Since January 2026, major insurers have added exclusions to standard commercial general liability policies that can deny coverage for claims tied to AI — including a chatbot or AI receptionist that promises a customer something the business never approved. If your business runs an AI phone system, your existing policy may no longer cover the mistake, and most owners renewing this fall have no idea the language changed.
What actually changed in January 2026
The Insurance Services Office — the industry group that drafts the standard policy language most U.S. commercial insurers build on — introduced new generative AI exclusion endorsements for commercial general liability policies, effective January 2026. One form, CG 40 47, excludes bodily injury, property damage, and personal or advertising injury "arising out of, or attributable to, generative AI" outright; a narrower version, CG 40 48, limits the exclusion to personal and advertising injury (Fenwick, 2026). ISO also issued a third related form, CG 35 08, the same month (Shumaker, 2026).
Carriers don't have to adopt ISO's language, but several moved fast. Berkley Insurance rolled out its own "Absolute" AI exclusion across specialty liability lines, and multiple major carriers have filed or received state approval for AI exclusions on general liability, D&O, and E&O policies this year (Shumaker, 2026). None of this requires a business to have done anything wrong — it's a change to what the policy responds to, quietly applied at renewal.
This already happened to an airline, and a tribunal made it stick
The case that put this risk on the map predates the exclusions, which is exactly the point — it's why insurers started writing them. In 2022, an Air Canada customer named Jake Moffatt asked the airline's website chatbot about bereavement fares after his grandmother died. The chatbot told him to book a full-price ticket and file for a retroactive discount within 90 days; Air Canada's actual policy required the discount request before travel, and the airline denied his claim. Canada's Civil Resolution Tribunal disagreed, ruling that Air Canada was responsible for everything on its website, chatbot included, and ordered the airline to pay $812 CAD in damages (CBS News, 2024).
$812 is a rounding error for an airline. It wouldn't be for a lot of small operators, and the exposure isn't limited to travel — it's any promise an AI system makes on a business's behalf that the business didn't sign off on: a price, a warranty, a policy exception, an availability confirmation later walked back.
What's excluded and what still holds
| Scenario | Standard GL with the new exclusion | Where coverage still applies |
|---|---|---|
| AI receptionist promises a discount or term the business never approved | Likely excluded under CG 40 47 / CG 40 48 | May be covered under a dedicated AI liability or tech E&O policy |
| AI-generated marketing copy triggers a defamation or copyright claim | Likely excluded (personal/advertising injury from generative AI) | Same — needs AI-specific or media liability coverage |
| A human employee makes the same kind of mistake on a call | Still covered under standard GL | No change — this is a human error, not an AI exclusion |
| A customer is physically injured with no AI system involved | Still covered under standard GL | No change |
The market is already building a patch
Insurers that created the gap are also the ones filling it. HSB, part of Munich Re, launched AI Liability Insurance for small and mid-sized businesses in March 2026, covering bodily injury, property damage, and advertising injury claims tied to AI use — the same categories the new exclusions carve out (Munich Re, 2026). HSB's own survey found 74% of small and mid-sized businesses already use AI, with 91% planning to, and marketing was the single most common use case at 47% (Munich Re, 2026). "All types of businesses are using AI to do things more quickly and efficiently. At the same time, the AI transformation brings new legal and financial exposures," said Timothy Zeilman, HSB's global head of product ownership, in the announcement (Munich Re, 2026).
What a Montana or Northwest business owner should actually do
Most owners find out their policy changed when a claim gets denied, not before. That's avoidable with one phone call before the next renewal — ahead of the winter slowdown, while there's still room to actually fix a gap instead of just learning about it.
- Ask your broker directly whether your general liability policy carries a generative AI exclusion, and get the endorsement number, not just a yes or no.
- Ask the same question about any E&O, D&O, or cyber policy you carry — carriers are adding this language across lines, not just GL.
- If you run an AI receptionist or chatbot, ask specifically whether it can be covered under a dedicated AI liability or tech E&O add-on.
- Separate what your AI system is allowed to state on its own from what it isn't. A system that quotes only pre-approved prices, policies, and availability can't freelance a promise the way a general-purpose chatbot can — that's a real reduction in exposure, not just a talking point.