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LMND · Forward model · Car · Bull case

What has to happen in Car

Model as of

This page changes Car inside the complete LMND model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

LMND forward model
Horizon
Consolidated fair value $86.24 all other verticals held in this portfolio case
Final-quarter revenue $472M 39% of company revenue
Explicit segment contribution $1.62B EBITDA less segment capex, before corporate items

The AI claims argument turns into underwriting margin, and Car becomes the third large line. Lemonade's LAE ratio has gone from 13% to a record-low 5% against an industry average near 9%, with record lows in homeowners, car and pet in the same quarter - and Car, where claims are hardest, hit 7%. This case carries that cost advantage into the loss ratios rather than treating it as a one-quarter print, and lets Car compound faster as states open. What it does NOT assume is any improvement in pet's loss ratio beyond base, which is the line that got worse this quarter and is about to become the largest book.

Related research
News · Lemonade Added Florida and Missouri. An Infinite Car Market Is Worth 38 Cents to Our Model. Lemonade Car launched in Florida on 26 August and Missouri on 2 September. An unlimited market adds 38 cents to our fair value; the add rate adds dollars.

Car

Basis quarter$42M
Final quarter$472M
Implied CAGR+62%
Final revenue mix39%

The line management is pushing hardest and the one that has to work for the story to change shape. $239M of in-force premium, up 59% year over year, at $2,089 a policy - nine times a renters policy, so a single car customer is worth more than eight renters. Lemonade is adding states rather than saturating them, and it says growth spend will rise sequentially behind Car. The gross loss ratio has gone from 88% to 61% in six quarters and the LAE ratio hit a record low 7% - management's cleanest evidence that AI claims handling works on the hardest line.

Last four quarters
2025 Q3 $20M Estimated
2025 Q4 $27M Estimated
2026 Q1 $34M Estimated
2026 Q2 $42M Estimated
Private passenger autoAutonomous car product
Subscribers 114K 1.4% of a 8.0M addressable base 114,409 policies: $239M of in-force premium over $2089 of premium per policy.
Addressable subscribers 8.0M the S-curve ceiling Private passenger vehicles in the states Lemonade is licensed in or is filing for, not the whole US fleet.
Net adds 11K/qtr ramping toward 38K/qtr, throttled as the base approaches the TAM 10,877 policies added in the basis quarter, the change in the derived policy count.
Net-add ceiling 38K/qtr what supply can deliver at full rate 38,000 policies a quarter, where this line's pace of adds stops rising.
ARPU $122.37/mo drifting +2.0% per quarter, floor $0.00 $122.37 a month net of reinsurance, against $174.08 gross that Lemonade publishes.
Non-subscriber revenue $0/qtr growing 0.0% per quarter Zero. Every dollar of this line is premium earned on the policy base; there is no non-policy revenue in it.
Car

Latest: $472M (2031Q2E)

Period Value
2024Q3 $13M
2024Q4 $13M
2025Q1 $14M
2025Q2 $16M
2025Q3 $20M
2025Q4 $27M
2026Q1 $34M
2026Q2 $42M
2026Q3E $49M
2026Q4E $56M
2027Q1E $65M
2027Q2E $75M
2027Q3E $86M
2027Q4E $98M
2028Q1E $112M
2028Q2E $127M
2028Q3E $144M
2028Q4E $162M
2029Q1E $183M
2029Q2E $205M
2029Q3E $230M
2029Q4E $256M
2030Q1E $286M
2030Q2E $317M
2030Q3E $351M
2030Q4E $388M
2031Q1E $428M
2031Q2E $472M

Assumptions & reasoning

  • Nine times the premium of a renters policy and the fastest grower, but only 114,409 policies. Car is a state-by-state licensing rollout, not a saturation story, so the constraint is regulatory footprint and growth spend rather than demand.
  • The loss ratio is volatile in a way the others are not: 88%, 82%, 76%, 40%, 74%, 61%. That 40% quarter was prior-period development, not a step change, and the model uses the basis quarter rather than the best one.
  • Management said growth spend rises sequentially in the third quarter behind Car and seasonal renters strength, so the near-term cost of this line's growth sits in the corporate layer, not here.
  • The terminal margin on this line is NOT purely underwriting. It is a seasoned loss ratio plus about 27 points that stand for Lemonade's fixed cost base being spread across a larger book. The engine holds sales and marketing, technology and general and administrative at a constant 52.65% of revenue, so operating leverage - the entire profitability thesis - has nowhere else to live. Read the basis margin as disclosed economics and the terminal margin as economics plus an assumption.
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