TL;DR: ISO/Verisk introduced three generative AI exclusion endorsements, CG 40 47, CG 40 48, and CG 35 08, for commercial general liability policies effective January 1, 2026. The language is broad enough to bar coverage for AI-related claims even when AI is only a contributing factor. W.R. Berkley has confirmed an absolute AI exclusion across D&O, E&O, and fiduciary lines. Small teams should check every renewal for this language rather than assume it is not there. New affirmative coverage exists too, including HSB AI Liability Insurance for small and mid-size businesses, launched March 2026.
For most of 2025, small teams treated "does our insurance cover AI risk" as a hypothetical. It stopped being one on January 1, 2026, when Verisk's ISO division put three new endorsement forms into circulation for commercial general liability (CGL) policies: CG 40 47 01 26, CG 40 48 01 26, and CG 35 08 01 26. Each one excludes coverage for losses connected to generative AI. ISO forms are the standardized language that underpins the large majority of US property and casualty policies, so when ISO ships a new exclusion, it does not stay theoretical for long, it shows up at renewal.
If your team runs an AI product, uses AI tools in client-facing work, or has ever had a chatbot, AI-generated report, or AI-assisted decision touch a customer, this is not a compliance footnote. It is a coverage gap that can show up the moment you actually need to file a claim.
What the ISO endorsements actually exclude
The three forms attach to different parts of a CGL policy, so the practical effect depends on which one your carrier uses.
| Form | Applies to | What it removes |
|---|---|---|
| CG 40 47 01 26 | Coverage A and Coverage B | Bodily injury, property damage, and personal/advertising injury "arising out of" generative AI |
| CG 40 48 01 26 | Coverage B only | Personal and advertising injury arising out of generative AI (narrower than CG 40 47) |
| CG 35 08 01 26 | Products/Completed Operations | Bodily injury and property damage from generative AI tied to a completed product or service |
All three define "generative artificial intelligence" the same way: a machine-based learning system or model trained on data with the ability to create content or responses, including text, images, audio, video, or code. That definition is wide enough to cover a customer-facing chatbot, an AI writing tool used in marketing copy, or an AI coding assistant that shipped a bug into a product your business sold.
The phrase doing the most damage to policyholders is "arising out of." Under established insurance law, that phrase requires only a causal connection, not a direct cause. A claim does not need to be primarily about AI to trigger the exclusion, AI just needs to be somewhere in the chain of events. That means a defamation claim over AI-drafted marketing content, an IP infringement claim over AI-generated images, or a product liability claim where an AI recommendation played any role, can all potentially fall outside coverage.
Because the ISO forms are optional, individual carriers decide whether and how to attach them. Some carriers apply the broad CG 40 47 version universally at renewal. Others use the narrower CG 40 48 or CG 35 08 variants, or write proprietary exclusion language instead of adopting the ISO form outright. There is no single public registry of which carrier is using which version, which is exactly why asking directly at renewal matters more than assuming based on what you read about the industry in general.
It is not just general liability
The CGL exclusion got the endorsement numbers, but it is not the only place this is happening. Tech E&O, professional liability, and cyber carriers have been following the same pattern, sometimes with even broader language.
W.R. Berkley has confirmed an "absolute" AI exclusion applied across its D&O, E&O, and fiduciary liability lines, language that removes coverage for any actual or alleged use, deployment, or development of AI by any person or entity connected to the insured, not just generative AI specifically. That is a meaningfully wider exclusion than the CGL forms, and it is worth checking for by name if your team carries D&O or E&O coverage.
Coverage-by-coverage checklist
Use this table at your next renewal. For each policy your team holds, confirm the status directly with your broker rather than assuming based on last year's terms.
| Policy type | Common exposure if AI-related | What to check for | What to ask for |
|---|---|---|---|
| General liability (CGL) | Bodily injury, property damage, or advertising injury tied to an AI-generated output | CG 40 47, CG 40 48, or CG 35 08 attached at renewal | A copy of the exact endorsement, and whether a carve-back or buy-back option exists |
| Tech E&O / professional liability | Errors from an AI-assisted deliverable, AI coding tool, or AI-generated advice | Any exclusion referencing "artificial intelligence," "machine learning," or "algorithmic" outputs | Whether AI-related errors are still covered under the core professional services definition |
| D&O | Claims that board or executive decisions relied on flawed AI output or governance failures | Absolute AI exclusion language, similar to what W.R. Berkley has adopted | Confirmation of whether AI governance failures are treated differently from AI performance failures |
| Cyber | A breach or incident where an AI tool was the entry point or contributing cause | Whether the cyber policy's AI carve-outs overlap with your GL exclusion, creating a gap between both | An affirmative statement that AI-involved incidents remain covered under the cyber policy |
| Dedicated AI liability | Model failure, hallucination-driven claims, algorithmic bias | Whether this coverage exists at all, most small teams do not have it yet | A quote for a standalone AI liability rider or policy, even if you do not buy it this cycle |
Coverage that did not exist a year ago
The exclusion wave has a mirror image: insurers are also building affirmative AI coverage, because the exclusions created demand for something to fill the gap. Three options are relevant depending on your size.
HSB AI Liability Insurance, from Munich Re's HSB division, launched March 18, 2026, specifically for small and mid-size businesses. It is built to pay for AI-related losses that a GL exclusion would otherwise deny, including bodily injury, property damage, and advertising injury claims tied to AI-generated advertising, marketing copy, blog content, or social media. Standard limits are $25,000 or $50,000 with a $500 deductible, and higher limits are available. HSB does not sell it directly, it is added to policies through partner carriers, so ask your broker whether your carrier offers it.
Munich Re's aiSure program, expanded through a March 2026 partnership with Mosaic Insurance, offers up to $15 million in coverage aimed at AI developers and vendors rather than general AI users. It is a performance-guarantee model, coverage responds when a predefined AI performance threshold is breached, without requiring a negligence finding. This is the right tier if your business builds or resells an AI product, not if you are simply a user of AI tools.
Vanguard AI, a February 2026 structure from Armilla and Chaucer at Lloyd's, bundles $25 million or more in dedicated AI liability limits with $10 million in cyber limits. This is enterprise-scale coverage, most small teams will not need it, but it is useful context if you are evaluating an AI vendor's own insurance posture during due diligence.
For most small teams, the realistic near-term move is asking your existing carrier whether HSB's small-business product, or an equivalent from a competing insurer, is available as an add-on. It is a meaningfully cheaper starting point than a dedicated $15 million policy built for AI vendors.
The renewal checklist, copy this into your next broker email
Before you sign any renewal for GL, Tech E&O, D&O, or cyber coverage in 2026, send your broker these questions in writing so you have a documented answer:
- Has an AI exclusion endorsement, ISO form or proprietary, been added to this policy at this renewal?
- If yes, can you send the exact endorsement language, not just a summary?
- Does the exclusion use "arising out of" or a narrower "solely caused by" standard? The difference matters enormously for how easily a claim gets denied.
- Does our current policy cover claims where an AI tool was used by an employee, even if AI was not the primary cause?
- Is an affirmative AI liability rider, buy-back endorsement, or standalone policy available through this carrier?
- If we use AI tools from a third-party vendor, does a claim against us get treated differently than a claim against the vendor directly?
- Has this carrier filed or adopted CG 40 47, CG 40 48, or CG 35 08 in our state, and was that filing approved by the state regulator?
Get the answers in writing. Broker conversations are useful, but only the policy language and the written confirmation from the carrier hold up if a claim is ever denied.
Self-audit before you even call your broker
- List every AI touchpoint in your business, not just your product. Marketing copy, coding tools, customer support chatbots, and internal AI-assisted decisions all count as potential exposure, even if AI is not your core business.
- Pull your last two renewal declarations pages and compare the endorsement list. A new exclusion form appearing between renewal cycles is the clearest signal something changed.
- Check whether your vendor contracts shift liability back to you. If an AI vendor's terms disclaim their own liability for output errors, and your insurer excludes AI claims, you can end up holding both ends of the risk with no coverage at all.
- Separate "AI as your product" from "AI as a tool you use." The coverage gap and the available fixes differ significantly between the two, and most small teams are the latter, which is exactly the segment HSB's small-business product targets.
- Put a date on this. AI exclusion adoption is moving fast enough in 2026 that a policy reviewed six months ago is not a reliable guide to what is in force today.
Related Reading
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- Agentic AI liability, who is responsible when your AI agent makes a mistake
- AI vendor due diligence checklist, 30 questions before you sign
- AI vendor contract red flags, 12 clauses that create liability
- GenAI vendor risk assessment framework for 2026
- Third-party AI tool risk assessment template
- VC AI governance due diligence, the 18-item checklist
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