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

Digital insurance company 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 “approximately 50%.”

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

Lemonade said on Wednesday that it is leveraging “vehicle telemetry data that was previously unavailable” thanks to a “technical collaboration with Tesla,” though the insurance company declined to offer more specifics. Lemonade said it would train its own usage-based risk prediction models to determine when a driver is using Full Self-Driving or operating the vehicle themselves, and price accordingly.

Lemonade is calling the new product “Autonomous Car insurance.” Tesla’s software does not currently make cars completely autonomous, and drivers need to be ready to take over at any moment. But the product is clearly a bet that Tesla CEO Elon Musk will ultimately fulfill his long-delayed promise that his company will make that happen.

“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,” Shai Wininger, co-founder and president of Lemonade, said in a statement. “Our existing pay-per-mile product has given us something no traditional insurer has: a unique tech stack designed to collect massive amounts of real driving data for precise, dynamic pricing.”

The new car insurance product will launch in Arizona on January 26, and in Oregon the following month. Lemonade claims that “the safer FSD software becomes, the more our 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 now, though in late 2025 the company was hit with an enforcement action by California’s Department of Insurance (CDI). The automaker was accused, along with partner State National Insurance Company, of “egregious delays in responding to policyholder claims,” “unreasonable denials,” and engaging in “unfair claims settlement practices.”

Tesla has denied the allegations.