A Small but Mighty AI Liability Insurance Product Update

Today, at the request of our beloved and extremely valued brokers, we are delighted to announce a small but mighty change to our generative AI liability insurance product.

Before we get into the update, let’s quickly reflect on the state of play for AI liability insurance.

Where does AI liability insurance stand today?

While we are now seeing exclusions applied broadly to commercial general liability (CGL) policies, a number of traditional lines of business are reacting much more slowly, particularly errors and omissions (E&O) insurance, partly due to soft market conditions. There are some pockets that are starting to change, such as lawyers’ and architects’ liability.

As businesses delegate more decisions, workflows, and customer interactions to AI systems, brokers and insureds are increasingly having to ask a difficult question:

If we receive an AI liability claim, can we rely on wording that is silent on the matter?

As AI becomes a core operational risk, that becomes a very difficult, and potentially very expensive, question to answer.

What is changing in our AI liability insurance policy?

In addition to launching a standalone liability product for deployers of generative AI, we are now taking steps to remove any lingering ambiguity about how our coverage might overlap with traditional policies.

We are updating the Other Insurance provision in our policy so that, for the AI liability exposures covered under the Testudo policy, our insurance is intended to respond on a primary basis.

Being primary for the AI risks that we price and underwrite has always been our intention. However, the continued presence of silent AI in traditional insurance policies creates ambiguity and uncertainty for our clients.

We cannot control what other insurers do, but we can control what we do. So we are making sure our intentions are crystal clear.

Why does this matter for brokers and their clients?

This is a meaningful update for our clients, as it means they do not necessarily have to worry about coverage overlaps with their incumbent E&O or cyber policy (with regard to our coverage for unauthorized data disclosure), or about how those policies would respond to the AI liability exposures covered by their Testudo policy.

If a claim falls within the dedicated AI coverage purchased from Testudo, our policy is intended to be the first-response policy for that AI exposure. Any overlapping coverage under the traditional E&O program will remain excess above Testudo, subject to that policy’s terms and conditions.

This is particularly important for companies performing professional services that are deploying generative AI tools in their business and do not want an AI claim to adversely affect their multi-year E&O program.

We hope this update is useful to our broker partners and their clients.

Broker feedback will always drive our product roadmap as we continue on our mission to insure the AI economy.

Who knows, in the future it might be AI liability insurers endorsing the last remaining human decisions back into their policies.