Insurtech unicorn Lemonade just tossed out a bold pitch to Tesla owners: insure cars running on Full Self-Driving for almost nothing.
The logic is simple but gutsy. If the cars drive themselves better than humans, as some tech leaders argue, then premiums shouldn’t look anything like the old actuarial tables.
The company has already built a direct integration with Tesla vehicles, which wipes out the need for plug-in telematics hardware in its Pay Per Mile product. This allows for more accurate driving data, lower costs, and enables Tesla drivers to use the “Lemonade Car” product without extra hardware
No boxes shipped, no clunky installs, just an API pulling granular driving data straight from the car. That not only trims operational overhead but gives Lemonade a sharper picture of how Teslas behave on the road compared with the generic signals most insurers rely on.
California is still Lemonade’s anchor auto market. Our analysts estimate about 30,000 active auto policies there, against roughly 256,000 Teslas insured in the state.
Across all markets, Lemonade closed 2025 with 84,273 auto policies. Small compared to legacy carriers, but the company is angling for outsize attention by dangling an offer the market hasn’t seen before.
Shai Wininger, Lemonade’s co-founder and president, put the idea directly in front of Elon Musk on X. His message was blunt: if Musk is willing, Lemonade would cover Tesla’s FSD miles for almost free.
Strip away the marketing gloss and it signals something deeper – a potential new pricing model that separates human-driven risk from machine-driven miles.
Tesla’s in-house insurance product runs in just twelve states. It hasn’t entered a new market in about three years, leaving gaps that competitors could exploit. Lemonade sees an opening.
If they can make their proposal real, Tesla owners outside those states might finally get access to FSD-friendly insurance without waiting for Musk’s team to expand.
Whether regulators, reinsurers, or actuaries sign off on “almost free” coverage is another story. But the intent is clear: Lemonade wants to push auto insurance into a place where the tech inside the car dictates the premium, not just the driver behind the wheel.
If it works, Teslas get cheaper to own, and the industry gets a blueprint it may not be ready for.
In October, Lemonade has withdrawn its Homeowners Program in South Carolina. The product was never launched.
Upon further analysis and strategic planning, we have decided not to proceed with the launch of our originally proposed Homeowners program for which the filed documents were intended.
“As such, the forms, rates and rules associated with this program have never been implemented or utilized in any capacity. Moreover, we are actively engaged in the development of a new Renters program, which is tailored to meet current market demands and align with our long-term business goals,” insurtech said.
Earlier this year, Lemonade filed a new Renters program in North Carolina, which was approved with an effective date of June 17, 2025.
Lemonade’s top home insurance markets are California with around 300,000 homeowners, New York with about 200,000, and Florida with roughly 65,000.
