AI liability insurance is coverage for financial loss caused by an AI system behaving badly: a wrong output acted on, a model that drifts, an agent that takes a damaging action. It is a young product line, sold either standalone or as an endorsement on existing policies.
Which two changes are reshaping AI insurance at once?
Affirmative coverage is appearing at the specialist end of the market, while standardized generative-AI exclusions now exist as endorsements a carrier can choose to attach to ordinary commercial general liability policies. So the same market that made AI insurable also made it easier to be uninsured by default, because an exclusion can arrive quietly at renewal while a new policy has to be bought on purpose. Read what your current policy says before shopping for anything new.
What do underwriters ask, and why does it matter anyway?
They ask what the system does, what it can touch, who checks it, and what happens when it is wrong: effectively an audit of your AI risk management and the evidence behind AI assurance. The questionnaire is worth completing even if you never buy the policy, because it finds the uncontrolled systems first. Pair it with contract work, since a thorough AI vendor assessment and a documented AI governance record decide how much of the loss was ever yours to insure.
Frequently asked questions
Does our existing general liability policy already cover AI?
Check the renewal wording rather than assuming. Standardized generative-AI exclusion endorsements for commercial general liability were issued in early 2026. They do not attach automatically, but a policy that was silent on AI may be explicitly carved out once a carrier adds one.
Is this the same as vendor indemnification?
No, and you may need both. Contractual indemnity shifts specific losses to your AI supplier, up to whatever cap they negotiated. Insurance covers your own liability regardless of who is at fault, including the gap that cap leaves.
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