Client Alert: The New AI Coverage Fight: Exclusions, Endorsements, and Denied Claims

Many businesses are adopting artificial intelligence (AI) under the familiar assumption that if something goes wrong, insurance will help absorb the loss. That assumption may need revision. As with cybersecurity and cyber liability insurance a decade ago, the insurance industry is doing something it doesn't like doing: paying for claims caused by rapidly evolving threats relying on insurance policy language that has been standard for decades. So, when it comes to AI, insurance companies have started doing what they’re famous for. They're saying "no." The issue is not that insurance companies have suddenly discovered AI, and it's also not malicious or a money grab. It's actually far more mundane. Insurers are now deciding how much of the risk they want to keep, how much they want to price separately, and how much they want to exclude entirely. That change is happening through new AI-specific exclusions, narrower endorsements, sublimits, underwriting questions, and old policy language... Read the complete article here... © Copyright 2026 Shumaker, Loop & Kendrick, LLP. All Rights Reserved.