For Brokers
When your client's AI harms a third party, their existing policies mostly won't respond. Testudo's does.
From customer-facing chatbots to content generation, companies across most industries have put generative AI into production. The accounts you renew next month are already running it.
of organizations report regularly using generative AI in at least one business function
McKinsey, The State of AI, November 2025
Insurers can now attach filed ISO exclusions (CG 40 47, CG 40 48 and CG 35 08) to a Commercial General Liability policy, removing cover for third-party harm caused by generative AI. As the claims land, more carriers will attach them.
growth in AI-related U.S. lawsuits filed from 2025 to 2026
Testudo AI Risk Engine case-law tracker, May 2026
Standard producer agreement, no volume minimums. Onboarded in 3-5 days.
We walk your team through the exposure, the coverage, and how to sell it. Virtual or in-person.
Third-Party AI Liability Cover
Six insuring agreements purpose-built for generative AI deployer exposure.
Our policy responds when a generative AI system that the insured has deployed causes harm to third parties. Coverage triggers and definitions are written for how generative AI systems actually cause legal liability.
Financial loss suffered by a third party arising from a hallucination or other negligent error or misstatement caused by a generative AI output.
Covers third-party claims arising from generative AI outputs that allegedly infringe IP rights or cause personal injury-type harm, including defamation, privacy/publicity violations, copyright or trademark/trade dress infringement.
Liability arising from the unauthorized disclosure of Protected Information through a generative AI output.
Bodily injury to a third party who interacts with, or relies upon the generative AI tool the insured has deployed.
Third party property damage arising from the interaction with, or reliance upon the generative AI tool the insured has deployed.
Defense costs, plus civil fines and penalties where insurable by law, when a governmental or regulatory authority brings an action alleging your deployment of a generative AI system violated an AI regulation or law.
WHO'S IT FOR?
Any organization that has deployed generative AI in its operations.
Your deployer clients sit at the end of the AI value chain. They don't build the models. They operate them. That's where the exposure sits.
Developers
The developer creates the foundational model, such as GPT-5 or other large language models. They own the core training, architecture, and base functionality. Examples include OpenAI, Anthropic, Google, xAI, Cohere, and Mistral.
Vendors
The vendor customizes or modifies the foundational AI model to create a specific generative AI system or application (e.g., a chatbot) and sells it to deployers. Examples include Cursor, Harvey AI, Bland.AI, and Microsoft Co-Pilot.
Deployers
The deployer embeds a developer's or vendor's AI system into its operations as customer chatbots, internal copilots, and workflow automation. Our target customers: any commercial company running generative AI in production, from manufacturers and retailers to healthcare and professional services.
Enable your clients to surface their AI liability risk by asking the following questions at renewal.
Are you currently using any generative AI, and if so, for what specific functions?
Generative AI systems include chatbots, support copilots, and virtual assistants.
How much visibility do your risk team and legal have into the specific generative AI tools your business units are running today?
Employees adopt AI tools without telling anyone. When that 'Silent AI' causes harm, the liability still lands on the insured. Only one in five organizations has a tested plan for an AI failure (Grant Thornton, 2026).
Have you confirmed with your current carriers that AI-related losses are still covered on your E&O, Cyber, and CGL placements this renewal?
None of those three policies were written with AI in mind, and since January 2026 there has been a standard exclusion carriers can attach to a General Liability policy. Ask whether it is on your client's schedule at renewal.
APPETITE
The generative AI use cases and industries we lean into.
The lists below aren't exhaustive. They set expectations. If a client's use case or industry isn't listed, bring it to us and we'll handle it case-by-case.
Use cases
Beyond the featured verticals, we have the appetite to review generative AI deployed across these use cases:
Industries
We have the appetite to review generative AI deployed in these industries:
Claims Examples
Hypothetical claim scenarios across Testudo's six insuring agreements.
Support chatbots for enterprise companies in telecoms, SaaS, and fintech provide clients incorrect onboarding or integration steps, leading to client downtime and lost revenue.
Generative AI errorsA chatbot fabricates a sexual misconduct case against the CEO of a supermarket.
IP & personal injuryWellness AI gives unsafe recovery guidance, allegedly causing physical injury.
Bodily injuryA helpdesk AI provides a customer with incorrect steps for subscription cancellation and the customer gets charged for another year.
Generative AI errorsAI writes a marketing campaign using a tagline that turns out to be a competitor's registered trademark, triggering a legal complaint.
IP & personal injuryA retail chatbot reveals another customer's order history, bank details, and address.
Unauthorized data disclosureContract-summary AI misstates service terms, causing a missed contractual obligation.
Generative AI errorsAn AI vendor-risk summary falsely flags a supplier as being on a sanctions list.
IP & personal injuryAn AI assistant tells a building manager to set the HVAC to the wrong temperature, freezing and bursting the pipes in a tenant's unit.
Property damageA state regulator opens an investigation alleging a company's AI-powered customer service chatbot violated the state's AI transparency and fairness requirements.
AI Regulatory ViolationScenarios are hypothetical and shown for illustration. Coverage determinations depend on the specific policy wording and claim facts.
Want to know where your clients are deploying AI?
HOW IT WORKS
The insured uses a generative AI tool such as a website chatbot.
The generative AI tool deployed causes harm to a third party.
The third party who was harmed sends a written demand or files a suit.
Testudo's policy responds to cover defense costs and settlements up to the policy limit for covered claims.
A concise, client friendly application form, covering the applicant's business information and generative AI system deployments.
High-level questions designed to be answered alongside the client in a single discovery call.
No security audits, penetration tests, or AI evals. The application form is typically enough to price the risk, so there's nothing for your client's security team to clear before we quote.
Appointed brokers download the current application form, the appetite guide and the claims scenarios from the Broker Platform.
We'll walk through your book with you, one account at a time, to map which insureds are using generative AI and where the liability risk sits providing an opportunity for cover.
You share a list of the named insureds in your book. We handle the classification, exposure grading, and appetite review. Most books come back within two business days of the list landing with our underwriting team.
| Account | AI use case | Exposure | Engage? | UW notes |
|---|---|---|---|---|
| Harbor Supply Co.Industrial Distribution | Customer support chatbot | Material | Yes | GAI Errors |
| Meridian Retail GroupRetail Trade | Marketing copy generation | Moderate | Yes | IP / PI |
| Bayline Health SystemHealthcare | Patient scheduling agent | Material | Yes | Unauth. Data |
| Crestwood LogisticsTransportation | Dispatch copilot | Low | Watch | Under review |
| Quadrant Consumer FinanceFinance & Insurance | Automated loan underwriting | Material | No | Out of appetite |
BROKER EDUCATION
We'll fly out or jump on video to educate your producers on AI exposure, and how to sell AI liability insurance with confidence.
Gap Analysis
Commercial General Liability, E&O, and Cyber can provide indirect coverage for some Gen AI risks, but none offers comprehensive protection. A purpose-built third-party AI liability policy is designed to fill the gap.
CGL does not cover pure economic loss.
Unless Gen AI exclusions are used.
Even if arising from a covered cyber event.
Under the Generative AI Errors insuring agreement.
Unless Gen AI exclusions are used.
E&O typically excludes bodily injury.
Cyber typically excludes bodily injury.
Under the Bodily Injury insuring agreement.
Unless Gen AI exclusions are used.
E&O typically excludes property damage.
Cyber typically excludes property damage.
Under the Property Damage insuring agreement.
CGL often has an access or disclosure exclusion.
E&O typically would not respond.
Potentially, depending on the wording.
Under the Unauthorized Data Disclosure insuring agreement.
To a narrow advertising-related IP infringement.
E&O excludes IP infringement.
IP infringement is narrowly defined under 'media liability'.
Under the IP Infringement and Personal Injury insuring agreement.
Governmental/regulatory actions excluded.
Traditional coverage does not include AI regulatory violations.
Traditional coverage does not include AI regulatory violations.
Under the AI Regulatory Violation insuring agreement.
In response to damages from Gen AI outputs
Does the policy respond to third-party financial damages?
CGL does not cover pure economic loss.
Unless Gen AI exclusions are used.
Even if arising from a covered cyber event.
Under the Generative AI Errors insuring agreement.
In response to damages from Gen AI outputs
Does the policy respond to third-party bodily injury?
Unless Gen AI exclusions are used.
E&O typically excludes bodily injury.
Cyber typically excludes bodily injury.
Under the Bodily Injury insuring agreement.
In response to damages from Gen AI outputs
Does the policy respond to third-party property damage?
Unless Gen AI exclusions are used.
E&O typically excludes property damage.
Cyber typically excludes property damage.
Under the Property Damage insuring agreement.
In response to damages from Gen AI outputs
Does the policy respond to third-party damages arising from unauthorized data disclosure?
CGL often has an access or disclosure exclusion.
E&O typically would not respond.
Potentially, depending on the wording.
Under the Unauthorized Data Disclosure insuring agreement.
In response to damages from Gen AI outputs
Does the policy respond to inadvertent IP infringement?
To a narrow advertising-related IP infringement.
E&O excludes IP infringement.
IP infringement is narrowly defined under 'media liability'.
Under the IP Infringement and Personal Injury insuring agreement.
In response to damages from Gen AI outputs
Does the policy respond to a regulator's action alleging an AI regulation violation?
Governmental/regulatory actions excluded.
Traditional coverage does not include AI regulatory violations.
Traditional coverage does not include AI regulatory violations.
Under the AI Regulatory Violation insuring agreement.
COMMON QUESTIONS
Scheduling specific systems gives the client certainty of coverage. Blanket policies often lead to coverage disputes.
The schedule also protects the client from shadow AI, where employees use unsanctioned AI tools without IT approval. We write coverage for the AI systems the client has reviewed and approved. Anything outside that list we don't price, because we don't know it exists. A schedule keeps coverage and premium aligned to what's actually deployed.
We are happy to add new generative AI systems to the schedule on request, subject to an underwriting review.
Testudo writes US risks today because the US is where the claims environment is most developed. That includes the Verisk generative AI exclusions available on US Commercial General Liability forms and the bulk of early-stage AI litigation in federal and state courts.
Our underwriting data (claims development, deployment patterns, model performance) is mainly US-sourced. We expect to expand internationally as non-US markets reach the same claims maturity.
For a global client operating worldwide with a US HQ, or any other bespoke risk, please reach out to the team on a case-by-case basis.
Commercial companies from mid-market through large enterprise. You can pitch this across most of your book, including manufacturers, retailers, professional services, banks, and healthcare organizations. If a client's generative AI interfaces with a third party, or produces output a third party receives or relies on, they are in the target market.
We supply risk reports to the broker to help start the conversation. They come industry-specific, or company-specific for a named policyholder.
Yes. AI hallucinations are covered under the Generative AI Errors insuring agreement, which responds when a generative AI system the insured has deployed produces a false or misleading output and a third party suffers financial loss relying on it.
"AI hallucination" is the common name for this failure mode. On the Testudo form it is one of six insuring agreements, alongside IP Infringement and Personal Injury, Unauthorized Data Disclosure, Bodily Injury, Property Damage, and AI Regulatory Violation.
Cyber insurance may include a narrow section covering media liability. Testudo's IP Infringement and Personal Injury agreement responds to copyright, trademark, libel, and slander from a generative AI output in one trigger. Cyber wordings vary widely, and in our view that coverage is rarely sufficient for an AI-deployer policyholder, because cyber forms were written for network and data-breach events, not for Gen AI output liability.
Where the client already has the coverage under another policy, we can write this policy on a modular basis so only the coverage required needs to be purchased.
No. We exclude cyber-attacks.
If the loss is caused by a cyber-attack, the cyber insurer pays, subject to the cyber contract. Cyber insurance policies generally respond to the defined 'Computer System.'
No. Testudo's Generative AI Third-Party Liability is a commercial-only product.
WAYS TO ENGAGE WITH TESTUDO