Digital insurance provider Lemonade has officially launched its specialized autonomous vehicle coverage in Tennessee, marking the fifth state to receive the offering. The program utilizes Tesla’s Fleet API to differentiate between manual driving and miles driven with Full Self-Driving (FSD) enabled. According to Teslarati, the insurer provides a 50 percent discount on premiums for every mile logged while FSD is engaged, reflecting the company’s stance that AI-piloted vehicles offer superior safety metrics compared to human drivers.

To participate in the program, vehicle owners must possess Tesla models equipped with Hardware 4 and updated firmware. The insurance structure operates on a pay-per-mile model, charging a base rate when the vehicle is stationary and a reduced rate for manual driving, with the significant 50 percent markdown specifically applied to automated segments. Lemonade maintains that this product is a pioneer in the industry, moving away from traditional actuarial models that do not account for the specific technological advantages of advanced driver-assistance systems, such as 360-degree environmental monitoring and millisecond-level reaction times.

This expansion follows a strategic rollout that began in early 2026. After initially testing the concept in Arizona and Oregon, the company successfully introduced the coverage to Indiana and Colorado. Lemonade executives have signaled that as the software continues to evolve and safety data improves, the company intends to refine its pricing models further to reward consistent FSD usage. While the policy provides comprehensive standard coverage—including collision, liability, and roadside assistance—the primary incentive remains the data-backed assertion that Tesla’s autonomous suite mitigates crash risks, allowing for more precise and cost-effective insurance premiums for modern EV owners.