State AI laws complicate liability and insurance coverage

More than 1,500 AI-related bills have been introduced in 2026, and 280 were adopted, according to the National Conference of State Legislatures. The growing patchwork of state requirements is complicating compliance and insurance coverage despite federal efforts to establish a minimally burdensome national framework and challenge conflicting state laws.

Litigation involving alleged chatbot harms is expanding potential liability, while consumer protection cases against social media companies could provide a roadmap for claims against AI businesses. Regulators are particularly focused on minors and vulnerable populations. Existing privacy and unfair-business-practice laws also offer avenues for enforcement as AI-specific rules develop.

Insurers are reassessing exposures even as cyber coverage remains competitively priced. Marsh reported that global cyber insurance rates declined 4% in the third quarter. Gallagher’s 2026 AI Adoption and Risk Survey found that One-in-five insurance industry respondents reported a client experiencing an AI-related loss or claim during the previous year, with cyber liability, product liability and employment practices liability most likely to be affected.

Resilience is emphasizing which developers, deployers and applications it will insure before addressing policy wording. Its global insurance product director, Michelle Worrall, uses the EU AI Act as a rigorous reference for drafting coverage. She expects more carriers to prioritize risk selection, with consumer-facing and companion AI models attracting heightened scrutiny.