Generative AI Liability Insurance
Many businesses still assume they're covered. But as generative AI lawsuits climb, insurers are responding by excluding generative AI risks from traditional coverage and denying related claims.
The Solution
As generative AI makes decisions, creates content, and powers critical work, it can also create new paths to liability. To protect your business, we provide liability coverage for the cost of lawsuits caused by your use of generative AI.
When hallucinations or incorrect outputs cause financial loss to a third party.
When generative AI outputs infringe on intellectual property rights.
When your use of generative AI physically injures a person or property.
When generative AI outputs reveal protected data about a person without their permission.
When a regulator takes action alleging your AI deployment violated an AI regulation or law.
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 disclosureAn 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 ProceedingsScenarios are hypothetical and shown for illustration. Coverage determinations depend on the specific policy wording and claim facts.
Wondering if you're covered for claims like these?
Coverage at a Glance
We've mapped common generative AI liability exposures against the policies most businesses already purchase to highlight the coverage gaps.
Claim Scenario
Your AI gives a wrong answer that causes a third party financial loss.
Claim Scenario
Your AI's output infringes a copyright or trademark, or harms a reputation.
Claim Scenario
Your AI exposes private information about someone without their permission.
Claim Scenario
Your use of AI physically injures a person.
Claim Scenario
Your use of AI damages physical property.
Claim Scenario
A regulator brings an action alleging your AI violates an AI regulation or law.
How To Apply For Coverage
Applying for coverage is fast, and we accept applications through the brokers you already work with. Our underwriting process is simple, and we never need to integrate invasively with your generative AI system. No lengthy audits or penetration tests are required to apply for coverage.
COMMON QUESTIONS
It is a standalone, claims-made third-party liability policy with six insuring agreements: Generative AI Errors, IP Infringement and Personal Injury, Unauthorized Data Disclosure, Bodily Injury, Property Damage, and AI Regulatory Proceedings.
It covers defense costs and settlements up to the policy limit arising from lawsuits when the insured's generative AI deployment causes harm to a third party resulting in litigation.
Any U.S. company deploying generative AI in its products or operations that could face litigation if the technology they have deployed causes harm to a third party. Exclusions in commercial general liability and errors and omissions insurance policies are leaving companies exposed to self insuring generative AI liability risk.
When generative AI causes harm to a third party (an incorrect output, IP infringement, unauthorized data disclosure, or physical injury), liability typically attaches to the enterprise that deployed the system.
Generative AI liability insurance protects the company that deployed the generative AI system. It responds to the defense costs and settlements arising from the outputs or deployment of the generative AI systems scheduled on the policy.
Coverage is distributed on an excess and surplus lines basis in the United States. Coverage is subject to underwriting and may not be available in all states.
A commercial general liability (CGL) policy will respond to bodily injury, property damage, and personal and advertising injury caused by generative AI, unless a generative AI exclusion has been attached to it. Insurers can attach the Verisk endorsements CG 40 47, CG 40 48, or CG 35 08, which remove that cover. Where one is on the policy, standalone generative AI liability insurance fills the gap.
Cyber insurance generally covers data breaches, network security failures, and privacy events, not third-party harm from what a generative AI system produces. Claims like defamation, IP infringement, or faulty AI-generated advice typically fall outside cyber policies, and outside CGL where AI exclusions apply, leaving a gap that standalone generative AI liability insurance addresses.