SAN FRANCISCO, Jan 21 (Reuters) – U.S. insurer Lemonade said on Wednesday it would offer a 50% rate cut for drivers of Tesla electric vehicles when the automaker’s Full Self-Driving (FSD) driver assistance software is steering because it had data showing it reduced accidents.
Lemonade’s move is an endorsement of Tesla CEO Elon Musk’s claims that the company’s vehicle technology is safer than human drivers, despite concerns flagged by regulators and safety experts.
As part of a collaboration, Tesla is giving Lemonade access to vehicle telemetry data that will be used to distinguish between miles driven by FSD – which requires a human driver’s supervision – and human driving, the New York-based insurer said. The price cut is for Lemonade’s pay-per-mile insurance.
“Teslas driven with FSD are involved in far fewer accidents,” Lemonade Co-Founder Shai Wininger said in a statement. “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.”
Tesla already offers its own insurance plan with a monthly discount of up to 10% for drivers who use FSD for more than 50% of the miles.
AUTONOMOUS CAR INSURANCE
Lemonade’s new offering – called Autonomous Car insurance – comes as the traditional insurers grapple with how to price coverage for the use of various levels of self-driving features that automakers are racing to deploy.
Commercializing autonomous vehicles has been harder and far costlier than expected. Most automakers offer Level 2 autonomy on personal vehicles for highway operation that requires the driver to pay constant attention to the road and remain in charge.
Tesla’s FSD is categorized as Level 2 and is capable of driving on city streets as well as highways.
But Tesla’s technology – which mainly uses cameras and artificial intelligence rather than redundant sensors that most others bank on – has sparked worries about its limitations, especially during inclement weather.
The U.S. auto safety regulator has investigated multiple crashes involving Tesla’s FSD and is examining claims that vehicles using the technology have committed traffic violations.
Lemonade said on Wednesday the 50% rate cut reflected “what the data shows to be significantly reduced risk during autonomous operation.” It was not immediately clear what data was available to the insurer.
The new product will roll out in Arizona on January 26 and in Oregon in February, Lemonade said.
Wininger said the company would reduce rates further as Tesla releases FSD software updates that improve safety.
“Traditional insurers treat a Tesla like any other car, and AI like any other driver,” Wininger said. “But a driver who can see 360 degrees, never gets drowsy, and reacts in milliseconds isn’t like any other driver.”
(Reporting by Abhirup Roy in San Francisco; Editing by Peter Henderson and Jamie Freed)
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