Two of the biggest names in insurance just got permission to stop covering AI-related losses, and that’s a loud signal about how insurers now view the technology.
According to The Information, Berkshire Hathaway and Chubb have won regulatory approval to exclude artificial intelligence from their commercial insurance policies. The Information reports the carriers can now carve AI out of coverage for business clients, meaning companies relying on AI systems won’t automatically be protected when something goes wrong.
This matters because insurance is usually the last line of defense when a new technology blows up in a customer’s face. When two of the most conservative, actuarially disciplined players in the market say they don’t want to underwrite AI risk, they’re telling the market something important: the losses are too unpredictable to price.
Why Insurers Are Pulling Back
AI creates risk categories that traditional policies weren’t built to handle. A chatbot gives bad legal advice. A vision model misclassifies a medical image. A generative system spits out copyrighted material. An autonomous agent sends the wrong wire transfer. These aren’t hypothetical anymore. They’re active claim scenarios playing out in courtrooms right now.
Traditional commercial general liability and errors and omissions policies assume human decision-making. AI breaks that assumption. When a model hallucinates, who’s at fault? The vendor? The deployer? The company that fine-tuned it? Insurers hate ambiguity, and AI is drowning in it.
The numbers make the case sharper:
- Air Canada was ordered to honor a refund its chatbot invented
- Multiple law firms have been sanctioned for submitting AI-generated fake case citations
- Copyright suits against foundation model providers keep stacking up
- Deepfake fraud losses hit the billions globally in 2025
Carriers looked at that loss curve and decided they’d rather not be on the hook.
What Changes for AI Adopters
If you’re a business running AI in production, the safety net just got thinner. Here’s what to expect:
- Policy reviews get urgent. Check existing coverage for AI exclusion language. Many carriers are adding it at renewal, not just Berkshire and Chubb.
- Specialty AI insurance becomes the path forward. Startups like Armilla, Testudo, and Munich Re’s bespoke AI warranty products are stepping into the gap. Expect premiums to reflect the risk.
- Vendor contracts need teeth. If your carrier won’t cover AI failures, you’ll want indemnification from the model providers and integration partners you rely on.
- Governance suddenly has a line item. Risk committees will push harder for audit trails, human-in-the-loop controls, and model cards, because those are the artifacts underwriters will demand.
The Bigger Picture
Insurance is a lagging indicator of societal consensus on risk. When carriers exclude something, it’s because claims history or expert forecasts say the exposure is uncontainable at current prices. That’s what’s happening here.
This doesn’t mean AI is uninsurable forever. It means the market is re-pricing. New carriers with AI-specific underwriting expertise will absorb what Berkshire and Chubb are walking away from, and they’ll charge accordingly. Expect premiums tied to model type, deployment context, and governance maturity. Companies with strong AI risk management will pay less. Companies running black-box models in high-stakes workflows will pay a lot, or go bare.
For practitioners, the signal is to treat AI deployment like any other regulated, high-liability activity. Document your evaluations. Keep humans in the loop for consequential decisions. Push your vendors for contractual protections. The era of “just plug in a model and see what happens” is closing, and the insurance market is enforcing that shift faster than any regulator.
The Berkshire and Chubb moves will pressure other large carriers to follow. Watch for similar exclusion filings from AIG, Travelers, and Zurich in the coming quarters. And watch for the specialty AI insurance market to grow from niche to mainstream by year-end.
Full details at The Information.