Lemonade has announced the launch of Autonomous Car Insurance, which it describes as a first-of-its-kind product designed specifically for self-driving vehicles, beginning with Tesla cars using Full Self-Driving (FSD).

The new product reduces per-mile insurance rates by around 50% when FSD is engaged, reflecting what Lemonade says is the lower risk profile of autonomous driving compared with human drivers. The insurer expects further price reductions over time as Tesla continues to release updates to its FSD software.

According to Lemonade, the launch is the result of a technical collaboration with Tesla that provides access to vehicle and driving data that has not previously been available to insurers. By connecting directly to Tesla’s onboard computer, Lemonade is able to ingest detailed sensor and driving data, enabling more granular and dynamic pricing.

The product will begin rolling out in Arizona on January 26, followed by Oregon approximately one month later. Lemonade currently offers its standard car insurance products in Arizona, California, Colorado, Illinois, Indiana, Ohio, Oregon, Tennessee, Texas and Washington.

Shai Wininger, co-founder and president of Lemonade, said: “Traditional insurers treat a Tesla like any other car, and AI like any other driver. But a car that sees 360 degrees, never gets drowsy, and reacts in milliseconds can’t be compared to a human. 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.”

He added that Teslas driven with FSD are involved in far fewer accidents, and that Lemonade’s data-driven approach allows it to price insurance “with higher precision than ever before.”

The launch highlights how insurers are beginning to adapt products and pricing models to reflect the growing role of autonomous driving technology, as well as the increasing importance of direct access to real-time vehicle data.