Lemonade launches an insurance product for Tesla Full Self-Driving customers

Lemonade is rolling out a new insurance offering designed specifically for drivers using Tesla’s advanced driver assistance technology, known as Full Self-Driving (Supervised). The insurer says the product can reduce per-mile insurance costs by “approximately 50%” for eligible customers.

The launch marks one of the earliest attempts to price auto insurance based on how much of the driving task is handled by software rather than humans. It also reflects how insurers may begin carving out new product categories as partially autonomous systems — and eventually fully self-driving vehicles — become more widespread.

Lemonade announced on Wednesday that the offering relies on “vehicle telemetry data that was previously unavailable,” made accessible through a “technical collaboration with Tesla.” The insurer declined to share further technical details. According to the company, it will use this data to train its own usage-based risk models, allowing it to distinguish between miles driven using Full Self-Driving and those driven manually, with pricing adjusted accordingly.

The company is branding the product as “Autonomous Car insurance.” While Tesla’s Full Self-Driving software does not yet enable full autonomy — drivers must stay alert and be ready to take control at all times — the product signals confidence that Tesla CEO Elon Musk will eventually deliver on his long-standing promise of true self-driving capability.

“Conventional insurers view a Tesla like any other vehicle, and AI like any other driver. But a system that has 360-degree awareness, never gets tired, and reacts in milliseconds isn’t comparable to a human driver,” said Shai Wininger, co-founder and president of Lemonade, in a statement. He added that Lemonade’s existing pay-per-mile insurance product has enabled the company to build a technology stack capable of collecting and analysing vast volumes of real-world driving data to support more accurate, dynamic pricing.

The new auto insurance product is set to debut in Arizona on January 26, with a rollout in Oregon planned for the following month. Lemonade said that pricing will continue to improve as Tesla’s Full Self-Driving software demonstrates increased safety, noting that “the safer FSD software becomes, the more our prices will drop.” The company’s standard auto insurance coverage is currently available for “most popular cars” across Arizona, California, Colorado, Illinois, Indiana, Ohio, Oregon, Tennessee, Texas, and Washington.

Tesla itself has offered in-house car insurance to customers for several years. However, in late 2025, the automaker faced enforcement action from the California Department of Insurance. Tesla, along with its partner State National Insurance Company, was accused of “egregious delays in responding to policyholder claims,” “unreasonable denials,” and engaging in what regulators described as “unfair claims settlement practices.”

Tesla has disputed the allegations and denied any wrongdoing.