Insurers are quietly attaching generative AI exclusions to commercial general liability policies, shifting the cost of AI-related lawsuits and regulatory actions onto the companies that develop or use AI-generated content.
The exclusions, based on standard policy language made available last year by Verisk Analytics Inc.'s Insurance Services Office, focus on losses from bodily injury, property damage, or personal and advertising injury that arise from the use of generative AI, industry professionals said.
Carriers began adding the exclusions in recent months as they race to limit their own liability. The move follows growing concern that AI tools could generate defamatory content, erroneous medical advice, or flawed autonomous decisions-losses that could trigger hundreds of claims under a single policy.
A shift in liability for AI risks
Companies that build or deploy generative AI now face a coverage gap. If a lawsuit alleges that an AI model caused physical harm or advertising injury, a standard CGL policy with the new exclusion may not respond. The burden of defense costs and settlements would fall directly on the AI developer or the business using the tool.
Even companies that do not develop AI themselves-but integrate it into customer-service chatbots, content generation, or automated underwriting-could be caught. A marketing firm that uses AI to create ad copy, for instance, might find itself without liability protection if the copy leads to a defamation claim.
Why this matters for insurance professionals
For underwriters, the exclusion offers a tool to manage unknown aggregation risk. It also demands a more rigorous assessment of how policyholders use AI. Brokers must now explicitly ask clients about generative AI exposure and explain that gaps may exist in their general liability coverage. Claims professionals will need to determine whether a loss involved generative AI systems-a technical determination that could become contentious.
Understanding these exclusions is now essential for underwriters and brokers, and training on AI for Insurance can help professionals stay current on emerging risks.
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