Will your insurer pay if AI causes the loss? AI and professional indemnity

Assume your professional indemnity policy does not cover an AI-caused mistake unless it says so in writing. Insurers are actively writing AI out of standard cover. From January 2026 the industry's standard general-liability forms include a generative-AI exclusion, and the era of "silent AI", where a policy neither promised nor refused to cover it, is ending. So if an AI tool contributes to a client loss, your insurer may decline the claim. The safe move is to check your wording and your disclosure duties before you lean on AI for billable work, not after something has already gone wrong.

Silent AI, and why it is ending

For the last couple of years most professional indemnity and errors-and-omissions policies said nothing about AI at all. They neither granted nor excluded it. That silence was comfortable while nobody was testing it, because a policyholder could assume an AI-assisted mistake would be treated like any other. That assumption is now being removed.

The insurance market has moved quickly. As the law firm Fenwick sets out in its analysis of emerging AI exclusions, insurers are "increasingly seeking to define the boundaries of AI coverage, either through affirmative grants of coverage or, more commonly, through exclusions designed to limit exposure." In January 2026 the standard-forms body ISO introduced a generative-AI exclusion for commercial general liability policies, one that excludes cover for injury or damage "arising out of, or attributable to, generative AI". When the standard forms carry an exclusion, it spreads fast across the market. Silent AI is not becoming friendlier. It is being replaced with an explicit no.

What an AI exclusion actually removes

The wording of these exclusions tends to be broad. A claim "based upon, arising out of, or attributable to" the use of AI can fall outside cover, and that phrasing is wide enough to catch work where AI played only a supporting part. For a professional firm, that is the uncomfortable bit. If an AI tool drafted the analysis, checked the figures or summarised the research behind a piece of advice, an insurer could argue the resulting claim is AI-attributable even though a person signed it off.

For errors-and-omissions and professional indemnity cover, the sharper risk is subtler than a single exclusion clause. Fenwick describes it as coverage fragmentation and "gap risk", where an AI-related claim falls between traditional lines of cover and no single policy clearly answers for it. There is a second trap specific to professional cover: many policies only respond to your defined "professional services", and if those services were assumed to be performed by qualified people, work substantially produced by a tool may sit outside the definition. The exposure is not always a loud exclusion. Sometimes it is the quiet architecture of the policy.

The disclosure trap

There is a way to lose cover you technically have, and it is worth naming. Professional indemnity works on disclosure. If your insurer asks how you operate and you understate your use of AI, or your proposal form implies work is done a certain way and it is not, a later claim can be refused for non-disclosure or misrepresentation. The tool did not even have to cause the problem. The gap between what you told your insurer and how you actually work is enough.

So the honest step is to tell your broker how AI genuinely sits in your delivery, before you renew, not to keep it quiet in the hope it never comes up. An insurer that knows and prices your AI use is far better than one that finds out at claim time.

A claim, and how it could be declined

Picture a straightforward case. A firm uses an AI tool to help draft a report for a client. The tool produces a figure that looks right, a person glances at it under time pressure, and it goes out. The figure is wrong, the client relies on it, and there is a loss. Under an older policy that said nothing about AI, this would most likely have been treated as an ordinary professional error and paid. Under a policy with a broad AI exclusion, the insurer can point to the tool's involvement and argue the claim is attributable to AI, and therefore outside cover.

Nothing about the firm's intent or care has changed. What has changed is that the policy now has language to lean on. That is the shift in a sentence: the same mistake, the same client harm, a different answer from your insurer. It is why the wording matters more than it did a year ago, and why reading it now, while nothing has gone wrong, is the cheap moment to act.

Five questions for your broker

You do not need to be an insurance expert to protect yourself. You need five answers in writing.

Does our current policy contain an AI or generative-AI exclusion, and how broadly is it worded? Does AI-assisted work still fall within our covered "professional services"? If a third-party AI tool we rely on malfunctions, are we covered, or does that count as someone else's product? What are we required to disclose about our AI use at proposal and renewal? And is affirmative AI cover available to us, so that AI work is expressly included rather than argued over later?

Ask them plainly, and keep the replies. A broker who cannot answer these is telling you something useful in itself.

How to stay insurable

The good news is that the discipline which keeps AI safe for clients is the same discipline that keeps you insurable. A qualified human signs off on anything that reaches a client. AI use follows a written AI policy that names the approved tools and the hard lines. Every consequential use has an owner, in the spirit of giving each AI agent a clear job description. And you keep a light record of where AI touched the work, so that if a claim ever arises you can show what the tool did and who checked it.

That record does two jobs at once. It is how you stop AI mistakes reaching your clients, and it is also the evidence that makes an insurer comfortable keeping you covered. Firms that can show controlled, documented, human-supervised AI use are a very different proposition to firms that cannot describe how AI sits in their work at all.

It is worth raising this at your next renewal rather than waiting to be asked. An insurer that has seen your controls, your sign-off process and your records can price the risk sensibly. That firm is far less likely to face a broad exclusion, or a disputed claim, than one whose AI use is a silence on both sides of the policy.

The takeaway

Do not assume your policy has your back on AI. The market is moving from silence to exclusion, and it is moving now. Read your wording, ask your broker the five questions, disclose your real use, and put the light governance in place that keeps both your clients and your cover protected. It is a short piece of work, and it is far cheaper than discovering the gap during a claim.

If you would like help putting that governance in place, so your AI use is documented, supervised and defensible, book a review and we will work through it with you.