How Lemonade Stock Gained 22% Last Month

Shares of Lemonade (NYSE: LMND) rose 21.9% in January 2026, according to data from S&P Global Market Intelligence. The highly computerized insurance company launched a very specific car insurance plan last month. Lemonade had signaled this move earlier, but investors still acted as if it were an unexpected announcement.

Lemonade's new plan rewards hands-free driving

Lemonade started January on a high note. The stock had been on a rampage for several months. By the end of January 19, it had gained 138.3% in 52 weeks. The earnings reports in August and November showed strong sales and positive earnings surprises, along with improved figures in industry-specific metrics such as loss ratios and gross earned premium. Market momentum from those reports carried Lemonade's stock higher in early January, too. Just before the new insurance plan launch, that was good for a 9.9% gain month-to-date.

On January 21, Lemonade unveiled a new car insurance plan, specifically designed for Tesla (NASDAQ: TSLA) vehicles. The Lemonade Autonomous Car plan charges insurance premiums per mile, like some of Lemonade's existing offerings. Electric vehicles also enjoy lower rates than gas-powered cars, so discounts for Tesla drivers already existed.

But the new insurance plan cuts the mileage fee in half when the car's full self-driving (FSD) feature is active. In other words, handing the wheel over to Tesla's FSD results in much lower insurance premiums.

Lemonade CEO Shai Wininger had hinted at this idea in October 2025, tagging Tesla CEO Elon Musk in X posts on that theme. But those posts didn't light a fire under Lemonade's stock at the time. Investors seemed to think that it was a long-term strategy, or maybe just an academic possibility with no real-world value.

Well, Lemonade made it happen in January. Investors embraced the news in a hurry.

Image source: Getty Images.

The fine print on self-driving savings

There are many limits to the half-cost mileage. The coverage relies on a direct data feed from Lemonade's recently launched integration with the data sensor system in Tesla cars. The new plan became available to properly equipped Tesla vehicles in Arizona on Jan. 26, to be followed by Oregon "a month later." Another eight states currently have Lemonade car insurance access today and should join the Tesla-specific program over time.

In the long run, Lemonade hopes to expand this rebate to other self-driving vehicles, but only Tesla has enough safety data and a direct data-streaming link to Lemonade today.

In the grand scheme of things, the self-driving discounts are part of Lemonade's data-driven growth plan. The thesis here is that robo-cars will be significantly safer than vehicles driven by humans, resulting in fewer accidents and claims. It remains to be seen whether real-world data actually points in that direction or not.

But if it does, and is followed by wider availability across many car brands and a wider geographic map, this discounted coverage plan could emerge as a turning point for Lemonade's financials.

Anders Bylund has positions in Lemonade. The Motley Fool has positions in and recommends Lemonade and Tesla. The Motley Fool has a disclosure policy.