Lemonade Set to Hike Pet Insurance Rates in California

More than 57,000 pet owners will see their pet insurance premiums rise sharply following the California Department of Insurance’s approval of substantial rate increases for Lemonade pet insurance policies. The CDI green-lighted an overall increase of 14%.

Currently, Californians with Lemonade pet insurance pay an average of $710 annually for their coverage. With the approved rate increase, the average premium will jump to $827 per year.

The rate increase will take effect on Nov. 24, 2024, and will affect all new policies and 57,471 existing policies.

Why the increase?

Inflation and the rising cost of veterinary care are driving pet insurance rate increases across the country. “Pet insurance firms have been increasing premiums to offset the rising cost of claims,” Srimukh Oddiraju, licensed insurance agent and CEO of Fletch, a technology provider to several leading insurance firms, told Insurify in May.

But in its state filings requesting the increase, Lemonade pointed out that its situation is more complex.

Lemonade — which also sells renters, homeowners, auto, and term life insurance — cited rising claims costs due to older pets. “As pets age, they are more likely to require veterinary care, and therefore have a higher premium,” the insurer said in its filing. “This is also evident in our higher loss trend when compared to competitors, as it anticipates more frequent and potentially more costly veterinary visits.”

What’s next: Preparing for higher insurance costs

Earlier this year, the CDI approved rate increases of 56% for MetLife and Embrace and 23% to 46% for American Modern Home. And Nationwide, one of the largest pet insurers in the country, has said it won’t renew 100,000 policies across the country.

Lemonade’s higher pet insurance rates take effect on Nov. 24, 2024, so policyholders have some time to comparison shop for cheaper pet insurance. But be sure to understand the terms, conditions, and limitations of any policy you consider buying, Oddiraju warned.

Most pet insurance doesn’t cover pre-existing conditions. So pet owners who decide to switch insurers and whose pets have pre-existing health conditions should comparison shop with caution. “Switching from one pet insurance firm to another ‘cheaper’ firm can be risky if certain existing conditions don’t get covered,” Oddiraju said.

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