Lemonade Inc has introduced a new auto insurance product for Tesla owners that cuts the per‑mile rate in half when Full Self‑Driving (FSD) is steering the car. The company says its pricing is based on internal data that links FSD use to fewer crashes compared with human driving. The product marks one of the first times a mainstream insurer has tied pricing so directly to how an automated driving system performs on the road, analysts say.
The coverage launches in Arizona on January 26 and is scheduled to reach Oregon in February, according to Lemonade’s announcement. The insurer already sells usage-based car policies in 10 U.S. states, and this offer for Tesla owners sits on top of that pay‑per‑mile model.
How the pricing model works
Lemonade says it has struck a technical collaboration with Tesla that lets it read granular data from the vehicle, including when FSD is switched on and how the system behaves. That feed gives the insurer a clear split between miles driven by the human and miles driven by FSD, which then feed into its risk algorithms and billing engine.
The company says its internal analysis shows “Teslas driven with FSD are involved in far fewer accidents,” and it argues that treating the software like an ordinary driver ignores that data. “A car that sees 360 degrees, never gets drowsy, and reacts in milliseconds can’t be compared to a human,” co‑founder and president Shai Wininger said in the launch statement. He added that “the safer FSD software becomes, the more our prices will drop,” framing the product as a long-term commitment to Tesla owners.
The new policy is set up for drivers who use FSD only part of the time. Lemonade charges one rate when the driver controls the car and a rate up to 50% lower when FSD is engaged, with the bill reflecting the actual mix of miles at the end of the period.
Households can cover more than one vehicle under the same policy, including non‑Tesla models, according to product details. Customers can also stack other discounts, for example for safe driving scores or for bundling auto with home, renters or pet policies that Lemonade already sells. The insurer continues to lean on its app-based claims system and automation, which it says can approve many claims in seconds.
Lemonade, listed on the New York Stock Exchange under ticker LMND, has promoted itself as a digital-first insurer that uses artificial intelligence and behavior data to set premiums and settle claims. Company filings show it remains a small player in U.S. auto insurance by premium volume, yet it has become a familiar name among younger policyholders through its app and renters products.
Tesla owners will be able to get a quote for the new product through the Lemonade app, or online.
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