Digital insurance company Lemonade is launching a new product designed for users of Tesla’s advanced driver assistance system, known as Full Self-Driving (Supervised). The insurer promises this product will cut per-mile insurance rates by approximately fifty percent. This represents one of the first insurance products geared toward pricing based on how software systems handle driving. It is a sign that companies may look to create new lines of business as partial autonomy and true self-driving technology start to proliferate.
Lemonade announced on Wednesday that it is leveraging vehicle telemetry data that was previously unavailable, thanks to a technical collaboration with Tesla. The insurance company declined to offer more specifics on this collaboration. Lemonade stated it will train its own usage-based risk prediction models to determine when a driver is using Full Self-Driving or operating the vehicle themselves, and will price policies accordingly.
Lemonade is calling the new product “Autonomous Car insurance.” It is important to note that Tesla’s software does not currently make cars completely autonomous, and drivers must remain ready to take over at any moment. The product is clearly a bet that Tesla CEO Elon Musk will ultimately fulfill his long-delayed promise that his company will achieve full self-driving.
Shai Wininger, co-founder and president of Lemonade, explained the rationale. He stated that traditional insurers treat a Tesla like any other car and artificial intelligence like any other driver. But a driver that can see in all directions, never gets drowsy, and reacts in milliseconds is not like any other driver. Wininger noted that Lemonade’s existing pay-per-mile product has given the company a unique tech stack designed to collect massive amounts of real driving data for precise, dynamic pricing, something no traditional insurer has.
The new car insurance product will launch in Arizona on January 26, followed by Oregon the following month. Lemonade claims that the safer the Full Self-Driving software becomes, the more its prices will drop. The company’s existing auto insurance offering is available for most popular cars in Arizona, California, Colorado, Illinois, Indiana, Ohio, Oregon, Tennessee, Texas, and Washington.
Tesla has offered its own car insurance to customers for years. However, in late 2025 the company was hit with an enforcement action by California’s Department of Insurance. The automaker, along with partner State National Insurance Company, was accused of egregious delays in responding to policyholder claims, unreasonable denials, and engaging in unfair claims settlement practices. Tesla has denied these allegations.