Artificial Intelligence (AI) has permeated various sectors, including the legal industry, enhancing tools from legal research to smart contract drafting. However, its integration comes with a twist in the insurance sector, particularly outside of cyber policies where exclusions are silently being introduced.

While cyber insurance remains robust against the AI evolution, affirmatively endorsing coverage for AI-related incidents, other insurance lines are retreating. Management liability, directors and officers (D&O), errors and omissions (E&O), employment practices, fiduciary, and crime insurance policies are now implementing broad AI exclusions. These exclusions can be severe enough to deny coverage for claims related to any use or interaction with AI technologies.

For example, consider a discrimination lawsuit stemming from an AI-driven resume screening tool or a negligence claim linked to an AI-powered contract review platform. These are cases where the new exclusions can leave businesses unexpectedly vulnerable, shifting significant risks back onto them and their clients.

For legal professionals, this development is twofold. Firstly, lawyers as business leaders need to scrutinize their firm’s insurance policies for any unnoticed AI exclusions that might affect their operations. Secondly, as advisors, they must ensure they are aware of these exclusions in their clients’ policies to maintain trust and avoid credibility damage.

Historically, the insurance industry has seen similar patterns with "silent cyber" risks that were quietly excluded from property and liability policies, leading to disputes over coverage. AI exclusions seem to be following this path but at an accelerated pace and with less clarity, potentially leading to more disputes and denials of claims.

To stay ahead, firms and their clients should meticulously review their insurance policies for any AI-related exclusions and seek clear definitions from insurers. What exactly qualifies as AI in these policies? The ambiguity could be a gateway to claim denials. It's also advisable to explore new insurance products or endorsements that specifically cover AI-related risks.

Moreover, collaboration with brokers and risk managers can provide insights into emerging exclusions and help tailor insurance coverage to match operational needs.

While cyber insurance currently stands strong, the landscape of other insurance policies is shifting. Awareness and proactive measures are essential to navigate this evolving terrain and to ensure that the innovative tools designed to streamline operations do not become liabilities themselves.

In conclusion, the intersection of AI and insurance is becoming complex, and understanding these nuances is crucial. Reviewing and adjusting insurance strategies today could prevent unwelcome surprises tomorrow.