Insurtech Counterpart has expanded its Affirmative AI Coverage, and added a Technology E&O Insuring Agreement to address the new and complex risks many companies are now exposed to as a result of businesses adopting artificial intelligence (AI) tools.
While reliance on AI tools grows, traditional insurance policies have largely failed to keep pace, often excluding coverage for the very technologies companies now depend on, Counterpart states.
AI adoption among small businesses has surged, with 92% now using AI in some form, primarily for research, marketing, and customer support. Automated decision-making tools have quickly become part of daily operations, improving efficiency but also amplifying risk.
Insurers are increasingly excluding AI-related risks and automated decision-making from coverage, a trend that leaves many businesses vulnerable, according to research from the Harvard Law Forum on Corporate Governance.
Ommid C. Farashahi, Insurance Coverage Partner at BatesCarey LLP, said: “AI-related risks are rapidly evolving. Coverage is by no means guaranteed by traditional E&O, D&O, Cyber, and CGL policies, which are ‘silent’ on such exposures and may be mitigated through AI-related exclusions or other policy limitations.
“To avoid any potential gap in coverage, companies should consider affirmative cover for the concentric circles of AI-related liability.”
As AI is still a gray area for many insurers, Counterpart argues its Affirmative AI Coverage directly addresses errors generated from first and third-party AI tools, removing uncertainty.
“AI risks have moved from theory to the courtroom,” said Mike Muglia, Professional Liability Lead at Counterpart. “A lot of small business owners and startup leaders are using AI to work faster, process more information, and deliver a higher level of service, but they don’t always see the liability that comes with it.”
He continued: “These endorsements give our brokers practical solutions for claims that come from everyday AI use, whether it’s bad outputs, decision errors, or machine-generated bias. As more businesses rely on AI to run and grow, these risks are only becoming more common.”
