The financial value of the deal, which values Metromile at approximately $500m, has not been disclosed.
As per the agreement, Metromile shareholders will receive Lemonade common shares in ratio of 19:1.
Digital insurance platform Metromile leverages data science technology and telematics sensors to offer bespoke pay-per-mile auto insurance policies.
The acquisition, which is expected to close in the second quarter of 2022, will compliment Lemonade’s auto insurance offering, which was launched last week.
Lemonade CEO and co-founder Daniel Schreiber said: “Pop the hood and you’ll see that it’s powered by telematics and architected to learn from the data it generates, with precision pricing as its ultimate destination.
“They have been down this road billions of times, and their proprietary data and machine learning algorithms can vault us over the most time and cost-intensive parts of the journey.”
The auto insurer went public recently and has a license to operate in 49 states of the US.
Metromile CEO Dan Preston said: “Joining forces with Lemonade Car will create the most customer-centric, fair, and affordable car insurance, and is a great outcome for Metromile shareholders, who will benefit as shareholders of the combined company.”
The deal is subject to regulatory approval and other customary closing conditions.
Earlier this year, Metromile secured $50m in investment from former Uber executive Ryan Graves.