Lemonade launches insurance product for Tesla customers for full self-driving

Digital insurer Lemonade is launching a product for users of Tesla’s advanced driver assistance system, known as Full Self-Driving (supervised), which the insurer promises will cut per-mile rates by “roughly 50%.”

It’s one of the first products geared toward securing pricing based on how software systems handle driving, and a sign that companies may be looking to create new lines of business as partial autonomy and true self-driving begin to spread.

Lemonade said Wednesday that it is leveraging “previously unavailable vehicle telemetry data” thanks to “technical collaboration with Tesla,” though the insurer declined to provide further details. Lemonade said it will train its usage-based risk prediction models to determine when a driver is using full self-driving or operating the car themselves, and price accordingly.

Lemonade calls the new product “autonomous car insurance.” Tesla’s software doesn’t currently make cars fully autonomous, and drivers must be ready to take over at a moment’s notice. But the product is clearly a bet that Tesla CEO Elon Musk will finally make good on his long-held promise that his company will make it happen.

“Traditional insurance companies treat a Tesla like any other car, and AI like any other driver,” Shai Weininger, co-founder and president of Lemonade, said in a statement. “But a driver who can see 360 ​​degrees, never feels drowsy, and reacts in fractions of a second, is not like any other driver.” “Our current pay-per-mile product gives us something no traditional insurance company has: a unique technology stack designed to collect massive amounts of real-world driving data for accurate, dynamic pricing.”

The new auto insurance product will launch in Arizona on January 26, and in Oregon the following month. “The more secure FSD becomes, the lower our prices become,” Lemonade claims. The company’s current auto insurance offering is available for “most popular cars” in Arizona, California, Colorado, Illinois, Indiana, Ohio, Oregon, Tennessee, Texas and Washington.

Tesla has offered private auto insurance to customers for years now, though in late 2025 the company was hit with enforcement action by the California Department of Insurance (CDI). The automaker, along with partner National State Insurance Company, was accused of “inordinate delay in responding to policyholder claims,” ​​”unreasonable deniability,” and engaging in “unfair claims settlement practices.”

Tesla denied the allegations.