According to recent statistics, 50-75% companies today have incorporated artificial intelligence (AI) within their organization for one or more operational processes. An even greater percentage are likely unknowingly utilizing AI as the technology is quickly becoming ubiquitous across all things electronic. Insurers, apparently concerned with AI loss coming within the scope of coverage under existing coverage lines, are looking for ways to limit or exclude coverage via AI-specific exclusions and endorsements.  Most of these exclusions purport to be near absolute in scope, precluding coverage in full for any claim in any way related, directly or indirectly to the usage of any AI. While today’s proposed AI exclusions are relatively easy to bypass, since they are not yet standard in the marketplace, insurers have begun incorporating them slowly with more expected to follow suit. With the growing prevalence of (and myriad of uses for) AI, and given the breadth of AI exclusions, there is an increasing risk of directors and officers operating with unrecognized liabilities, under the false pretense that such risks are fully insured under traditional D&O liability policies. Corporate officers are also more likely to overlook them or fail to recognize their true scope given their recent emergence.

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