Tesla FSD Super Users Can Now Get Half-Price Car Insurance

• Lemonade’s new “Autonomous Car” insurance gives a hefty discount to Tesla owners.
• Tesla owners will be entitled to a discount of 50% on their insurance policy.
• The catch? The discount only applies to owners who use Tesla’s Full Self-Driving Software.

Tesla’s cars have a bit of a stigma around real-world costs. While the vehicles themselves might be fairly affordable up-front (as far as new EVs go, anyway) there are a few variables that drive up the overall lifetime cost of the cars. One of the biggest out there is the cost of insurance.

Enter Lemonade, an insurance provider that is looking to shake up the business by betting big on Tesla’s Full-Self Driving (Supervised) driver-assistance suite. On Wednesday, the company announced it will offer a big discount off of your Tesla’s insurance policy—as long as you let FSD take the wheel.

Insurance is a game of risk. The more an insurance provider can anticipate risk, the more it can accurately assess how much to charge a driver to insure their vehicle. Lemonade says it’s convinced that Tesla’s FSD software reduce crash risk significantly compared to a human driver behind the wheel.

Lemonade’s new partnership with Tesla provides the insurer with vehicle telemetry data which helps Lemonade to feed its risk prediction models. This includes the ability to distinguish when FSD is enabled and predict risk based on sensor precision as well as the version of FSD installed in the car. This “cuts per-mile rates for FSD-engaged driving by approximately 50%,” according to Lemonade. (Lemonade charges a variable per-mile fee for its car insurance, on top of a base rate.)

“Teslas driven with FSD are involved in far fewer accidents,” said Shai Wininger, Lemonade’s co-founder and president, in a statement on Wednesday. “By connecting to the Tesla onboard computer, our models are able to ingest incredibly nuanced sensor data that lets us price our insurance with higher precision than ever before.”

FSD aims to pilot a car all the way to a preplanned destination, taking control of acceleration, braking and steering. But it still requires driver supervision and is far from perfect. So it’s not truly “self-driving” despite many years of promises from Tesla. The carmaker’s in-house insurance product also offers discounts for owners that have FSD and use it for at least half of all miles driven, though it’s only 10% compared to Lemonade’s hefty discount of roughly 50%.

Lemonade says that it expects FSD to further reduce driving risk over time as Tesla implements additional FSD software updates.

“Beyond the product announcement today, we’re also announcing our commitment to the Tesla community – the safer FSD software becomes, the more our prices will drop,” Wininger said. 

The rollout of Lemonade’s so-called “Autonomous Car” (which Tesla’s FSD is not) insurance begins in Arizona later this month, followed by Oregon in February. Tesla also plans to remove the ability to purchase FSD as a perpetual software license on February 14th, meaning that drivers who want a discount later on may need to purchase a subscription to FSD at $99 per month instead.

What’s not immediately clear is what data Lemonade is relying on to prove that FSD is safer than a human driver. Tesla released its own FSD safety report late last year, which claims that the system results in fewer crashes. But some autonomous vehicle experts have questioned how useful or trustworthy that data is, given that it hasn’t been peer-reviewed and may be misleading. 

We reached out to Lemonade for some more details there. What’s clear, though, is that car insurance will have to be overhauled for a future autonomous era. And Lemonade wants to be ahead of the curve.