Insurers move to limit coverage for AI claims

Insurers are increasingly attaching AI exclusions to business policies as litigation and regulatory risks tied to generative AI grow. Some carriers have adopted exclusions based on standard language from Verisk Analytics Inc.’s Insurance Services Office, targeting claims involving bodily injury, property damage, or personal and advertising injury arising from policyholders’ use of generative AI.

W. R. Berkley Corp. has gone further with an “absolute” AI exclusion that can reach claims against directors and officers, raising concerns that companies could be left exposed over AI-related disclosures, governance, copyright disputes, and alleged AI-washing. Generative AI-related lawsuits in the US surged by 978% from 2021 to 2025, according to Gallagher Re.

Potential losses are especially significant for companies relying on data centers and embedded AI systems. An average 100-megawatt data center could generate more than $1 billion in annual profits, and an outage could create a business interruption loss equaling about 70% of that profit total, according to insurance lawyers cited in the discussion. Industry professionals expect some insurers to narrow exclusions or develop new products, but policyholders may still face costly premiums and gaps as carriers struggle to model fast-changing AI risks.