Physical artificial intelligence systems that decide how to act on their own are breaking the liability framework traditional insurance policies were built to handle. Insurers are responding by carving out AI-related damages, while a handful of carriers are launching new products designed specifically for autonomous robot risks - but none of them cover the full chain of liability when an incident triggers claims against hardware makers, software developers and operators at the same time.
Why standard policies are coming up short
Unlike fixed-command machines, physical AI uses sensors, software and models to react as conditions change. That flexibility means fault rarely rests with a single company. A robot maker may build the hardware, a separate firm may supply the AI model, and the operator may have failed to enforce operating rules. Contracts divide those duties on paper, but one incident can still set off disputes over which failure caused the loss.
Existing policies leave gaps on both ends of a robot incident. A standard business insurance policy may not cover the loss at all if it includes an AI exclusion or if the event doesn't fit its definition of an accident. If the policy does respond, it likely covers only physical damage - not the production losses that follow when a robot failure shuts down a line.
Insurers are choosing to exclude AI from their coverage. Berkshire Hathaway, Chubb and Travelers sought state regulatory approval to exclude AI-related damages from general liability policies. State regulators approved more than 80% of those requests. Some carriers went further and established absolute exclusions across multiple policy lines.
Robot-specific coverage emerges
Axis Insurance built a program specifically for companies that make and deploy autonomous robots. It covers bodily injury and property damage from AI navigation or perception failures, physical damage caused by a cyberattack that takes over a robot's controls, and production losses from a software update or sensor failure that takes a robot offline - even when no physical damage has occurred. It also covers cases where a defect in a third-party sensor or component triggers a failure, but the claim lands on the company that integrated it rather than the part maker.
In January 2026, Relm Insurance launched a product called PONTAAI that covers bodily injury and property damage among other liabilities. Neither product, however, covers the full chain of liability. A single robot incident can trigger claims against the hardware maker, the software developer and the company operating the machine simultaneously.
Pricing risk without a claims history
Insurers usually price commercial risk using past claims, equipment records and operating controls. Physical AI gives them less history and more variables. The same robot can carry different risk at two warehouses. Floor layouts differ. Workers interact with the system in different ways. Software versions and operating limits change after the policy is written.
"The pattern matches what the industry saw with cyber insurance, when adoption outpaced the understanding of how risk translated into insured loss," said Lucy Pilko, CEO Americas at AXA XL.
The accumulation problem runs deeper. Gallagher Re found that as robots and autonomous vehicles increasingly run on AI, product liability coverage may respond to injury and property damage, but only in jurisdictions that treat AI software as a product. Financial losses from the same failure get no coverage at all. That risk has no geographic limit. A flaw in one widely used AI model can spread instantly to every business running it, in every industry and country at once.
Why this matters for insurance professionals
The shift from scripted machines to autonomous physical AI demands new underwriting approaches and a clear understanding of AI supply chains. Brokers and carriers who track these developments on AI for Insurance can better identify coverage gaps for clients deploying autonomous robots. The systemic risk - where a single software flaw triggers losses across countless policies at once - echoes the early days of cyber insurance and will require the same deliberate accumulation management.
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