U.S. insurer Lemonade said on Wednesday it would offer Tesla owners a 50% premium discount if their vehicles have the "Full Self-Driving" (FSD) feature enabled, as data it has collected proves the feature can reduce accidents.
Lemonade's move is a nod to Tesla CEO Elon Musk's assertion that the company's vehicle technology is "safer than human drivers," despite concerns raised by regulators and safety experts.
As part of the collaboration, Tesla will provide vehicle telemetry data to Lemonade. This data will be used to differentiate between miles driven by FSD systems (which currently still require human driver supervision) and miles driven by humans. The New York-based insurance company said the price reduction is for Lemonade's pay-per-mile insurance products.
"We're analyzing this at extremely high resolution, so that we can record exactly every minute, every second that you're driving a Tesla," said Lemonade co-founder Shai Weninger. "We're taking the data from the millions of signals that that car is sending out and pricing you based on that."
Wenninger said that the data provided by Tesla and Lemonade's own insurance data show that using the FSD system can make the average driver's driving safety about twice as good.
He did not reveal specific details about the data Tesla shared, but said there were no payments involved in Lemonade's deal with the electric car maker for data and new services.
Tesla has launched its own insurance plan, and owners who use the FSD system to drive more than 50% of their mileage can enjoy a monthly discount of up to 10%.
Lemonade’s new product — called “self-driving car insurance” — comes as traditional insurance companies grapple with how to set insurance rates for the use of the various self-driving features that automakers are racing to roll out.
Tesla's FSD system is classified as Level 2 autonomous driving, capable of adapting to city streets and highway driving situations.
But Tesla's technology - which relies primarily on cameras and artificial intelligence rather than the redundant sensors that most other systems rely on - has raised concerns about its limitations, especially in adverse weather conditions.
Wenninger said: "Currently, these systems cannot operate completely autonomously and require a certain degree of driver intervention and certain driving skills. Based on the data we have, we believe that this technology can improve the driver's driving level, but it does not allow this technology to operate completely autonomously, so the 50% discount is reasonable."
Lemonade said the new product will be available in Arizona on January 26 and in Oregon in February.
Wenninger said the company will further reduce rates as Tesla releases FSD software updates that improve safety.
"Traditional insurance companies treat Teslas like regular cars and AI like regular drivers," Wenninger said. "However, a driver who can observe the surrounding environment 360 degrees, never gets sleepy, and reacts at the millisecond level is completely different from an ordinary driver."