Digital insurance innovator Lemonade is set to introduce a groundbreaking insurance product specifically designed for users of Tesla’s advanced driver assistance system, known as Full Self-Driving (Supervised). This new offering promises to reduce per-mile insurance rates by around 50%, marking a significant development in the integration of technology and auto insurance.
The launch of this product reflects a broader trend as insurance companies begin to explore new business models in light of the increasing capabilities of partial autonomy and self-driving technologies. Lemonade announced that it is harnessing “vehicle telemetry data that was previously unavailable” through a collaboration with Tesla, although specific details of this partnership remain undisclosed. The tech-driven insurer plans to develop its own usage-based risk prediction models to accurately assess when drivers are using the Full Self-Driving feature as opposed to manually operating the vehicle, allowing for more precise pricing.
Dubbed “Autonomous Car insurance,” this new product acknowledges the current limitations of Tesla’s software, which does not enable full autonomy and requires drivers to maintain a readiness to take control at any moment. Lemonade’s move appears to be a strategic decision based on confidence that Tesla CEO Elon Musk will eventually deliver on the promise of achieving fully autonomous vehicles.
Shai Wininger, co-founder and president of Lemonade, emphasized the distinct nature of the driver capabilities offered by the advanced technology. “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,” he stated. This innovative approach to insurance pricing relies on data collection that traditional insurers may not have access to, allowing Lemonade to potentially offer more dynamic rates.
This insurance product is scheduled to launch in Arizona on January 26, followed by its introduction in Oregon the next month. Lemonade believes that as the Full Self-Driving software improves, its insurance prices will decrease further, offering an attractive proposition for Tesla owners.
While Tesla has provided its own insurance solution for customers in the past, the automaker faced scrutiny in late 2025 from California’s Department of Insurance due to alleged delays and unfair practices in handling policyholder claims. However, Tesla has firmly denied these allegations, which may add complexity to the competitive landscape in automotive insurance.
As autonomous driving technology continues to evolve, Lemonade’s new product represents a hopeful step forward, harnessing data for smarter insurance solutions and paving the way for a future where vehicle autonomy may redefine the way we think about car insurance.