Testudo Launches New Insurance Coverage for Liability Risks Created by Generative AI Systems

San Francisco, CA. Testudo, a technology and insurance company focused on covering generative AI risk, has launched a new insurance product that protects enterprises from the financial, reputational, and legal fallout when their generative AI systems cause harm.

Last reviewed: May 2026.

The policy is backed by Lloyd’s of London capacity, with support from Apollo and other syndicates, and carries limits from $1 million to $10 million. Testudo assesses each company’s generative AI liability using proprietary litigation data and other risk signals, so a broker can secure a quote for a client without an invasive technical audit.

The launch follows the new generative AI exclusions in Commercial General Liability (CGL) insurance, which took effect on January 1, 2026. Testudo’s product is built to cover the gaps those exclusions leave for companies deploying generative AI.

“GenAI is changing enterprises at every level. But this change brings new, unknown risks,” said George Lewin-Smith, CEO of Testudo. “Business leaders can’t afford to cross their fingers and hope nothing goes wrong. Testudo can help them understand and insure their GenAI risk, transferring liability off corporate balance sheets and allowing enterprises to confidently innovate. Our insurance products will unlock the next wave of GenAI deployment in the economy.”

What is generative AI insurance?

Generative AI insurance is a standalone, claims-made third-party liability policy that covers the defense costs and damages a company faces when its generative AI produces a false or misleading output that harms a third party. Testudo writes it on Lloyd’s of London paper (rated A+ Superior by AM Best) for U.S. enterprises deploying generative AI.

How Testudo underwrites generative AI risk

Testudo captures litigation, regulatory filings, and incident data in real time, then uses proprietary modeling to estimate a company’s real-world generative AI liability exposure. Underwriting runs on that dataset rather than on a technical audit of the customer’s systems, and coverage is placed on A+ (Superior) rated Lloyd’s of London paper.

Does insurance cover AI hallucinations?

Yes. Testudo’s policy responds to third-party claims that arise when a company’s generative AI produces a false, misleading, or harmful output, which is what most people mean by an AI hallucination. Those losses sit under the Generative AI Errors agreement, one of five insuring agreements that also cover IP infringement and personal injury, unauthorized data disclosure, bodily injury, and property damage. Testudo’s own litigation data shows that only 4.9% of U.S. generative AI lawsuits turn on hallucinations, so most exposure comes from the other failure modes the policy is built to handle.

Real-time risk scoring and monitoring

The same data powers real-time risk scores, GenAI Risk Summaries, and Active Liability Monitoring, so brokers and enterprises can track a company’s generative AI exposure as it shifts instead of revisiting it once a year at renewal.

Industry perspective

Dawn Miller, Chief Commercial Officer of Lloyd’s and CEO of Lloyd’s Americas: “Testudo’s GenAI liability product exemplifies what the Lloyd’s Lab was designed to deliver: developing pioneering insurance solutions for emerging risks. By collaborating with innovators like Testudo, we’re not just creating new products; we’re advancing the market’s ability to assess and price complex new exposures. This product represents the kind of specialist capacity Lloyd’s exists to provide, addressing policyholder needs that didn’t have solutions before.”

Hayley Budd, Innovation Class Leader at Apollo: “At Apollo we recognise the critical role insurance needs to play in helping organisations to manage new and emerging risks. Testudo is tackling one of the biggest challenges in our market today, how to support organisations utilising Generative Artificial Intelligence. There’s a real gap between how fast GenAI is evolving and the availability of fit-for-purpose insurance products, which is why we’re so excited to see this product launch.”

Mark Titmarsh, Head of Insurance at Testudo: “Where there’s risk, there’s insurance. And that’s why Testudo’s unique insurance products will accelerate enterprise GenAI adoption. We serve as the portal between the specialist underwriting expertise of London and advanced technology of the Bay Area, helping businesses deploying GenAI at every level.”

About Testudo

Testudo combines technology and insurance to address the challenge of generative AI risk. As a participant in the Lloyd’s of London Innovation Lab (Cohort 14), Testudo has built a database to model and monitor real-world generative AI exposure, and uses that intelligence to underwrite and price the risk. This lets enterprises transfer liability and adopt generative AI with confidence.

What does Testudo's generative AI liability policy cover?

Testudo's standalone Gen AI liability insurance responds to five categories of third-party claim: financial loss and negligent misrepresentation from AI errors, defamation and reputational harm, IP infringement, unauthorized data disclosure, and bodily injury or property damage. Coverage sits on A+ (Superior) rated Lloyd's of London paper with limits from $1 million to $10 million. Brokers can get a quote without an invasive technical audit. For the underlying litigation trends driving demand, see Testudo's generative AI litigation market overview.