"Artificial intelligence (AI) is everywhere - in legal research tools, in "smart" assistants that draft contracts, and, if we're honest, probably in that partner's suspiciously polished brief. The legal profession can't avoid it, and neither can the insurance industry. But while cyber insurers are, somewhat surprisingly, holding firm on AI risks, other key coverage lines are quietly changing - and not in your favor."
"Contrary to what you might expect, cyber insurers are not panicking over AI. In fact, some are adding affirmative endorsements to confirm coverage for AI-related incidents. From their perspective, AI is less a new frontier than a turbocharged version of familiar risks. Deepfakes, social engineering, and AI-powered phishing aren't brand-new - they're just faster and harder to spot. That's not to say the consequences aren't serious. Imagine a deepfake video of your CFO authorizing a fraudulent transfer."
"The real trouble starts outside cyber policies. Management liability, directors and officers (D&O), errors and omissions (E&O), employment practices, fiduciary, and crime coverage are all beginning to include sweeping AI exclusions. Some of the language is alarmingly broad. A few carriers have introduced "absolute" exclusions that eliminate coverage for "any actual or alleged use, deployment, or development of Artificial Intelligence." That's not a scalpel; it's a sledgehammer."
Artificial intelligence (AI) is pervasive across legal and insurance workflows, appearing in research tools and contract-drafting assistants. Cyber insurers are largely maintaining coverage for AI-related incidents, with some adding affirmative endorsements, viewing AI as an amplified form of existing cyber risks like deepfakes, social engineering, and AI-powered phishing. Deepfake-driven fraud can cause major financial and reputational harm, such as a fabricated CFO authorization for a transfer. Non-cyber insurance lines are introducing broad AI exclusions across management liability, D&O, E&O, employment practices, fiduciary, and crime policies. Some carriers are drafting absolute exclusions for any use, deployment, or development of AI, eliminating protection.
Read at Above the Law
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