Does Your CGL Policy Cover Liability from the Business Use of AI?

AI is being used in new ways all the time. What started as a tool hidden within other functions is now routinely used to generate written copy, make decisions, and complete other critical tasks across all types of businesses.

When the use of AI is perceived to have caused a problem, the companies that rely on it can be sued. These companies often assume that their commercial general liability (CGL) policy will cover them. This includes providing legal defense in the lawsuit and payment of any liability losses. However, the companies that provide CGL insurance are increasingly finding ways to deny coverage for AI risks.

If your company relies on AI—and few companies do not at this point—it is important to understand how your CGL coverage applies to AI-related risks. You may have coverage gaps that need to be addressed. 

At the same time, companies often find themselves in a position where their policy should provide coverage, and yet the insurer is refusing to defend in an action or pay damages. In this type of situation, an insurance attorney can work to ensure that the insurer honors its obligations to defend the claim and pay appropriate damages. It is important to understand the limits of CGL coverage and whether steps are necessary to provide more complete protection.

”Silent Coverage” Used to Be Common

Many times in the past, insurers provided what is sometimes called “silent coverage” for AI risks. Policies were silent on AI because its use was not anticipated when the policies were written. If a company were sued for an injury caused by an AI-powered machine, for instance, the losses from the injury would be covered under standard bodily injury provisions.

In addition, CGL policies have traditionally handled claims when a company is sued for copyright infringement or defamation arising from content generated by AI. Many CGL policies cover incidents or occurrences that take place during the coverage period. Other policies cover claims made during the policy period. They are often referred to as “occurrence” coverage and “claims made” coverage, respectively.

New ISO Endorsements

The endorsements released by the Insurance Services Office (ISO) that took effect in January of 2026 have created exclusions that will prevent many CGL policies from providing coverage for situations that were traditionally covered. 

The ISO gathers and analyzes actuarial data and uses those analytics to develop standard policy forms used throughout the property and casualty insurance business. Insurance companies rely on the ISO to set underwriting and form standards, and their endorsements tend to affect coverage across the board. Use of ISO standardized forms is popular within the industry because industry representatives believe it provides consistency among insurance products and reduces the potential for legal ambiguity. Of course, the use of ISO forms also decreases administrative costs for insurance companies and retards competition to a certain degree as well

Endorsements modify, add, or exclude coverage in general liability policies. These endorsements allow companies to tailor their base insurance products to account for specific risks. While some endorsements name particular individuals, such as adding an additional insured to a policy, other endorsements are blanket endorsements that automatically cover particular individuals or projects.

According to industry sources, insurers asked ISO to develop underwriting tools they could use to limit their exposure to claims arising from the use of generative. Last fall, the new endorsements were released to take effect in January. There are three  ISO endorsement exclusions that will affect insurance liability claims stemming from the use of generative AI:

• CG 40 47 – This endorsement, which fits with both occurrence coverage and claims-made coverage, excludes coverage under Coverage A and B for claims involving bodily injury, property damage, personal and advertising injury stemming from the use of generative AI.
• CG 40 48 – This endorsement, which is to be used with both the occurrence and claims-made versions of ISO’s Commercial General Liability Coverage Part, excludes coverage under Coverage B for personal and advertising injury stemming from the use of generative AI.  
• CG 35 08 – This endorsement, which is to be used with ISO’s Completed Operations Liability Coverage Part, excludes coverage regarding bodily injury or property damage stemming from the use of generative AI.

Review Your Policy Language

Adoption of these exclusions is likely to leave many companies with insufficient coverage. It is wise to review policy language as policies renew to check for the presence of new endorsements, amended definitions, or other limitations. Insurance renewal is often given only cursory attention, but this year a more careful study is advisable.

It may be necessary for companies to add coverage. This might include a policy specialized to cover generative AI liability. However, other products might also fill the gap, depending on the company’s needs. For instance, cyber liability coverage might be appropriate, or enhanced D&O protection could prove sufficient.

Complex Insurance Issues are Our Business

Coverage for the use of generative AI or any other type of insurance coverage can be extremely complicated. Insurance is an industry that becomes more complex with every passing day and every perceived new risk of loss. It is important to ensure you have the right coverage to protect your personal assets and your business operations.

But even when you have solid coverage, your insurance company may not act in good faith. If you have a dispute with your insurance company, the experienced attorneys at Ver Ploeg & Marino are ready to assist. We can often negotiate solutions, but when an insurer is stubborn, we are prepared to pursue litigation to uphold policyholders’ rights. For a confidential discussion of the assistance we could provide in your particular situation, contact our team today.

Share