Lemonade Cuts Tesla Insurance Rates by Half for Software-Assisted Miles

• Lemonade will access Tesla vehicle telemetry data to distinguish between FSD-driven miles and human-driven miles for its pay-per-mile insurance pricing
• Tesla's FSD is classified as Level 2 autonomy requiring driver supervision, and the U.S. auto safety regulator is currently investigating multiple crashes and traffic violations involving the technology
• Lemonade plans to reduce rates further as Tesla releases FSD software updates that improve safety, differentiating itself from traditional insurers that 'treat a Tesla like any other car'

Lemonade Offers 50% Tesla Insurance Discount for FSD-Assisted Driving

Key Development:

U.S. insurer Lemonade announced a 50% rate reduction for Tesla drivers using Full Self-Driving (FSD) software, marking a significant shift in autonomous vehicle insurance pricing. The new "Autonomous Car insurance" product launches in Arizona on January 26 and Oregon in February.

How It Works:

Tesla is providing Lemonade direct access to vehicle telemetry data to distinguish between FSD-assisted miles and human-driven miles. The discount applies to Lemonade's pay-per-mile insurance product and is based on data showing FSD reduces accident rates. Lemonade Co-Founder Shai Wininger stated rates will decrease further as Tesla releases safety-improving FSD updates.

Market Context:

This offering represents an endorsement of Tesla CEO's safety claims, contrasting with traditional insurers who treat autonomous features no differently than conventional driving. Tesla already offers its own insurance with up to 10% monthly discounts for drivers using FSD over 50% of miles—significantly less than Lemonade's 50% reduction.

Regulatory Concerns:

The move comes despite ongoing scrutiny from U.S. auto safety regulators investigating multiple FSD-related crashes and alleged traffic violations. Tesla's camera and AI-based approach has raised concerns about limitations during inclement weather, as most competitors use redundant sensor systems.

Industry Implications:

Lemonade's pricing strategy challenges traditional insurance models as the industry grapples with coverage pricing for various autonomous driving levels. Most automakers currently offer Level 2 autonomy requiring constant driver attention; Tesla's FSD falls into this category but operates on both highways and city streets.

The partnership signals growing insurer confidence in autonomous technology despite slower-than-expected commercialization across the broader industry.