AI Insurance: Understanding the Gaps in “Silent Coverage”

One consequence of the explosive growth in the usage of AI tools is that insurance policies haven’t caught up, which means that the potential source of insurance coverage for AI-related liabilities will be a company’s existing liability insurance policies.  This WTW article says that this “silent coverage” may be coming to an end, but in the meantime, risk managers need to keep a close watch on the overlaps and gaps in those policies in order to ensure they appropriately address emerging liability issues:

Currently companies often rely on a patchwork of policies to cover AI risks. No single policy covers all AI perils, but different policies cover different aspects (for example, a data breach caused by AI falls under cyber insurance; an AI-caused injury falls under general liability). Each policy may have gaps where an AI-related loss might not fit neatly. Therefore, it is critical for risk managers to understand these overlaps and gaps and not assume that “AI” is certainly covered.

Insurers anticipate the AI insurance market to grow (one forecast is ~$4.7B in premiums by 2032), and they are developing solutions. Specialized AI endorsements (e.g. some cyber policies now explicitly cover or exclude AI-driven events like data poisoning or AI-generated content) have been introduced and some standalone AI insurance offerings for specific needs.

The article includes a chart that shows how 12 common types of insurance policies relate to AI, and highlights the role, key gaps and potential AI-related exclusions contained in those policies.