Insurance disruptor Lemonade (LMND -1.18%) expanded into the life insurance industry a few months ago, which is a much larger market opportunity than its core renters, homeowners, and pet insurance businesses. And while it's certainly a large potential growth area, Lemonade's upcoming auto insurance product is the most exciting path to growth. In this Fool Live video clip, recorded on May 20, Fool.com contributor Matt Frankel, CFP, explains why. 

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Matt Frankel: Lemonade jumped into life insurance, but that's really not going to be their big accelerating market. Life insurance is an adjacent product they're selling to a lot of their current customers. There wasn't a ton of demand for it. Being honest, the younger generations don't have as much desire to get life insurance as they probably should, coming from your friendly certified financial planner over here.

But having said that, Lemonade has reported seeing overwhelming demand for car insurance. They recently reported that they are going to be rolling that out. Here's why this is so significant. Auto insurance is a massive industry. It is estimated to be a $300 billion market. Lemonade estimates that its current customers are spending over $1 billion a year on auto insurance. I mentioned the total in-force premium Lemonade has is about a quarter billion dollars.

They don't have to convert all of their customers. Auto insurance is just a valuable market. The average U.S. customer pays $139.50 a month in auto insurance premiums. The average renters insurance customer, which is Lemonade's bread and butter right now, pays $15 a month. I did the math before the show, if they can convert 14% of their customers into auto insurance customers, they would double their in-force premium. That's a nice growth market, especially something that they're seeing "overwhelming demand for."

Lemonade's insurance products sell themselves. If you tell their customers, "Okay, you like your renters insurance experience? You know how we paid your claim last month in three seconds," which is what they're paying claims in about three seconds. "You want your auto insurance to be that easy? Sign up with us." I think 14% is a doable goal within the next few years. This is something their customers are paying for anyway. Why not make it easier? A lot of them aren't paying for life insurance anyway, which is why I'm not as bullish on that market. But their customers, most of them have cars. They are paying for auto insurance anyway.

There's a huge opportunity to grow their company here, cross-sell products, just build their insurance ecosystem. They want to just completely revolutionize the insurance industry and this is the next step to doing it. I think if you missed out on Lemonade in the post-IPO months when it was still in the $40-$50 range, this is a second chance if you wanted to add it to your portfolio.