Deepfakes force insurers to build new coverage for reputational damage
As AI-generated video deepfakes become easier to produce, insurers are beginning to develop dedicated policies for the reputational risks they pose to celebrities and corporate executives - a shift that mirrors how cyber insurance evolved from a niche add-on to a standalone product.
Celebrities are already taking action. Matthew McConaughey trademarked videos and audio clips of himself in January, including his famous catchphrase "alright, alright, alright." Taylor Swift followed in April by trademarking her image and voice samples. Both moves represent a legal strategy to counter deepfakes before insurance products catch up.
Coverage will follow cyber insurance's path
Courtney Horrigan, a partner in the insurance recovery group at Reed Smith law firm, said deepfake coverage will likely develop as cyber insurance did: starting as an endorsement on errors and omissions policies before becoming a dedicated product.
"They will stop being silent coverages," Horrigan said. "You will need explicit coverage under a policy for an AI risk."
Cyber insurance faced the same trajectory. When cryptojacking emerged as a threat in 2017, insurers needed one to two years to explicitly cover it in policies. The same pattern will likely apply to deepfake liability.
The valuation problem
The main obstacle is quantifying risk. Insurers must calculate both the likelihood of deepfake damage and the financial losses that result - a challenge in entertainment and media where content value fluctuates rapidly.
Horrigan compared it to art insurance, where third-party appraisers struggle to predict a creator's content value. Social media amplifies this unpredictability: content can go viral overnight, shifting value dramatically.
"The difficulty that the insurance industry is having as a whole in quantifying the risks of AI and valuing the artistic content of a creator is an issue you see oftentimes with art insurance," Horrigan said.
Claims will drive clarity
As deepfake incidents occur, disputes will emerge over whether existing policies cover the damage. These claims will give insurers the data they need to underwrite more effectively.
"You will see claims. You will see people arguing on both sides as to whether it's covered under the language and what the scope is," Horrigan said. "As the insurance companies see more claims, then they will be able to better underwrite for those types of liabilities."
Insurers working in AI for insurance will need to develop new underwriting standards and clearer policy language as the market matures.
Your membership also unlocks:
