Digital insurer 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 reduce mileage rates by “about 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 seek new lines of business as partial autonomy and true self-driving begin to proliferate.

Lemonade said Wednesday that it is leveraging “previously unavailable vehicle telemetry data” thanks to a “technical partnership with Tesla,” though the insurer declined to provide further details. Lemonade said 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 charge 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 finally make good on his long-delayed promise that his company would do just that.

“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 sleepy, and reacts in milliseconds, is unlike any other driver,” said Shai Wininger, co-founder and president of Lemonade. “Our existing pay-per-mile product has given us something that no traditional insurer has: a unique technology stack designed to collect massive amounts of real-world driving data for accurate, 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 offer is available for “most popular cars” in Arizona, California, Colorado, Illinois, Indiana, Ohio, Oregon, Tennessee, Texas and Washington.

Tesla has been offering its own auto insurance to its customers for years, though in late 2025 the company was hit with an enforcement action by the California Department of Insurance (CDI). The automaker was accused, along with its partner State National Insurance Company, of “extreme delays in responding to policyholder claims,” ​​”unreasonable denials” and engaging in “unfair claims settlement practices.”

Tesla has denied the allegations.