At a Glance
- Lemonade will slash per-mile rates by roughly 50% for Tesla drivers using Full Self-Driving (Supervised)
- The new “Autonomous Car insurance” taps Tesla telemetry data through a technical collaboration
- Launch begins January 26 in Arizona, expands to Oregon in February
- Why it matters: First major product to price coverage on software driving behavior, not human history
Lemonade is betting that Tesla’s driver-assistance software is safer than humans-and it’s putting money behind the claim. The digital insurer announced Wednesday it will cut per-mile insurance rates by about half for customers who engage Tesla’s Full Self-Driving (Supervised) system, a move that marks one of the first attempts to price coverage based on how software, not people, handles the road.
How the Product Works
The company calls the policy “Autonomous Car insurance.” It uses vehicle telemetry data supplied through a “technical collaboration with Tesla” to determine when the FSD software is active. Lemonade then feeds that information into proprietary usage-based risk models, charging lower rates during miles driven by the system.
Key details:
- Rates drop ~50% when FSD (Supervised) is engaged
- Data stream was “previously unavailable” before Tesla partnership
- Pricing adjusts dynamically as the software logs miles
- Human-driven miles continue under existing per-mile structure
Lemonade declined to specify exactly which telemetry points it receives or how the data is transmitted, citing competitive reasons.
Rollout Timeline
| State | Launch Date |
|---|---|
| Arizona | January 26, 2025 |
| Oregon | February 2025 |
The insurer says additional states will follow throughout the year. The product is optional; Tesla owners can keep their current Lemonade policies unchanged.
Why Tesla Drivers Get the Break
Shai Wininger, Lemonade co-founder and president, argues traditional insurers misprice Teslas by ignoring the car’s built-in AI copilot.
“Traditional insurers treat a Tesla like any other car, and AI like any other driver. But a driver who can see 360 degrees, never gets drowsy, and reacts in milliseconds isn’t like any other driver,” Wininger said in a statement.
Lemonade already offers standard pay-per-mile coverage for “most popular cars” across ten states. That program collects real-time driving data, letting the company claim it can distinguish between software and human control.
Tesla’s Own Insurance Troubles
While Lemonade partners with Tesla, the automaker continues to battle regulatory scrutiny over its in-house insurance unit. In late 2025 California’s Department of Insurance hit Tesla and partner State National Insurance Company with an enforcement action, alleging:
- Egregious delays in responding to policyholder claims
- Unreasonable denials
- Unfair claims settlement practices
Tesla has denied the allegations. The outcome could affect how the company positions its own coverage relative to third-party insurers like Lemonade.
Market Implications
The launch signals a broader shift as partial-autonomy features spread across vehicle lineups. By pricing coverage on software performance rather than human driving records, Lemonade is testing whether regulators and consumers accept algorithms as safer drivers.
If loss ratios support the 50% discount, competitors may follow, accelerating usage-based insurance models tied to real-time autonomy data. For now, Tesla owners in Arizona and Oregon can opt in starting later this month, with Lemonade promising rates will keep falling “the safer FSD software becomes.”
