Carriers are actively excluding AI liabilities from their standard products. Since January 1, 2026, Verisk/ISO exclusion endorsements have allowed carriers to remove generative AI exposure from commercial general liability policies, and at least six major carriers have filed their own AI exclusions with state regulators. GenAI lawsuits in the U.S. grew 137% year over year in 2024 to 2025, with cumulative filings past 700. The liability is real, it is accelerating, and it is flowing to the enterprise deployer because every major AI vendor caps its own exposure at 12 months of fees. The same MGA model that Chubb’s CEO publicly argued AI will replace is now the model underwriting the AI liability class that Chubb’s standard products cannot cover.
The structural driver making this an insurance problem rather than a legal problem is vendor contract design. All four major AI vendors, OpenAI, Anthropic, Google, and Microsoft, cap their liability at 12 months of fees paid and disclaim all consequential damages. No vendor offers performance warranties under standard terms.
So a new liability class. Seems like insurers are running fast to avoid the exposure. Will the federal government step up?
Generally insurers like to have some idea of what they’re insuring. Because AI is so new and so poorly understood, I would be surprised if any step up to put their firms at risk with this particular product, at least until everybody gets a handle on what it is and what the liabilities are.
Yep the potential liability is unknown. Insurers detest that sort of risk.
AI prefer “free”. Ain’t AI a national strategic concern. Just like Covid. Vaccine corporations weren’t held liable for any adverse health results?
I tend to agree, but there could also be the higher-risk entrepreneurial types who see an opportunity in a high-fee product with bankruptcy limiting the downside.
That would be a hard product to sell, though. Especially to business purchasers. This is insurance, after all. Businesses will generally be reluctant to pay a high fee for insurance from a company that is capitalized in such a way that bankruptcy limits the downside. The whole point is to have assurance that the insuring entity has more than enough capital to pay out the policy coverage even in (or especially in) a “downside” scenario.