AI Exclusions in Business Insurance: What Major Insurers’ 2026 Coverage Limits Mean for Your Policy
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- Major insurers — including Berkshire Hathaway, Chubb, Travelers, AIG, Great American Insurance Group, and WR Berkley — have formally filed to exclude or limit AI-related liabilities from commercial policies.
- Verisk’s two new standardized AI exclusion endorsements (CG 40 47 and CG 40 48), effective January 1, 2026, are already affecting policy coverage for businesses renewing in Q1 and Q2 2026.
- Generative AI-related lawsuits in the U.S. surged 978% between 2021 and 2025, making AI one of the hardest risks for insurers to price accurately.
- If your business uses AI tools in any form, your current coverage may have new gaps — a proactive insurance comparison with your broker is the smartest first move.
What Happened
Some of the biggest names in commercial insurance — Berkshire Hathaway, Chubb, Travelers, AIG, Great American Insurance Group, and WR Berkley — have formally filed requests with U.S. state regulators to exclude or significantly limit how much they will pay out for AI-related claims. This is not a subtle policy tweak. It is one of the most significant coverage shifts in commercial insurance in years, and it is already affecting businesses renewing their policies right now.
To help standardize this shift, Verisk — the data analytics firm that helps insurers develop policy language — released two new endorsements (add-on clauses that formally modify a standard policy’s terms) effective January 1, 2026. The first, CG 40 47, is a broad exclusion covering bodily injury, property damage, and personal and advertising injury linked to generative AI. The second, CG 40 48, is a narrower version covering only personal and advertising injury. Policies renewing in Q1 and Q2 2026 are the first cohort expected to encounter these new forms.
WR Berkley went furthest of all, introducing what it calls an “absolute AI exclusion” across its Directors & Officers (D&O — insurance that protects executives from personal liability for their business decisions), Errors & Omissions (E&O — coverage for professional mistakes and oversights), and fiduciary liability products. This removes coverage for AI-generated content, failure to detect AI materials, poor oversight of AI systems, and regulatory investigations involving AI. Meanwhile, AIG filed for similar exclusions but publicly stated it “has no plans to implement them at this time,” treating the filing as a regulatory pre-approval held in reserve for when AI claims become more frequent and costly.
Why It Matters for Your Coverage
This news has a direct impact on policy coverage for any business that uses AI — and that is a far larger group than most people realize. AI tools now power everything from customer service chatbots and contract drafting assistants to hiring algorithms and medical records analysis. For years, businesses assumed their standard general liability (GL) policy — the foundational business insurance that covers third-party bodily injury and property damage claims — would respond if an AI tool caused harm. That assumption is now being tested at renewal desks across the country.
Here is an analogy to make it concrete: imagine you run a small catering business and your standard policy covers food safety incidents. Now suppose you start using an AI system to generate recipe suggestions and allergen warnings, and it makes an error that injures a customer. Under the old rules, your GL policy might respond. Under the new CG 40 47 exclusion, it might not. That is a real risk assessment gap that could leave you personally responsible for costs your policy used to absorb.
The numbers behind this shift are striking. Generative AI-related lawsuits in the U.S. grew 978% between 2021 and 2025, according to a joint report by Gallagher Re and MIT. Courts are seeing cases involving AI-generated content that defames real people, AI hiring tools that discriminate, and AI customer service agents that dispense dangerously wrong advice. Kevin Kalinich, Aon’s head of cyber risk, summed up the core underwriting challenge clearly: “The industry can absorb a $400 million or $500 million hit from a misfiring AI agent used by one company, but it cannot absorb an upstream failure that produces a thousand losses at once.” He characterizes AI as a “systemic, correlated, aggregated risk” — meaning one AI platform failure at a major software provider could simultaneously trigger claims from thousands of businesses that all depend on that same vendor. That is precisely why Chubb, while agreeing to insure certain AI-related risks, specifically carved out systemic, correlated losses affecting multiple clients at the same time.
The financial scale of this shift extends beyond individual policy coverage decisions. Bank of America identified over $15 billion in commissions paid to independent agents in 2025 that are at risk from AI disruption to the broader insurance distribution model — a figure that illustrates just how comprehensively AI is reshaping who sells insurance and how. At the same time, the global AI-in-insurance market is valued at $10.24 billion as of 2026, and Deloitte projects annual AI insurance premiums will reach $4.7 billion globally by 2032, growing at an 80% compound annual rate. Specialized AI liability products are coming, but the current transition period may leave businesses in a gray zone of uncertain coverage. A careful insurance comparison now — before a claim arises — is the most practical step available. And a strong risk assessment of your current AI practices could translate directly into insurance savings once purpose-built AI liability products become widely available and underwriters begin rewarding businesses with demonstrated governance controls.
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The AI Angle
There is a notable irony here: the very insurers limiting AI liability coverage are themselves among the heaviest adopters of AI in their own operations. AI-driven underwriting platforms like Tractable (which automates auto and property damage assessment from photos) and Shift Technology (which focuses on claims fraud detection) are already transforming claims management — automating decisions in seconds that once required days of human review. Insurers are actively using AI to conduct risk assessment, price policies, and flag suspicious filings in real time, even as they tell regulators they are not ready to insure the risks that AI creates in your business.
Legal analysts at Lexology noted that “AI risk is not actuarially mature” — meaning there is not yet enough historical loss data to price AI liability reliably the way insurers price car accidents or house fires. Without that foundational data, underwriters cannot confidently set premiums, so they are limiting exposure until loss patterns become clearer. Analysts at Modulos AI went further, observing that “the insurance industry has quietly become AI’s most powerful regulator,” arguing that exclusion filings and coverage conditions are pushing companies to adopt formal AI governance faster than any legislation has managed. How claims management practices evolve over the next two to three years will very likely shape how entire industries decide to deploy AI tools.
What Should You Do? 3 Action Steps
Pull out your existing commercial general liability policy and look carefully for any new endorsements added at your most recent renewal. Specifically ask your broker whether Verisk’s CG 40 47 or CG 40 48 forms — or any equivalent AI exclusion language — have been added to your policy coverage. If your policy renewed after January 1, 2026, there is a real chance new exclusions are already in effect without a clear explanation in your renewal notice. Do not assume your coverage is the same as last year. Always consult a licensed insurance agent before drawing any conclusions about what is and is not covered.
A growing number of specialty insurers now offer standalone AI liability policies designed to fill the gaps that standard GL policies are creating. When conducting an insurance comparison, ask specifically about coverage for AI-generated content errors, AI discrimination claims, regulatory investigation costs related to AI, and systemic failure scenarios where one vendor’s AI malfunction could affect your business alongside thousands of others. Because this is a rapidly evolving market, premiums and terms vary significantly between carriers. A licensed broker who specializes in technology or professional liability coverage is your best guide through the available options.
Before your next renewal, document how your business uses AI: which tools, who oversees them, what review processes exist, and how errors are identified and corrected. This documentation serves two purposes. First, it supports a stronger risk assessment profile when applying for coverage, demonstrating to underwriters that your AI use is supervised and controlled. Second, it positions you for potential insurance savings as specialty AI products mature and insurers begin rewarding businesses that can show responsible AI governance — much like installing a security alarm earns a discount on your property insurance. A licensed insurance agent can help you translate this documentation into a concrete coverage strategy.
Frequently Asked Questions
Does using AI tools in my small business affect my commercial insurance policy coverage in 2026?
Yes, potentially in significant ways. Verisk’s new CG 40 47 and CG 40 48 endorsements, effective January 1, 2026, allow insurers to exclude generative AI-related claims from standard general liability policies. Businesses renewing in Q1 or Q2 2026 may already have these exclusions in place without fully realizing it. Review your current policy documents carefully and ask your broker whether AI-related liabilities are explicitly included or excluded from your policy coverage. Always consult a licensed insurance agent for guidance tailored to your specific business situation.
What is the Verisk CG 40 47 AI exclusion and how does it change what my general liability policy will actually pay for?
CG 40 47 is a standardized endorsement — a formal clause that officially modifies what your policy does and does not cover — developed by Verisk and made available to insurers beginning January 1, 2026. It allows insurers to broadly exclude bodily injury, property damage, and personal and advertising injury claims arising from generative AI. A companion form, CG 40 48, applies only to personal and advertising injury. In plain terms, if an AI tool your company uses causes harm — for example, an AI content generator publishes something defamatory about a real person — these forms give your insurer a contractual basis to deny the claim under a standard GL policy. Consult a licensed agent to understand how these forms may apply to your coverage.
How can small business owners find insurance savings while still getting adequate AI liability coverage in 2026?
The most practical path to insurance savings right now is proactive documentation and risk management. Insurers are more likely to offer favorable terms — and may price coverage lower — for businesses that demonstrate clear AI oversight: designated human reviewers, documented error-correction processes, and limited use of high-risk AI applications. Bringing this documentation to broker conversations also strengthens your negotiating position. Because this is a fast-moving market, working with a licensed insurance agent who understands technology liability is essential to finding the right balance between cost and protection.
Will the surge in AI-related lawsuits cause my business insurance premiums to increase significantly in 2026?
It is a reasonable concern. Generative AI-related lawsuits grew 978% between 2021 and 2025, and insurers are responding with tighter risk assessment criteria at renewal. Whether your specific premiums increase depends on your industry, the nature of your AI tool usage, your claims history, and which insurer you work with. AIG, for instance, filed AI exclusions but has stated it has no current plans to implement them — demonstrating that the market is not moving uniformly. A direct conversation with a licensed agent about your specific situation is the most reliable way to understand your exposure.
What should I specifically look for when doing an insurance comparison for AI liability coverage options in 2026?
When comparing AI liability coverage options, focus on five key areas: (1) whether generative AI claims are explicitly included or excluded; (2) whether systemic or correlated losses — when one AI failure simultaneously harms many businesses — are covered or carved out, as Chubb has done; (3) whether regulatory investigation costs tied to AI incidents are included; (4) the quality of claims management support, including access to legal and technical experts when a claim arises; and (5) whether the policy covers both first-party losses (your own business costs) and third-party liability (claims from customers or partners). This is a fast-moving market, and a licensed insurance agent who specializes in technology or cyber liability is your most valuable resource for navigating it.
Disclaimer: This article is for informational purposes only and does not constitute insurance advice. Always consult a licensed insurance agent for personalized guidance.
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