Armilla AI Expands Standalone AI Liability Capacity and Coverage Scope as Generative AI Exclusions Spread
Wilmington, DE - January 21, 2026. Armilla AI has expanded its standalone AI Liability Policy with limits up to $25 million per organization and broader protection for generative AI and autonomous agents. The move lands as traditional carriers add AI exclusions or tighten wording, leaving gaps across cyber, E&O, and GL towers.
"Most insurance policies weren't designed for generative AI or AI agents," said Karthik Ramakrishnan, CEO of Armilla AI. "After two years of focused underwriting development, we believe our expanded policy gives risk managers a clear path forward."
Why this matters for insurance programs
Generative AI is moving into core workflows. When these systems misadvise customers, make bad decisions, or leak sensitive information, coverage under traditional forms can be uncertain-or excluded outright. That puts claims clarity and governance defensibility at risk.
Brokers are increasingly flagging a professional responsibility to advise on AI-specific coverage. Armilla's primary policy is built for AI failure modes and is intended to respond where retrofitted endorsements and DIC structures can struggle.
What the policy covers
Armilla's all-risks form is built specifically for AI risk. It extends to traditional General Liability exposures and adds clear, affirmative protections that many programs now exclude, sub-limit, or describe ambiguously:
- AI Model Error Liability: Third-party financial loss from hallucination, inaccuracies, drift, or measurable underperformance
- AI Model Output Liability: Claims tied to harmful or misleading outputs, including defamation, trade secret exposure, and confidentiality breaches
- AI Agent Failures: Claims from incorrect decisions, improper tool use, or escalation errors
- Non-Breach Privacy & Data Leakage Liability: Regulatory investigations or third-party claims from unintended disclosures via AI outputs
- AI-Driven Property Damage: Damage to third-party property caused by AI-enabled automation, generative AI, or agentic systems
- AI Regulatory Violations: Defense costs and, where insurable by law, fines arising from investigations under laws such as the EU AI Act and Colorado AI Act
Capacity, backing, and fit
Limits now reach $25 million per organization. Armilla became the first Lloyd's Coverholder dedicated exclusively to AI liability in 2024 after its participation in Lloyd's Lab and launched its standalone product in April 2025.
The policy serves AI scale-ups, large technology platforms, and Middle Market to Fortune 1000 enterprises embedding generative or agentic AI into core operations. Priority sectors include financial services, healthcare, HR, telecommunications, retail, and professional and customer services. Each policy includes independent AI system certification and risk reporting informed by more than 500 AI evaluations across regulated industries.
Broker and risk manager checklist
- Map genAI and agentic AI exposure across business lines, customer touchpoints, and automated decisions
- Review new AI exclusions, restrictions, and sub-limits across cyber, E&O, GL, D&O, and property schedules
- Assess standalone AI liability as a primary layer for claims clarity and program completeness
- Confirm model governance, human-in-the-loop controls, privacy protocols, and audit logging meet underwriting expectations
- Document incident response for AI-caused harms, including output takedown, customer notification, and regulator engagement
About Armilla AI
Armilla AI is a Lloyd's Coverholder and MGA focused on AI underwriting solutions, backed by A-rated global insurers. Offerings include AI software performance warranties and standalone AI liability insurance to support safe, secure adoption of AI systems.
To learn more or request a quote, visit armilla.ai.
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