Source: Honigman

A study by Gallagher Re, in collaboration with MIT and Testudo Global Inc., finds that traditional insurance policies generally do not cover liabilities native to artificial intelligence deployments, while AI tool vendors are structured to avoid these risks. The study reports that the rapid adoption of AI has surpassed the insurance sector’s development of suitable products, creating a class of uninsured AI-related liabilities.

The commercial insurance market is responding by increasingly limiting or excluding coverage for AI-related losses. For instance, in 2025 the Insurance Services Office (ISO) introduced optional generative AI exclusions effective in 2026 commercial general liability policies, which exclude coverage for bodily injury, property damage, or personal and advertising injury arising from generative artificial intelligence. Technology Errors & Omissions policies frequently exclude harms related to AI such as hallucination losses and intellectual property infringement. Additionally, Directors & Officers (D&O) and Commercial General Liability (CGL) policies have begun to include AI-specific exclusions, contributing to growing exposure for enterprises deploying AI technologies. ---