When AI Screws Up… Are You Covered?
Scaling with AI comes with major advantages but it also comes with new risks. And one of the most overlooked is this:
Are you covered if something goes wrong?
In a recent LinkedIn Live, I explored the legal gray zone of AI-powered businesses and why it’s time to take a hard look at your insurance coverage.
Here’s what I want every expert to consider:
You probably already have basic coverage. Most professionals carry at least two policies: cyber liability insurance and errors & omissions (E&O), also called professional liability.
But do either of those actually cover mistakes made by—or with AI?
That’s the open question. And the answer depends entirely on your provider, your policy, and how you use AI.
Let’s break it down:
Cyber liability covers breaches, not bad advice. It won’t protect you if AI generates flawed output that causes harm.
E&O may cover your mistakes but not AI’s. Many policies exclude third-party tools and software-generated content.
AI isn’t your junior associate. It’s a third-party tool. That means no guarantees, no accountability, and the liability stays with you.
And here’s the catch: most insurance policies weren’t written with AI in mind. They’re lagging far behind how we’re actually using it in business whether it’s writing content, building bots, or designing client tools.
So what can you do?
Start by asking the right questions:
Does your current E&O policy cover work created or assisted by AI?
What are the exclusions for third-party content, platforms, or tools?
Is your AI usage considered a professional service or something else entirely?
Does your insurer offer add-ons or riders for AI-related activities?
If you’re not sure what your policy covers, talk to your broker. You may need AI-specific coverage. Some insurers are starting to offer it, but it’s not yet mainstream.
And while disclaimers help, they’re not a shield. They won’t protect you from liability if AI-assisted work causes real harm or breaches a contract.
The bottom line is: You can’t outsource responsibility just because you outsourced the task to AI.
You’re still the expert. You’re still accountable. And that means making sure your insurance protects you in this new era of work.
Use AI, but use it smart. You can delegate the task. Not the liability.
P.S. If you missed this LinkedIn Live, you can catch the replay here. And if this raised some new questions for you, consider forwarding this newsletter to a peer. We all need to be thinking about this.
Using (or thinking about using) AI in your business? Make sure your AI tools aren’t breaking your contracts—or your clients’ trust.
Book an AI Clarity Session with Erin to get expert legal and ethical guidance tailored to how you use AI. In just one hour, you’ll walk away with a clear, compliant, and confidence-boosting plan.