For decades, people have filed lawsuits and sought compensation for professional errors and omissions that caused financial losses and other types of harm. However, traditionally, these lawsuits were filed against humans who were responsible for these costly mistakes, or the businesses they owned or represented.
In today's world of artificial intelligence, professional advice and assistance are often given to the public by AI. So what happens when AI gives incorrect advice or makes another error that causes loss or harm? That's what creates the need for AI professional liability insurance.
Fortunately, a local independent insurance agent can help you get set up with all the artificial intelligence liability insurance you need. They'll help you find the right professional liability for AI, regardless of your industry. But first, here's a guide to AI errors and omissions insurance, what it covers, and why it's necessary.
Key Takeaways - AI Professional Liability Insurance
- More professional liability insurance policies now cover errors and omissions caused by artificial intelligence in addition to those caused by humans.
- Tech firms, legal practices, financial institutions, healthcare companies, and many other businesses need AI professional liability insurance.
- Some standard professional liability insurance policies exclude coverage for AI-related errors and omissions.
- The deployer of the AI services is typically the entity held responsible in lawsuits related to AI professional errors or omissions.
- Working with an independent insurance agent is highly recommended, as they can tailor coverage to your unique business and find a policy that specifically includes AI.
What Is AI Professional Liability Insurance?
AI professional liability insurance is a special type of errors and omissions insurance that protects businesses and professionals from claims of negligence or mistakes related to the use or deployment of artificial intelligence technologies in professional services. Basically, AI insurance covers professional errors, omissions, and oversights that lead to financial losses or other types of harm to third parties if the error was caused by artificial intelligence and not a living human. This coverage is an essential part of a modern business insurance policy.
Why Is AI Liability Coverage Important?
As organizations integrate more AI, unique risks arise, such as errors, omissions, and algorithmic bias, leading to potential lawsuits that require specially tailored insurance coverage. More and more services, organizations, and institutions are relying on bots and other AI advisors to complete tasks and offer advice or assistance to the public. If a mistake is made and no human is directly responsible for the resulting loss, there must be a way to hold the artificial intelligence accountable, which is where coverage for AI errors and omissions comes in.
Who Needs AI Professional Liability Insurance?
Any business or professional using, developing, or relying on artificial intelligence should consider specialized insurance for AI-powered business risks. This can include the following professionals, industries, and organizations:
- Tech firms
- Legal practices
- Financial advisors and institutions
- Life sciences
- Healthcare companies
- Online retailers
If your business relies on AI for any services that can impact the public, you likely could benefit from having professional liability AI insurance coverage. An independent insurance agent can help you find the right coverage for your unique industry, such as AI errors and omissions insurance for technology companies.
Common Risks Covered by AI Liability Insurance
You may have been wondering, "When does professional liability insurance cover AI mistakes?" AI professional liability policies often protect against costs related to the following claims and allegations against your business:
- Data errors
- Biased outputs
- Intellectual property violations
- Cyber vulnerabilities
- Misinformation
Any of these errors and omissions can be generated by AI systems and lead to financial, reputational, or other harm to the public who rely on your business's services. If your company uses AI, ask an independent insurance agent to help you get equipped with AI professional liability insurance today.
Common AI Liability Exclusions to Be Aware Of
Some insurers exclude AI-related claims, including those arising from software errors, third-party systems, or even minor AI involvement. It's critical to review your business's professional liability insurance policy to determine if it includes coverage for AI-generated mistakes and oversights. Your independent insurance agent can help you review your existing policy and, if necessary, add coverage for AI liability.
How Is AI Liability Insurance Different from Traditional Coverage?
Unlike standard professional liability or E&O policies, AI-focused coverage is updated for technology risks such as autonomous decision-making, algorithm bias, and cyber threats specific to AI. Another key difference is who bears responsibility in the case of AI-related errors that result in lawsuits, because in cases of human-caused errors, it can be much easier to pinpoint fault.
It's typically decided that the deployer of the AI services, or the business or entity that uses AI, is responsible for its potential errors or omissions. As such, lawsuits would typically be filed against the deployer of the AI services. In other words, if your business relies on AI, it should be covered by a professional liability insurance policy that covers AI-generated mistakes to avoid having to pay for costly lawsuits.
The Cost Factors in AI Professional Liability Insurance
Several factors can influence the cost of AI professional liability insurance. Premiums can be higher for businesses that use cutting-edge or complex AI technologies, which can create a greater risk for larger claims. The following factors can impact your business's AI professional liability insurance rates:
- Location
- Claims history
- Industry and operations
- Size and annual revenue
- Coverage options and deductibles
An independent insurance agent can help you get a quote for AI professional liability insurance and find affordable coverage near you.
Steps to Qualify for AI Professional Liability Insurance
Insurers often ask questions about how your business integrates and oversees its AI services. You'll likely be asked about any risk management strategies your company implements to reduce its risk of incidents and resulting claims.
If your business can prove to an insurance company that it's not too much of a risk to insure, you can probably secure an AI professional liability insurance policy. An independent insurance agent can also help your business get the coverage it needs from a reputable insurer.
How to File a Claim Under AI Liability Insurance
In the event of a claim, for example, if the AI services your business relies on cause an error that leads to third-party damages, you'll need to notify your insurance company right away. Your business will be required to provide documentation of the incident.
The insurance company will likely conduct a detailed review of your business's AI use and oversight of the services before making a decision about your claim. An independent insurance agent can also help file claims directly through your insurance company for your business and keep you updated through every step of the process.
Here's How an Independent Insurance Agent Can Help You Find AI Professional Liability Insurance
When you're ready to get your business equipped with the right AI professional liability insurance policy, no one's better equipped to help than a local independent insurance agent. These agents have access to the best professional liability insurance companies, and they know where to find policies that include coverage for AI-related errors and omissions. They'll make sure you get set up with coverage that's customized for your unique business and its AI use.
FAQs About AI Professional Liability Insurance
What specific AI risks are usually covered by professional liability insurance?
Professional liability insurance can cover the following AI-related risks:
- Data errors
- Biased outputs
- Intellectual property violations
- Cyber vulnerabilities
- Misinformation
Ask an independent insurance agent to help you find a policy that includes all the coverage your business needs for potential AI mistakes.
Are AI-related claims excluded by standard professional liability or E&O policies?
In some cases, yes, AI-related claims can be excluded by standard professional liability and E&O policies. That's why it's helpful to work with an independent insurance agent to find a professional liability insurance policy that specifically includes AI coverage.
How does an insurer determine premiums for AI liability insurance?
Insurance companies may look at several criteria, including your business's size, location, industry, and AI-related operations to determine your AI professional liability insurance premiums.
What should policyholders disclose to get proper coverage for AI use?
Your business should inform the insurance company of exactly how it uses and oversees AI services to get the proper liability coverage.
Can AI liability insurance be bundled with cyber or general liability policies?
Yes, AI liability insurance can sometimes be bundled with cyber or general liability insurance policies through some insurers to earn a coverage discount. An independent insurance agent can help you find an insurer that offers this bundling option.
Sources
https://lamdabroking.com/en/professional-liability-in-the-age-of-ai-advice/
https://www.hoganlovells.com/en/publications/insuring-ai-risks-is-your-business-already-covered
https://allenthomasgroup.com/understanding-tech-professional-liability-insurance-costs/
https://corpgov.law.harvard.edu/2025/09/22/the-hidden-c-suite-risk-of-ai-failures/
https://www.hunton.com/insights/publications/how-insurance-policies-are-adapting-to-ai-risk