AI Insurance Exclusions
Your AI disaster recovery plan survived the Cloudflare outage last week.
Did your team?
Here’s what most executives are missing: while you’ve been focused on AI adoption, insurers have been quietly repositioning.
Major carriers are now introducing explicit policy exclusions for claims tied to generative AI. Standardized exclusionary language from Verisk will be widely available by early 2026.
That “silent coverage” you assumed protected AI-related harms under traditional liability, E&O, D&O, and cyber policies? It’s disappearing.
The insurance industry is telling us something important: they can’t price AI risk because most organizations can’t demonstrate they’re managing it.
This isn’t a documentation problem. It’s an execution problem.
Your crisis plan says who’s responsible for AI governance. But when your LLM produces harmful output at 2 AM on a Saturday, who actually makes the call to shut it down? Have they ever practiced that decision?
The gap between documented preparedness and actual execution capability is where organizations get exposed. Insurers know this. That’s why they’re stepping back.
Three questions every executive should be asking right now:
- Do we have explicit AI coverage, or are we assuming traditional policies apply?
- Can our incident response team recognize and contain AI-specific failures—such as hallucinations, bias events, and data contamination?
- Have we stress-tested our AI governance under realistic conditions, or just reviewed it in a conference room?
The organizations that answer these honestly—and act—will be the ones carriers want to cover.
The rest will discover their exposure the hard way.