AI Risk Is Moving Faster Than Insurance Coverage

Artificial intelligence is becoming part of routine business operations faster than insurance coverage is adapting. When those tools produce incorrect, biased, or harmful results, the question is not only who made the error. It is also whether the resulting loss fits within existing insurance coverage or is excluded altogether.

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Gallagher's 2026 AI Adoption and Risk Survey points to rapid adoption, growing concern over AI errors, and early claims activity. ¹

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Gallagher's 2026 AI Adoption & Risk Survey

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Cyber Insurance as a Preview, Not a Playbook

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Early cyber losses were often tendered under traditional property, crime, general liability, and professional liability policies before dedicated cyber products, exclusions, underwriting questions, and loss-control expectations emerged. AI coverage may follow a similar path.

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The point is not that AI risk belongs in cyber policies, but that emerging technology risks often begin as coverage questions before the market develops clearer products, exclusions, endorsements, and underwriting practices.² The American Bar Association has described "silent AI" as a developing coverage challenge, where AI exposures are neither expressly included nor excluded under traditional liability policies.³

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AI risk may show up inside familiar claim types rather than as a clearly labeled "AI claim." The examples in the following table show how different AI uses can create different coverage, claims-handling, and defense issues.

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AI-Related Claims: Use Cases, Coverage Lines, and Real-World Examples ^4-10

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These examples are illustrative of emerging liability and claims issues; they do not determine whether any particular policy would respond.

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How Alan Gray Can Help

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Alan Gray can help clients prepare for a more developed AI coverage market by assessing claim-handling, governance, documentation, escalation controls and legal spend.

Key Takeaway

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AI coverage may develop like cyber coverage: uncertainty first, followed by claims experience, policy wording, exclusions, and underwriting discipline. The difference is that AI risk may spread across more coverage lines at once. For insurers and policyholders, the priority is to identify AI use, track related claims, and document controls that support coverage, claims handling, and litigation strategy.

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Citations

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1. Gallagher. "The 2026 AI Adoption and Risk Survey: AI in Action." Arthur J. Gallagher & Co., 2026.
2. Farley, John, and Dan Burke. 2026 Cyber Insurance Market Outlook. Arthur J. Gallagher & Co., 2026.
3. American Bar Association. "The Evolving Landscape of AI Insurance: Empirical Insights, Risks, and Policy Gaps." The Brief, 5 Jan. 2026.
4. Akin Gump Strauss Hauer & Feld LLP. "Court Allows Discrimination Claims Against AI Hiring Tool to Proceed \| Mobley v. Workday, Inc." AI Law and Regulation Tracker, 29 Apr. 2026.
5. Freifeld, Karen, and Mike Scarcella. "Sullivan & Cromwell Law Firm Apologizes for AI 'Hallucinations' in Court Filing." Reuters, 21 Apr. 2026.
6. Brittain, Blake. "OpenAI, Microsoft Hit with New U.S. Consumer Privacy Class Action." Reuters, 6 Sept. 2023.
7. Stempel, Jonathan. "CNN Files Lawsuit Against Perplexity Alleging Unlawful Content Distribution." Reuters, 28 May 2026.
8. Stempel, Jonathan. "Tesla Ordered by Florida Jury to Pay $243 Million in Fatal Autopilot Crash." Reuters, 1 Aug. 2025.
9. American Bar Association. "BC Tribunal Confirms Companies Remain Liable for Information Provided by AI Chatbot." Business Law Today, 29 Feb. 2024.
10. U.S. Securities and Exchange Commission. "SEC Charges Two Investment Advisers with Making False and Misleading Statements About Their Use of Artificial Intelligence." SEC, 18 Mar. 2024.