Is Your Firm's AI Use Creating Insurance Coverage Gaps You Don't Know About

Is your firm using ChatGPT, Midjourney, or other AI tools in design work? If so, there's a question worth asking: does your professional liability insurance still cover AI-related errors?

The professional liability (E&O) insurance landscape for design professionals shifted dramatically in early 2026. Major carriers began adding AI exclusions to policies, creating potential coverage gaps for architects and engineers who incorporate AI tools into their workflows.

This development affects firms of all sizes. One-third of architecture firms now use AI in daily operations, yet many remain unaware that their insurance protection may no longer extend to AI-related errors. The comprehensive guide to AI and professional liability for architects and engineers provides detailed information about these changes and their implications.

What Changed in January 2026

Verisk released standardized AI exclusion forms that became effective January 1, 2026. These forms—CG 40 47 and CG 40 48—give insurers ready-made language to exclude losses arising from generative AI use. Several carriers have already implemented these exclusions or filed for regulatory approval to do so.

Berkley introduced what it calls an "absolute" AI exclusion for D&O, E&O, and Fiduciary Liability policies. The exclusion specifically names popular AI tools including ChatGPT, Bard, Midjourney, and DALL-E. Philadelphia Insurance and Hamilton Select have already excluded AI-related claims from E&O coverage.

While AI is not excluded on the majority of professional liability policies for design professionals right now, the trend suggests this landscape will continue evolving. Firms renewing policies in 2026 should expect to see new exclusionary language.

Why Insurers Are Excluding AI

The insurance industry's caution reflects documented AI reliability concerns. Stanford Law School research shows general-purpose AI tools produce incorrect outputs at rates between 58% and 88%. Even specialized AI tools designed for professional use still show error rates of 20-33%.

The Mata v. Avianca case illustrates the real-world stakes. A lawyer was sanctioned by the court for citing fake cases generated by ChatGPT—the cases simply did not exist. For design professionals, similar errors carry significant consequences. AI might suggest building materials that do not exist. It might recommend structural approaches that violate code requirements. It might generate specifications that cannot be built as designed.

When such errors lead to claims, the professional who stamped or sealed the work typically bears the liability—regardless of whether AI assisted in the process.

The AIA Trust's February 2025 guidance identifies multiple categories of AI risk: competence questions when relying on AI outputs, confidentiality breaches when uploading client data to AI platforms, and standard of care implications as AI adoption increases across the industry.

AI Adoption Creates Uneven Risk Exposure

American Institute of Architects research reveals that only 8% of firm leaders report full AI integration. Another 20% are implementing solutions, while 35% are considering adoption. Large firms lead at 61% adoption, midsize firms follow at 42%, and small firms trail at 27%.

A notable generational divide complicates risk management. Architects under 35 are 66% likely to use AI image generators, compared to 41% of those over 50. This means younger team members may be using AI tools that firm leadership has not evaluated for risk implications or insurance compliance.

The Intersection of AI and Cyber Risk

AI creates data exposure that many firms haven't considered. When employees upload client information to AI platforms, confidentiality risks emerge. Project details, client data, and proprietary designs may be exposed to third-party systems.

Cyber liability insurance may provide protection that standard E&O policies now exclude. But coverage varies significantly by carrier and policy language—exactly why design professionals need specialized guidance rather than generic insurance advice.

Protecting Design Firms from AI Liability

Effective risk management starts with understanding actual exposure. Design professionals should take several immediate steps to protect their firms.

First, review current E&O policies for AI-related exclusions. Check for language addressing technology errors, computer-aided design, and emerging risks. Policies renewing in 2026 deserve particularly close attention.

Second, document which AI tools employees use and establish verification protocols. The AIA Trust recommends treating AI as a support tool—not a replacement—for sound professional judgment. Licensed professionals should review all AI-generated outputs before incorporation into deliverables.

Third, update client contracts to address AI use, disclosure requirements, and liability allocation. Transparent disclosure protects both parties and allows for clear expectations.

Fourth, consider supplemental coverage for risks your standard E&O policy now excludes.

Finding the Right Coverage

Many businesses view their insurance agent as a vendor. Risk Specialty Group takes a different approach—serving as a guide in helping design professionals navigate the complex world of insurance and risk management. The firm represents clients, not carriers, working with over 20 "A" rated carriers who specialize in architects, engineers, and other design firms.

Risk Specialty Group offers three approaches to addressing coverage questions:

• Just a Quote — For those who know what coverage they need
• Conversation & Quote — For those unsure about AI coverage gaps
• Full 360° Review — Comprehensive risk analysis including emerging AI exposures

By simplifying the complex, Risk Specialty Group helps design professionals across Texas, Arizona, Arkansas, California, New Mexico, and Oklahoma. reduce risk and increase profit.

Content strategydeveloped in partnership with Texas digital marketing agencyASTOUNDZ.

Risk Specialty Group
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Website: https://riskspecialtygroup.com/
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