New Message From Lemonade

Lemonade announced a new coverage stance on guns and gun owners, but does it benefit society or just Lemonade?

In August, I wrote about “Lemonade’s Bizarre New Self-Service Approach.” This “self-service” approach is pitched by Lemonade as a benefit to customers who can apparently delete coverage for spouses, mortgage companies and others unilaterally — something that could create serious problems for consumers who are not counseled on the possible repercussions of such actions. In other words, Lemonade is reducing its workload, increasing consumers’ risks of loss and making customers thank Lemonade for it. Earlier this month, I posted on LinkedIn about “Lemonade’s ‘Zero Everything’ Policy.” Again, Lemonade touts something that largely benefits… Lemonade. And it does it in a way that makes consumers think they are getting the benefits. See also: Politics of Guns and Workplace Safety   Just this week, I learned of yet another odd Lemonade decision regarding a new coverage stance on guns and gun owners. This is from their web site blog: “Guns, And Why Lemonade Is Taking A Stand“ According to the blog post, Lemonade’s next policy form revision will include the following:
  1. “We will exclude assault rifles altogether. We simply don’t understand why civilians need military-grade weapons, and we prefer not to insure them.
  2. We will add requirements that firearms be stored securely and used responsibly, upon penalty of voiding coverage. We believe guns should be treated mindfully and soberly, not as a plaything, a status symbol or an ideological prop. Reasonable people, we believe, can agree on that.”
On the first point, Lemonade did not elaborate on how “assault rifle” will be defined, nor did the company indicate whether the exclusion will be for loss of the rifle itself or, more likely, liability claims for BI to others. If the latter, this policy sounds like it punishes victims as much as gun owners. Lemonade’s HO policies already exclude liability coverage for intentional losses like the recent Las Vegas shooting. So even if the perpetrator had an HO policy with the company (or most other insurers), the policy wouldn’t cover victims’ claims. However, what about an accidental negligent shooting or BI that arises when someone takes a gun owned by someone else and the owner is sued? Most HO policies would respond to such claims. However, it doesn’t sound like Lemonade wants any part of that. On the second point, Lemonade says that its revised policies will require that all firearms be stored “securely and used responsibly” or else there is no coverage. How do you determine what “securely” and “responsibly” mean if these terms are the ones actually used in the revised policy language? And, again, if such an exclusion is invoked, who is the loser? It sounds like the victim(s) of such negligence now have no insurance proceeds to access. So, who is potentially the primary beneficiary of these changes? It sounds like Lemonade is because it would not be paying claims to innocent victims of the negligence of their insureds. Insurance policies sometimes exclude BI or PD that arises from illegal activities, though most auto policies, for example, don’t exclude BI or PD that arises from driving under the influence. The reason is that one of the primary purposes of liability insurance, from a social aspect, is to benefit innocent victims of such careless actions. See also: Examining Potential of Peer-to-Peer Insurers   However, what we could be seeing with this change from Lemonade is that its insurance products may base coverage on what LEMONADE thinks is morally right or wrong. The company's blog post says it is being upfront about what it thinks is “good” and “not good,” and that Lemonade is not into “gun worship” or “vigilante” gun owners and is doing its part to “solve gun violence.” Sounds like what Lemonade is doing is simply taking away a victim’s source of financial recovery for the negligence of Lemonade’s customers. Does that benefit society, or does it benefit Lemonade?

Bill Wilson

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Bill Wilson

William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of Insurance He retired in December 2016 from the Independent Insurance Agents & Brokers of America, where he served as associate vice president of education and research.


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