The AI exclusion hiding in your contractor insurance

Executive summary

Generative AI exclusions create a non-obvious risk for contractors: using AI for one small part of a job can affect coverage for a later claim arising from physical work. Carriers have filed these exclusions in almost every state for several kinds of ordinary liability policies, including the primary, umbrella, and excess policies contractors rely on for injury and property-damage claims. These forms are optional endorsements unless a carrier’s program rules require them. The filings do not show whether a carrier attached an exclusion to an issued policy.

1. 01

   One AI-assisted step can put coverage for an ordinary contractor claim at risk

   A contractor might use AI to prepare an estimate, compare plans, diagnose equipment, or draft marketing copy, then complete the physical work by hand. If that AI-assisted step contributes to an injury, property damage, an advertising claim, or a problem discovered after the work is finished, the exclusion may give the carrier a basis to deny coverage.

2. 02

   3,955 of the 4,078 filed form adoptions involve coverage lines contractors and small businesses commonly hold

   They include general liability, umbrella and excess, commercial package, businessowners, errors and omissions, and related lines. The report shows exclusions appearing broadly across much of a contractor's commercial liability program.

3. 03

   There are 4,078 filed form adoptions across 49 states and the District of Columbia with generative AI exclusions

   Each adoption represents one carrier or program filing one generative AI exclusion form for use in one state.

4. 04

   2,369 records had reached their filed effective dates by July 31

   1,117 are scheduled for later dates. There are also 222 pending filings and 370 filed adoptions where the effective timing was not established.

5. 05

   No existing product replaces the coverage these exclusions remove

   Generative AI coverage exclusions are different than what happened with cyber insurance 15-20 years ago. Insurers added cyber exclusions to standard policies, but a separate cyber-insurance market had developed to cover that risk so businesses could "buy back" that coverage separately. There are currently no admitted standalone generative AI products that fill the coverage gap these exclusions create for contractors, creating a potential uncoverable gap for millions of businesses.

Filed form adoptions reached 592 in a single month, and continue to be filed monthly.

Sixteen filed form adoptions first appeared in August 2025. The monthly count reached 459 in October and peaked at 592 in February 2026. Another 412 first appeared in July. ISO, the organization that writes standard policy forms used by many insurers, published six generative AI exclusion forms in July 2025. Carriers then filed those forms and their own exclusion wording across commercial coverage lines.

More than half of the records had reached their filed effective dates by July 31

By July 31, 2,369 records had reached their filed effective dates. Another 1,117 are scheduled after the cutoff. May had the largest monthly increase, with 627 records reaching an effective date. The remaining 592 records are pending or do not have established effective timing. Carriers filed additional exclusions in every month through July.

Most exclusions are on general liability policies, the primary coverage contractors carry.

General liability is the policy many contracts require a contractor to carry. The report contains 1,415 general liability adoptions, 1,849 commercial umbrella and excess adoptions, and 636 commercial package adoptions. In total, 3,955 of the 4,078 adoptions involve coverage lines contractors and small businesses commonly buy. Six standard forms apply the exclusion across primary, umbrella, and excess coverage.

There are three main versions of the exclusion, and each excludes coverage for a different kind of claim

The six standard ISO forms share one trigger: a claim that arises out of generative AI. They apply to different kinds of claims. Carriers also filed their own forms and variations. Below are examples of the claims each standard form excludes from coverage.

National Union accounts for the most filed form adoptions

National Union Fire Insurance Company of Pittsburgh, Pa. accounts for 313 filed form adoptions across 40 jurisdictions, more than any other carrier or program label. The same standard and carrier-written forms also appear across many other insurers.

The filings reach 49 states and the District of Columbia

Minnesota is the only state without a counted adoption. Wisconsin has 150 filed form adoptions, New Mexico has 147, and Wyoming has 145. The table ranks the busiest jurisdictions. A high count reflects filing patterns and the number of carriers and forms in a jurisdiction. It does not show how many policies or businesses are affected.

Unlike cyber, there's nowhere to buy the coverage back yet

In 2020, ISO used a similar exclusion to pull cyber risk out of standard commercial policies. Businesses that still wanted the coverage could buy standalone cyber insurance. The reviewed filing set does not identify an admitted standalone generative AI product that replaces the excluded coverage for contractors. The gap also reaches physical work. An AI-assisted measurement or design can contribute to a collapse or defect, not just a data or advertising claim.