Your Next Liability Renewal May Quietly Drop AI Coverage

Via Claims Journal: Insurer Interest in AI Exclusions Growing as Risk Becomes Omnipresent

Your liability policy may stop covering AI before your next renewal notice makes it obvious

Owner-led firms have been treating AI governance as a nice-to-have. Insurers are treating it as an underwriting problem they would rather not price.

Claims Journal reported on July 20, 2026 that carriers are moving to exclude generative-AI risk from commercial liability coverage, with ISO generative-AI endorsements drawing rising interest and Berkley already floating a broad absolute AI exclusion for directors and officers, errors and omissions, and fiduciary liability products.

The practical consequence for a 10-to-50 person firm is blunt: if staff use ChatGPT, Claude, or an agent tool on client work, and a claim lands after the exclusion hits your policy, you may discover you have silence where coverage used to live. That is not a technology story. It is a renewal story.

Attorney Alana McMullin of Lathrop GPM, quoted by Claims Journal, called it a major shift and said insurers are moving quickly to limit exposure. Joe Lam of Verisk, who helped write the ISO endorsements, said carriers want underwriting flexibility for exposures traditional policies never contemplated.

Why this matters now for owner-led SMEs

Silent coverage is ending because the industry noticed the lawsuits.

Claims Journal cites a Gallagher study showing a 978 percent increase in AI-related lawsuits from 2021 to 2025, and a 137 percent jump from 2024 to 2025. Patent, copyright, privacy, and disclosure disputes are already in the mix. McMullin told Claims Journal that errors and omissions and directors and officers lines may be among the first places aggressive AI exclusions get tested when claims are denied.

ISO has published generative-AI endorsements for Commercial General Liability and Products/Completed Operations, including CG 40 47, CG 40 48, and CG 35 08. Berkley absolute AI exclusion, as summarized by Claims Journal, can reach use or development of AI, AI-generated content, failure to identify third-party AI content, AI policies and procedures, and breaches of AI-related duties.

For law firms, accountants, RIAs, healthcare practices, and consultants, that list maps onto everyday work: drafting, summarizing, client intake notes, and shadow use on personal accounts. If your renewal packet adds one of these endorsements, the question is no longer whether AI is useful. It is whether you can show any governance at all when a broker or underwriter asks.

What smart firms do before the binder arrives

Do not wait for a denied claim to invent a policy.

• Inventory shadow AI. List tools, personal accounts, and where client or employee data is pasted. You cannot defend what you cannot see.
• Ask the broker three renewal questions. Which AI exclusions are proposed? Which lines? Can coverage be bought back for an additional premium instead of carved out?
• Write a plain-English acceptable-use rule. Approved tools, banned data classes, escalation path. Keep it short enough that people will follow it.
• Assign an owner. Someone must review renewals, vendor terms, and AI exceptions. In a 30-person firm that is rarely a full-time role, but it cannot be nobody.
• Keep evidence. Training notes, tool approvals, and incident logs become useful when an underwriter asks how AI is governed.

McMullin told Claims Journal that policyholders still influence adoption through buying choices and renewal negotiations. That only works if you read the endorsements instead of rubber-stamping them.

How AgentsROI helps without selling you an insurance product

AgentsROI does not underwrite policies. We help owner-led firms make AI governable enough that renewals, clients, and regulators are not a scramble.

Start with a Shadow-AI Risk Assessment and AI Governance Audit: map what the team actually uses, where sensitive data goes, and what the business depends on. You leave with a risk register, a plain-English policy draft, and a roadmap — the artifacts brokers and carriers increasingly expect to see.

Where ongoing judgment is needed, a Fractional AI Officer owns operating tempo: vendor decisions, exception handling, and renewal prep so the founder is not the default compliance department at 11 p.m.

Vendor-neutral on purpose. The goal is not to pick a model brand. The goal is to keep AI work covered, controlled, and measurable.

Read the exclusion before you renew

If your next liability renewal lands with a generative-AI endorsement attached, treat it as a business decision, not fine print. Ask what is excluded, what can be bought back, and what governance evidence you can show. Then book a governance audit if the inventory is still a mystery.

Talk to AgentsROI about a Shadow-AI Risk Assessment before the renewal window closes.

This article summarizes publicly reported information and is for general informational purposes only. It does not constitute legal, tax, financial, investment, security, or compliance advice. AgentsROI.ai is not a law firm, accounting firm, or registered investment adviser. Facts, pricing, statistics, and product capabilities cited here reflect the sources listed at the time of writing and may change. Readers should verify current information independently and consult qualified professionals regarding obligations specific to their industry, jurisdiction, and circumstances—including applicable New York State and New York City requirements. AgentsROI.ai may have commercial relationships with vendors mentioned; where material, such relationships are disclosed. Nothing in this article is an endorsement of any specific AI product, model, or provider.