AI Vendor Agreements: Liability-Shifting Clauses and the Insurance Exclusions That Compound Them

This session will discuss the generative AI exclusions introduced by Verisk ISO and other carrier specific exclusions and their impact on the insurance market. The discussions will touch on will auditing a client’s full insurance tower for AI-related gaps, evaluating the emerging standalone AI liability market, and offering insights on the no-man’s land created when vendor liability caps and insurance exclusions compound each other. Attendees will leave able to identify coverage arguments that remain viable, recognize governance controls that underwriters now require, and align contractual risk-transfer strategy with actual insurance availability. It will cover the end of “Silent AI” coverage and introduction of new AI exclusions, why policyholders must audit their insurance programs and indemnity agreements for AI-related gaps, and how policyholders benefit from adopting established governance controls.

As organizations rapidly adopt generative AI platforms and AI-enabled software, the vendor agreement often determines who ultimately bears the legal and financial consequences when an AI system fails, infringes intellectual property, exposes confidential information, or produces inaccurate results. This session examines the contractual provisions that deserve the greatest scrutiny during AI procurement and renewal negotiations. Attendees will learn practical strategies for negotiating liability limitations, indemnification obligations, ownership of prompts and outputs, confidentiality protections, subcontractor provisions, audit rights, and evolving regulatory compliance obligations before AI-related disputes arise. It will cover negotiating liability caps that reflect AI-specific risk, drafting effective AI indemnification provisions, protecting data, prompts, outputs, and intellectual property rights, and managing AI vendor performance, compliance, and operational risk.