Hiscox introduces UK’s first clear AI liability insurance amid rising business risks

Hiscox Launches UK’s First Affirmative AI Liability Cover

Hiscox has updated its Technology Professional Indemnity (PI) policy to explicitly cover risks related to artificial intelligence (AI), marking a significant step in UK insurance. This new policy provides clear and affirmative insurance protection for AI use, deployment, and professional advice, filling longstanding gaps as AI becomes increasingly integral to business operations.

Adapting Insurance to AI’s Growing Role

Since underwriting its first technology specialist policy in 1994, Hiscox has consistently responded to emerging tech risks. From the Millennium Bug to the rise of cyber threats, the insurer has adjusted its policies to meet evolving challenges. Now, with AI adoption accelerating across UK businesses—70% are using or planning to use AI—the insurer recognizes the need to address liability concerns head-on.

AI is no longer just an automation tool; it’s embedded in critical systems from transport to healthcare. Failures in AI outputs can have serious consequences, affecting contractual commitments and operational reliability. As Adam Atkins, Head of Technology at Hiscox UK, puts it, “AI is only as good as the human who builds or uses it. Liability sits with the user, not the machine.”

Closing the Silent Gaps in Coverage

Standard technology policies often leave uncertainty about coverage for AI-related incidents, much like early cyber policies missed emerging threats. Hiscox’s updated PI policy removes this ambiguity by explicitly naming AI-specific risks and scenarios in the insuring clauses. This includes:

• Failures where an algorithm’s output impacts contract delivery
• Faulty data causing defective AI-driven software
• Negligent AI suitability advice by consultants

Additional updates include expanded clauses for network security, interruption, personal-data loss, and injury or property damage. Notably, exclusions for vulnerabilities like Log4J are removed and the cap on personal data claims has been lifted to align with overall policy limits.

Practical Clarity for Brokers and Clients

The policy update aims to simplify placement and claims handling. It’s written plainly so brokers don’t need specialized AI knowledge to explain coverage. This practical clarity extends to claims—for example, if an AI model drift disrupts logistics and causes widespread delivery failures, the policy responds without confusion or interpretation.

Liability risks tied to AI will likely increase. Whether it’s a healthcare algorithm producing flawed diagnoses or a generative AI tool delivering unusable designs, defence costs can escalate quickly. Hiscox’s policy reflects that the duty of care remains with the human user or advisor, providing a clear safety net.

Meeting Market Demand

Early interest from venture-backed software firms and regulated utilities indicates growing demand for explicit AI liability coverage. These businesses face board-level pressure to manage risks from automated systems effectively. Hiscox’s updated policy is positioned to meet this need, ensuring insurance keeps pace with technology rather than lagging behind.

For insurance professionals, this development offers a concrete example of how policies must evolve to address new technology risks. Clear, affirmative coverage for AI-related liabilities reduces uncertainty and supports confident risk transfer in a fast-changing landscape.

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