me. One is the personal property protection. Although it hasn’t been an issue since I left college, in school I had a ton of expensive clothing stolen out of my room. I had expensive belts, shoes and sunglasses all go missing which sucked, so in that sense I think it could be worth it. It may not be as much of an issue anymore, since I don’t have as many people coming in and out of my apartment. Therefore, I think Lemonade could do well in a college space. I think they could get a lot of customers since people frequently lose stuff in college between house parties and going out a lot.

Another part of the company that interests me is the loss of use policy. When I was renting in NYC the summer of my junior year for an internship, my apartment had multiple ant infestations out of nowhere even though there wasn’t even a kitchen in the space. It was so bad that a couple times I had to stay in a hotel and pay a couple hundred bucks a night, therefore that coverage definitely would have benefited me. Now that I have a real apartment that’s much nicer, its hard to imagine having that problem again, but I guess something else could happen.

So after looking at the policy and considering your own use cases do you think it would be worth it now?

No, at least not at the moment. Had you asked me in college there’s a good chance I would have considered it, but now it seems less likely I would have my stuff stolen and I’m in a better renting situation. It is relatively cheap only being 11 dollars a month, so who knows maybe I’d consider it in the future but at least for right now I can’t say it’d be worth it.

Now that you are aware that Lemonade exists if you decided to get renters insurance would you look towards them or maybe at a more established insurance firm like competitors Geico or Allstate?

I would say that Lemonade seemed easy to use and had a similar userface to other apps geared towards people my age such as Robinhood, Spotify, Venmo, etc. I don’t think that I would look towards a Geico or Allstate unless the price was significantly lower or I was much older and had a family. In my mind they sort of have the same consumer brand reputation as a Wells Fargo or E-trade — a not very user-friendly service that people my age would find annoying and too buttoned-up. Also the fact that Lemonade is geared towards people my age would make me think they would approve more things that I would actually lose, like the sunglasses I talked about. And although the fact that they donate money to charity doesn’t win me over its kind of a cool thing, so if I had to decide between Lemonade and another competitor, I’d probably choose Lemonade.

So any final thoughts about Lemonade, their IPO, or renters insurance in general?

As someone who actively invests and does a lot of my own equity research, I think I will probably wait to see how the company does in its first year public. Lemonade seems like a company that could be a great long term investment, but I think there is big downside in the short term, especially with the global pandemic. I’m a little surprised they’re even choosing to IPO now. In a normal world I don’t think I am completely sold on renters insurance, but especially not when I am barley leaving my apartment. I would like to think that this will all be over soon, but who knows how long this whole situation could last and because of that, there is a lot of risks involved, so I’m very hesitant.

I do think the company has potential and it is still growing considerably. Keeping almost 80 percent of customers year over year seems good, so obviously the people using it must like it or think its worth it. It would be a good idea for them to target people younger then me as well, especially people in college. I had never heard of Lemonade until recently, but if they attract a lot of college students while they’re young and they’re happy with the service, they could have a lot of customers that continue to use it when they graduate and move to places like New York City or San Francisco. Being able to appeal to people like me and making renters insurance commonplace for my generation is something thats totally possible, so, if they gain traction in the market, they could have a lot of success.

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