Companies are using AI to help write content, answer customer questions, support employees, analyze information, and improve efficiency. In many cases, those tools are being added quickly because they are useful.
But there is another side businesses should understand.
As AI becomes more common, insurance policies are also beginning to change. New exclusions, endorsements, and specialty coverage options are emerging around generative AI.
That makes one question especially important:
If AI plays a role in a claim, will your current insurance respond the way you expect it to?
Why AI Is Becoming an Insurance Conversation
Most traditional insurance policies were written before generative AI became a normal part of business operations.
That does not mean AI-related claims are automatically uncovered. However, it does mean existing policies may not address every situation clearly.
Commercial General Liability, Errors and Omissions, and cyber insurance can respond to certain types of claims. At the same time, each policy has its own purpose, limitations, and exclusions.
As a result, businesses should be careful about assuming one policy automatically covers every risk connected to AI.
For companies reviewing their overall Business Insurance program, AI usage is becoming another important part of the conversation.
What Could Go Wrong With AI?
AI risk can sound technical, but many examples are easy to understand.
Imagine a company puts an AI chatbot on its website. A customer asks a question, receives incorrect information, relies on it, and suffers a financial loss.
Or a business uses AI to help create marketing content. The tool produces language or imagery that creates a copyright, trademark, or defamation issue.
Other potential concerns can include:
- Incorrect or misleading AI-generated information
- Copyright or trademark concerns
- Defamation or harmful statements
- Accidental disclosure of protected information
- Customers relying on inaccurate AI recommendations
- Bodily injury or property damage connected to reliance on AI output
These are some of the types of exposures newer AI liability products are being designed to address.
What About Cyber Insurance?
Cyber insurance may cover certain AI-related events, but that does not necessarily mean it covers every issue involving AI.
For example, some cyber endorsements are being updated to address situations where AI is part of a cyberattack or security event.
Coalition’s Affirmative AI Endorsement includes language around AI-related security events, prompt injection, data breaches, and fraudulent instructions involving deepfakes or other artificial intelligence technology.
That is different from a situation where a business is simply using AI in its normal operations and the AI produces a harmful result.
That distinction matters.
Cyber coverage may help address certain AI-enabled attacks or security failures. A separate liability issue can arise when a business uses AI and that use creates harm for someone else.
Why Policy Reviews Matter
The insurance industry is also beginning to introduce endorsements that specifically address generative AI.
Depending on the policy and endorsement involved, certain AI-related claims may be limited or excluded from coverage.
That does not mean every business has a new coverage problem today. It does mean businesses should pay closer attention to policy language as AI continues to become more common.
This is especially important for customer-facing organizations.
Businesses in Hospitality Retail and similar industries may already be using AI for customer service, marketing, chatbots, scheduling, recommendations, or internal support. The more directly AI interacts with customers, the more important it becomes to understand how that use could affect risk.
New AI Liability Coverage Is Emerging
As businesses adopt more AI tools, insurers are beginning to create coverage specifically for generative AI liability.
For example, CRC Specialty’s materials describe a Generative AI Third-Party Liability product designed for companies that deploy AI within their operations.
The product is intended to address certain claims involving financial loss, intellectual property issues, defamation, unauthorized data disclosure, bodily injury, and property damage resulting from generative AI output.
It is primarily aimed at businesses that are using or deploying AI systems, such as chatbots or other AI-powered tools, rather than only companies developing the underlying technology.
This type of coverage will not be necessary for every organization. However, its emergence shows how quickly the insurance market is responding to changes in technology.
Questions Businesses Should Ask About AI
Businesses do not need to become AI experts to start managing this exposure.
A few practical questions can help:
- Where are we currently using generative AI?
- Are customers interacting directly with any of our AI tools?
- Are employees using AI to create public-facing content?
- Is AI helping make recommendations or decisions?
- What types of information are employees entering into AI tools?
- Does our current insurance include any AI-related exclusions?
- What AI-related coverage does our cyber policy actually provide?
- Is there a gap between the way we use AI and the coverage we currently have?
These questions can help make future insurance conversations much more useful.
The Goal Is Understanding, Not Avoiding AI
AI can create real value for businesses.
It can save time, improve efficiency, support employees, and create better customer experiences. The goal is not to avoid using it.
The goal is to understand how it is being used and make sure your insurance program keeps pace with those changes.
As AI becomes more common, businesses should make AI usage part of their regular risk and insurance discussions.
At Liberty Insurance Agency, we can help you talk through how your organization is using AI, review where potential insurance gaps may exist, and identify questions worth addressing before your next renewal.
Contact the Liberty team to learn more about how AI-related risks may affect your insurance program.
