How to Protect Your Business Insurance from AI Exclusion: A 5-Step Action Plan

You already know something is wrong. Maybe your broker mentioned "new AI language" in your renewal. Maybe you read about insurers pulling coverage for AI-related claims. Maybe a colleague got a claim denied because their business used ChatGPT. Whatever brought you here, the problem is real — and it is happening right now in 2026. The good news: you can still protect yourself. This guide gives you the exact steps to take.

First, Understand What You Are Dealing With

Starting in January 2026, insurance carriers began attaching AI exclusion endorsements to commercial general liability (CGL), business owner (BOP), and umbrella policies. These are not vague policy updates. They are specific, standardized endorsement forms created by Verisk (formerly ISO), the organization that writes the standard policy language used by the majority of commercial insurers in the United States.

The most important form to know is Verisk CG 40 47 — the AI Technology Exclusion for Commercial General Liability. When this endorsement is attached to your policy, it excludes coverage for bodily injury, property damage, and personal or advertising injury arising out of AI technology. That means if a client sues you because of something an AI tool did — or helped you do — your insurer can deny the claim entirely.

There are also companion forms: CG 40 48, which is a narrower limitation rather than a full exclusion, and CG 35 08, which extends AI exclusions to umbrella policies. For a detailed breakdown of all three forms, read our complete guide to Verisk CG 40 47.

Carriers including AIG, WR Berkley, Great American, and Hamilton have already started attaching these endorsements. More carriers are following with every renewal cycle that passes. If your policy renewed after January 2026 — or is about to renew — you are likely affected. For a broader look at which carriers are adopting these forms, see our overview of AI insurance exclusions in 2026.

Why This Is Urgent

This is not a theoretical future risk. Renewals are happening right now. Every week that passes, more small businesses are getting renewed with AI exclusion language baked into their policies — often without realizing it. Endorsements are typically added as part of a stack of renewal documents. Unless you or your broker specifically look for AI-related language, you will not notice it until you file a claim and get denied.

The window to act is before your renewal, not after. Once the endorsement is attached, you are locked into those terms for the policy period. And if you have already renewed with an exclusion in place, you need to start preparing now for your next renewal so you can negotiate better terms.

Here is the 5-step plan to protect your business.

Step 1: Check Your Current Policy for AI Exclusions

Before you do anything else, find out whether you already have an AI exclusion on your policy. Pull up your most recent policy documents — specifically the declarations page and any attached endorsements. Search for these terms:

• "Artificial intelligence" or "AI technology"
• "CG 40 47" (full AI exclusion)
• "CG 40 48" (AI limitation)
• "CG 35 08" (umbrella AI exclusion)
• "Machine learning," "automated decision," or "algorithmic"

If you find any of these, your policy has already been modified. That does not necessarily mean you are completely unprotected — CG 40 48, for example, is a limitation rather than a blanket exclusion — but you need to understand exactly what is and is not covered. If you cannot find your policy documents, call your broker and ask directly: "Does my current policy contain any AI-related endorsements or exclusions?"

If your renewal is coming up in the next 90 days, move to Step 2 immediately. Time matters here.

Step 2: Document Every AI Tool Your Business Uses

Insurance underwriters are making decisions about your AI risk based on what they know — and right now, most of them know very little about how your specific business uses AI. That information vacuum works against you. When an underwriter cannot assess your AI risk, the default response is the broadest exclusion: CG 40 47.

Your goal is to replace that information vacuum with a clear, organized inventory of exactly what AI tools you use, how you use them, and what controls you have in place. This is called an AI tool registry, and it is the foundation of everything else in this plan.

For each AI tool your business uses, document:

• Tool name and vendor (e.g., ChatGPT by OpenAI, Copilot by Microsoft)
• Business function — what do you use it for? Drafting emails, generating reports, customer service, marketing copy?
• Data exposure — does the tool receive customer data, financial information, or health data?
• Human review — is there a person who reviews AI output before it goes to clients or the public?
• Risk level — low (internal drafts), medium (client-facing content with review), or high (automated decisions affecting people)

We have a free template that walks you through this process. See our AI Tool Registry Template to get started. Most businesses can complete their registry in under 30 minutes.

Step 3: Create an AI Acceptable Use Policy

An AI tool registry tells your insurer what you use. An AI acceptable use policy tells them how you use it responsibly. This is the document that demonstrates governance — that your business has thought carefully about AI risk and put guardrails in place.

Your AI acceptable use policy should cover:

• Authorized use cases — which business activities are approved for AI assistance, and which are off-limits
• Prohibited activities — things your employees should never do with AI tools (e.g., inputting client financial data into a public AI tool, using AI output without human review for regulated advice)
• Human oversight requirements — who must review AI output before it is used, and what that review process looks like
• Data handling rules — what types of data can and cannot be entered into AI systems, and how you comply with privacy regulations
• Incident response — what happens if an AI-related error occurs, who is notified, and how it is documented
• Employee training — how you ensure staff understand the policy and follow it

This does not need to be a 50-page legal document. For most small businesses, two to four pages is sufficient. The key is that it exists, it is specific to your business, and you can show it to your broker and underwriter. Read our AI Acceptable Use Policy Template guide for a complete walkthrough of how to write one.

Step 4: Prepare Your AI Governance Package for Your Broker

Steps 2 and 3 gave you the raw materials. Now you need to package them into something your insurance broker can actually use. Brokers negotiate with underwriters on your behalf, and the better ammunition you give them, the better outcome you get.

Your broker-ready AI governance package should include:

1. AI Tool Registry — the complete inventory you built in Step 2, showing every AI tool, its purpose, and your risk classification
2. AI Acceptable Use Policy — the governance document from Step 3, signed and dated, showing it is an active policy in your organization
3. Risk mitigation summary — a one-page overview that connects the dots: here is what we use, here is how we govern it, here is why our AI risk is manageable
4. Training documentation — evidence that employees have been trained on your AI policy (even a simple sign-off sheet counts)

This package serves two purposes. First, it gives your broker a concrete story to tell the underwriter — "this business has documented AI governance in place." Second, it shifts the underwriter's assessment from "unknown AI risk, apply the broadest exclusion" to "managed AI risk, consider the narrower limitation or negotiate terms."

The difference between getting CG 40 47 (full exclusion) and CG 40 48 (limitation with some coverage preserved) often comes down to whether you can demonstrate governance. The CoverMyAI Governance Kit gives you all four documents in a ready-to-use format — registry, policy, risk summary, and training sign-off — for $29. Most customers complete it in about 15 minutes.

Step 5: Talk to Your Insurance Broker Before Renewal

This is the step that actually protects you. Everything above is preparation. The real protection comes from having the right conversation with your broker at the right time — which is before your renewal, not after.

Call your broker and raise these specific points:

• "I want to understand whether my current policy has any AI-related exclusions or endorsements, specifically CG 40 47, CG 40 48, or CG 35 08."
• "I have documented our AI usage and governance. I would like to provide this to the underwriter as part of our renewal submission."
• "If the carrier is going to add an AI exclusion, I want to negotiate for the CG 40 48 limitation rather than the CG 40 47 full exclusion. Here is our governance documentation that supports that."
• "Are there alternative carriers that are taking a less restrictive approach to AI exclusions? I am open to getting comparative quotes."
• "What would it take for the carrier to offer an AI liability endorsement that provides coverage rather than excludes it?"

The critical timing point: have this conversation at least 60 days before your renewal date. Brokers need time to shop alternatives and negotiate with underwriters. If your renewal is 30 days out, you can still act, but your options narrow significantly. If your renewal already passed with an exclusion in place, start this process now so you are ready for the next cycle.

What Happens If You Do Nothing

Let us be direct about the stakes. If you take no action, the most likely outcome is that your policy renews with a full AI technology exclusion (CG 40 47) attached. That means:

• If a client sues you over AI-generated content — your insurer denies the claim
• If an AI tool produces an error that causes financial harm to a customer — your insurer denies the claim
• If an employee uses AI in a way that leads to a discrimination or privacy complaint — your insurer may deny the claim
• You pay defense costs and any settlement or judgment out of pocket

For context, the average general liability claim costs $35,000 to defend, and that is before any settlement. For a small business, a single uninsured claim can be devastating. The question is not whether you can afford $29 for a governance kit. It is whether you can afford to be uninsured on the tools your business uses every day.

To understand more about whether your current policy covers your AI usage at all, read our guide: Does Business Insurance Cover AI?

The 5-Step Plan at a Glance