The changes come after the Insurance Services Office, the industry’s clearinghouse for policy language, introduced three new artificial intelligence exclusions for commercial general liability policies that insurers are beginning to add to coverage forms.
Roughly 86% of all U.S. property/casualty insurance policies contain some form of ISO language, meaning these exclusions could soon become widespread and leave coverage gaps for many employers when their CGL policies come up for renewal. Insurers are also starting to add similar language to other policies with a liability component.
New coverage gap
The three new ISO endorsements include:
- CG 40 47 — The broadest form, excluding coverage for bodily injury, property damage or personal/advertising injury arising out of generative AI.
- CG 40 48 — A narrower endorsement excluding only personal and advertising injury claims tied to AI.
- CG 35 08 — An exclusion applying to products and completed operations liability coverage.
These endorsements could affect how coverage applies to certain AI-related claims, depending on policy language and endorsements.
One of the largest concerns involves Coverage B of the CGL policy, which traditionally covers claims such as defamation, invasion of privacy, misappropriation of advertising ideas or certain intellectual property-adjacent disputes. Under the new exclusions, those claims may no longer be covered if they arise from AI-generated text, images, audio, video or code.
Even businesses using third-party AI tools, rather than developing their own systems, may still trigger the exclusions. In some cases, incidental use of AI may be enough.
The businesses likely to feel the greatest impact are those integrating generative AI deeply into operations, including:
- Marketing and advertising firms using AI-generated campaigns,
- Technology companies embedding AI into products or software,
- Manufacturers relying on AI-assisted product design,
- Professional service firms using AI to draft documents or communications,
- Retailers deploying AI chatbots or recommendation engines,
- Nonprofits using AI for outreach or donor engagement, and
- Employers using AI tools in hiring or HR decisions.
Insurers are not stopping with general liability coverage. AI exclusions are also beginning to appear in:
- Directors and officers liability,
- Employment practices liability,
- Fiduciary liability,Cyber, and
- Errors and omissions policies.
Some insurers have already received regulatory approval for AI exclusions in Florida, Connecticut and Maryland. Others, including W.R. Berkley, have adopted broader exclusions that eliminate coverage for claims arising out of the use, deployment or development of AI across multiple lines of coverage.
What you can do
Businesses should expect insurers to ask more detailed questions about AI usage during renewals and underwriting. Companies that fail to evaluate potential coverage gaps could find themselves uninsured for lawsuits, regulatory investigations or shareholder claims tied to AI-generated content or decision-making.
Organizations should consider taking the following steps:
- Identify where AI is being used throughout the organization.
- Strengthen internal AI governance and oversight procedures.
- Require human review of AI-generated content and decisions.
- Train employees on acceptable AI use.
- Evaluate contracts with AI vendors and third-party providers.
- Discuss AI exposures and coverage gaps with us before renewal.
- Explore specialized protection options.
Some organizations may ultimately need dedicated technology errors and omissions coverage, cyber liability insurance or emerging standalone AI insurance products designed to address AI-related risks. Call us with questions.