Insurance carriers' AI silence leaves brokers, clients in coverage limbo

The coverage gap nobody can quantify

Businesses deploying artificial intelligence systems are almost certainly insured for the risks those systems create. The catch: neither the carrier, the client, nor often the broker can say with confidence which policy would respond when something goes wrong.

That ambiguity sits at the center of a 2026 RAND Corporation report titled The Insurability of Artificial Intelligence, authored by researchers Sasha Romanosky and Celine Robinson. The report analyzed public AI incident data, US litigation records, state legislation, and admitted-market insurance filings to map a market divided three ways: a minority of carriers affirmatively covering AI losses, a growing number filing broad exclusions, and a silent majority saying nothing at all.

Why it matters

Silent policies create coverage roulette. Two businesses running identical AI systems may reach opposite claim outcomes depending solely on which carrier wrote their policy and how that carrier interprets the loss after the fact. Brokers placing AI-using clients face a market with no standard approach, no shared data, and exclusions appearing mid-renewal without warning.

When silence becomes a problem

When a policy contains no AI-specific language, coverage hinges on how a claim is characterized at the time of loss. A chatbot that hallucinates and gives incorrect financial advice could be framed as a professional error, a cyber incident, a product defect, or a general liability claim. Different policies respond to each framing differently, and the language in those policies was not written with AI in mind.

The RAND report found that AI-related losses span at least 11 insurance lines, including technology errors and omissions, professional liability, cyber, directors and officers, and commercial general liability. A single AI event can simultaneously resemble multiple claim types, setting up disputes over which policy responds before any settlement is reached.

Exclusions arrive at renewal

Carriers are resolving the ambiguity on their own terms. Verisk's Insurance Services Office made three optional generative AI exclusion endorsements available for commercial general liability policies in January. Those forms—CG 40 47, CG 40 48, and CG 35 08—exclude bodily injury, property damage, and advertising injury connected to generative AI outputs. ISO's standardized language appears in more than 80 percent of US property and casualty policies, according to the report, giving those endorsements substantial reach wherever adopted.

Berkley has introduced language across its specialty lines that bars coverage for nearly any claim tied to AI use, development, or deployment, including a company's own statements about how it uses AI. The report also noted that AIG, Great American, and Chubb were moving toward similar positions, though adoption varies by carrier and state.

The surge in exclusion activity began in summer 2025, concentrated in commercial umbrella and commercial general liability policies. At renewal, a client previously covered implicitly across cyber, tech E&O, and general liability may now find each of those lines quietly narrowed.

The data problem

One reason the market has not coalesced around a standard approach is the near-total absence of usable claims data. AI losses are only beginning to generate filed claims, legal theories are still forming, and the underlying models change faster than loss patterns can stabilize. That uncertainty is pushing carriers toward narrower terms, higher retentions, and lower limits as a precaution rather than as a signal that AI risk is well understood.

A handful of specialty insurers have begun offering affirmative coverage. Munich RE covers both first- and third-party AI losses across hallucinations, bias, privacy violations, and IP claims. The Artificial Intelligence Underwriting Company provides up to $50 million in primary and third-party cover. Newer entrants including Armilla and Testudo target specific deployer exposures. Take-up remains concentrated among technology-sector clients.

The RAND report recommends that state regulators and the National Association of Insurance Commissioners develop a standardized AI Coverage Notice requiring carriers to declare, for each line, whether AI-related losses are covered, excluded, or left silent. That structure does not yet exist.

The report's core argument is not that carrier disagreement on AI risk is inherently a problem—different carriers can hold different views on a poorly understood exposure. The problem is that neither policyholders nor their brokers can tell the difference at placement time.

These findings were first reported by Insurance Business based on the RAND Corporation report.