According to Tesla, using its Full Self-Driving (Supervised) suite dramatically lowers the chances of being in a major or minor collision. The company’s data states you’ll have to drive around 5.1 million miles with FSD engaged before being in a major collision, whereas the U.S. average (including all vehicle makes) is just 699,000 miles.
That’s just one of Tesla’s many safety claims for FSD, and now one auto insurer in the U.S. will be rewarding Tesla drivers with much lower premiums for using FSD instead of driving their cars manually. This move could further incentivize consumers to make the switch to a Tesla, while putting pressure on other automakers to further advance their autonomous capabilities.
Up To 50% Off Insurance Rates
Tesla
Lemonade, the digital insurance company, says that per-mile rates for FSD-engaged driving will be lower by up to 50%. That's not as impressive-sounding as the free insurance for Teslas it proposed a few months ago, but it's still a significant saving. Called the Lemonade Autonomous Car insurance, it's the first of its kind in the industry for self-driving cars, and Tesla’s FSD suite will lead the way. According to the insurer, future FSD software updates could further lower insurance premiums.
“Traditional insurers treat a Tesla like any other car, and AI like any other driver,” said Shai Wininger, co-founder and president at Lemonade. “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. Lemonade Autonomous Car was built on that foundation.”
Even households with one Tesla and a car from another brand without FSD can take out a single policy. Lemonade’s ability to process “nuanced sensor data” from Teslas and how often FSD is engaged can easily adjust pricing accordingly. As both companies invest heavily in artificial intelligence, the decision to pioneer the new insurance offering with the EV giant was a simple one.
The Autonomous Car insurance product will start rolling out on January 26 in Arizona, followed by Oregon a month later.
How Much Can You Save?
Tesla
According to Lemonade’s 2025 data, the average monthly cost of insuring a Tesla ranges from $32 for the Model Y to $39 for the Model S and X. Using the Model Y as an example, its insurance costs would be $183 over six months. Under the new Autonomous Car product, a Model Y owner could theoretically save over $90 over six months. Obviously, you could save more depending on your risk profile and Tesla model.
The FSD system, like most others on the market, is rated as a Level 2 self-driving suite. This means drivers still have to pay attention at all times and be ready to resume manual vehicle control if needed. However, FSD isn’t limited to specific highways. It can handle point-to-point drives through urban areas. Most rivals don’t have this capability, although they’re slowly catching up: The new Mercedes CLA with MB.Drive Assist Pro can also handle point-to-point driving without manual intervention.
Related: Mercedes Brings Tesla-Style Point-to-Point Self-Driving to the U.S.
Autoblog’s Take
Tesla
In a 2025 study from AAA, it was found that 6 in 10 drivers in the United States were afraid to ride in a self-driving vehicle. This question didn’t distinguish between partially and fully autonomous vehicles, but shows that many Americans are still skeptical of these technologies. The tech is also costly, with FSD currently costing $8,000.
Lemonade’s new insurance product can potentially overcome these challenges by giving consumers a completely new reason to try self-driving tech, beyond its convenience and potential safety benefits. The more you use it, the more you save, and you can gradually recoup some or all of the costs associated with paying for the tech initially, thanks to lower insurance rates.
One question mark remains, though—is Lemonade putting too much trust in FSD, too soon? The latest version of the software works remarkably well for many Tesla drivers, but the system has been investigated for temperamental and dangerous behavior in certain conditions.
For now, we’ll wait to see if larger insurers like State Farm and Progressive follow Lemonade’s lead.
Related: FSD Investigation Hits Millions Of Teslas—See If Yours Is On The List
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