How AI May Impact Cyber Insurance for Your Business 

Cyber insurance has emerged as a critical loss control measure in the modern, digital world. This type of coverage’s increasing importance represents how quickly and drastically business risk profiles and possible exposures can change. As artificial intelligence (AI) embeds its roots into many organizational functions, your company may need to reassess further how such implementations may impact your coverage.

Can Cyber Insurance Cover AI-related Losses?

While AI systems and programs can help streamline operations and lead to innovations, their vast capabilities may also exacerbate cyber risks and exposures. Fortunately, your cyber insurance policy may help offset resulting losses and expenses, including for the following:

• Incident response costs—AI systems may store and manage extensive data. If they’re breached, resulting expenses could be significant. Your insurance can help manage these fiscal repercussions by assisting with notifying affected parties, hiring a public relations firm and recovering data.

• Business interruption losses—If your company relies on AI systems and a cyber incident disrupts such operations, you could lose significant revenue. Fortunately, your cyber insurance may help recoup these losses.

• Legal expenses—Incidents involving AI could expose other parties’ data, which may lead to lawsuits. In such situations, cyber insurance can help fund your legal defense, including hiring attorneys, making settlements and paying court-ordered judgments.

Are There Complications?

Indeed, AI has changed the landscape of digital technology and, subsequently, cyber insurance coverage. While many common AI-related incidents may be covered under existing policies, insurers and companies alike may need to make future adjustments regarding coverage. Consider the following potential complications:

• Greater coverage needs—Given AI systems’ capabilities, incidents may be particularly costly, potentially exhausting current coverage limits.

• Increased premiums—As AI introduces new risks and exacerbates existing concerns, insurers may need to charge more for coverage to account for potentially higher claims costs.

• Unclear coverage—It may be unclear if cyber insurance covers certain AI-related incidents. For example, lawsuits related to bias within hiring algorithms might instead require liability insurance for employment practices.

We’re Here to Help

At V Financial, LLC in Rolling Meadows, Illinois, we realize that AI has changed how your business thinks about cyber risks and exposures. Our agents are standing by to discuss your coverage and help you retain the right insurance. Contact us today to learn more.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.