--- title: "Insurance & AI Glossary" url: "https://www.testudo.co/glossary" description: "Plain-English definitions of the insurance and AI terms brokers meet when placing AI liability insurance for generative AI, from Tech E&O to Lloyd's." site: "Testudo" --- Glossary # Speak the language of AI liability insurance Plain-English definitions of the coverage, distribution, and risk terms that come up when AI companies and brokers place AI liability cover for generative AI. Search glossary terms ## A 9 terms - ### [Absolute AI Exclusion](https://www.testudo.co/glossary/absolute-ai-exclusion) An insurance endorsement that bars coverage for any claim arising out of the use, deployment, or development of artificial intelligence, with no carve-back. - ### [Affirmative AI Coverage](https://www.testudo.co/glossary/affirmative-ai-coverage) Policy language that explicitly grants coverage for claims arising from artificial intelligence systems, rather than leaving the exposure ambiguous. - ### [Agentic AI Liability](https://www.testudo.co/glossary/agentic-ai-liability) Third-party liability arising when an autonomous AI agent takes an unauthorized action, transacts on a user's behalf, or causes financial loss outside its intended scope. - ### [AI Governance](https://www.testudo.co/glossary/ai-governance) The policies, controls, and accountability structures an organization puts in place to deploy AI safely and lawfully, increasingly a condition of favorable insurance underwriting. - ### [AI Hallucination Liability](https://www.testudo.co/glossary/ai-hallucination-liability) The third-party legal exposure a deployer faces when a generative AI system produces a false, fabricated, or unsupported output that a user relies on to their financial detriment. - ### [AI Indemnification](https://www.testudo.co/glossary/ai-indemnification) A contractual promise from an AI vendor (such as Microsoft Copilot Copyright Commitment or Google Cloud) to defend customers against IP claims arising from the vendor's AI outputs. - ### [AI Liability Insurance](https://www.testudo.co/glossary/ai-liability-insurance) Third-party cover for the liability a company takes on when the AI it deploys causes harm to someone else. - ### [AI Washing](https://www.testudo.co/glossary/ai-washing) The legal and regulatory exposure a company faces when it overstates or misrepresents its use of artificial intelligence, drawing securities, consumer-protection, or false-advertising claims. - ### [Algorithmic Bias Liability](https://www.testudo.co/glossary/algorithmic-bias-liability) The legal exposure a company faces when an AI system produces discriminatory or disparate outcomes in hiring, lending, housing, or pricing decisions. ## C 2 terms - ### [Claims-Made Policy](https://www.testudo.co/glossary/claims-made-policy) A policy that responds only to claims first made against the insured and reported to the carrier during the policy period, regardless of when the underlying act occurred. - ### [Cyber Liability Insurance (Cyber)](https://www.testudo.co/glossary/cyber-liability-insurance) Coverage for losses arising from cyber-attacks, data breaches, and the regulatory and third-party fallout that follows. ## D 2 terms - ### [Data Poisoning](https://www.testudo.co/glossary/data-poisoning) An adversarial attack that manipulates an AI model's training or retrieval data to corrupt its behavior, creating a deployer liability exposure when the tainted outputs cause harm. - ### [Duty to Defend](https://www.testudo.co/glossary/duty-to-defend) An insurer's obligation to fund and provide legal defense for any lawsuit where at least one allegation, if proven, would fall within policy coverage. ## F 1 term - ### [Foundation Model Liability](https://www.testudo.co/glossary/foundation-model-liability) The exposure faced by developers of base AI models (OpenAI, Anthropic, Google) and by companies that build downstream applications on those models. ## G 1 term - ### [Generative AI Exclusion (CG 40 47 / CG 40 48 / CG 35 08)](https://www.testudo.co/glossary/generative-ai-exclusion) A set of Verisk-filed Commercial General Liability endorsements removing coverage for bodily injury, property damage, and personal and advertising injury arising from generative AI. ## H 1 term - ### [Hammer Clause](https://www.testudo.co/glossary/hammer-clause) A consent-to-settle provision that caps an insurer's liability at a rejected settlement amount if the insured refuses to settle a claim the insurer recommends resolving. ## L 1 term - ### [Lloyd's Coverholder](https://www.testudo.co/glossary/lloyds-coverholder) A company authorized by a Lloyd's managing agent to enter into contracts of insurance on behalf of the members of a Lloyd's syndicate, under a binding authority. ## N 1 term - ### [NAIC Model AI Bulletin (AIS Program)](https://www.testudo.co/glossary/naic-model-ai-bulletin) A National Association of Insurance Commissioners bulletin adopted in December 2023 requiring insurers to maintain a written AI governance program (AIS Program) for all consumer-facing AI use. ## P 1 term - ### [Prompt Injection Liability](https://www.testudo.co/glossary/prompt-injection-liability) The exposure created when an attacker manipulates an AI system's instructions to exfiltrate data, bypass guardrails, or cause unintended actions on behalf of a user or company. ## R 1 term - ### [Retroactive Date](https://www.testudo.co/glossary/retroactive-date) The earliest date on which a wrongful act can have occurred and still be covered under a claims-made policy, anchoring how far back prior acts are insured. ## S 2 terms - ### [Silent AI](https://www.testudo.co/glossary/silent-ai) A coverage gap where an existing insurance policy is neither affirmatively granting nor explicitly excluding AI-related claims, leaving the insurer's exposure undefined. - ### [Surplus Lines Insurance (E&S)](https://www.testudo.co/glossary/surplus-lines-insurance) Specialty insurance written by non-admitted carriers for risks the admitted market will not insure, regulated state-by-state with surplus lines taxes. ## T 3 terms - ### [Tech Errors and Omissions Insurance (Tech E&O)](https://www.testudo.co/glossary/tech-errors-and-omissions-insurance) A professional liability policy that covers technology companies when their products or services cause a client to suffer financial loss. - ### [Third-Party Liability Insurance (TPL)](https://www.testudo.co/glossary/third-party-liability-insurance) Coverage that responds when the insured is legally liable for harm caused to a third party, paying defense costs and damages. - ### [Training Data Infringement](https://www.testudo.co/glossary/training-data-infringement) Copyright or IP claims brought against an AI developer or deployer for the unlicensed use of protected works in model training datasets. ## W 1 term - ### [Wrongful Act](https://www.testudo.co/glossary/wrongful-act) The defined event that triggers coverage under a claims-made liability policy, typically an actual or alleged act, error, or omission in the insured's covered activities. --- ## More from Testudo - 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