Your Business Uses AI. Does Your Insurance Cover It?

Your software produces an incorrect recommendation. A customer relies on it and loses money. They want compensation.

Five years ago, the conversation might have been about a coding error. Today, it could involve an AI model, an automated agent or a third-party integration.

For the founder, the problem is much the same: something your business delivered allegedly caused harm. But the insurance response may depend on whether your policy explicitly addresses AI, leaves it unclear or excludes it.

That is why affirmative AI cover deserves attention.

What Does "Affirmative AI Cover" Mean?

Affirmative means the policy expressly addresses covered AI-related exposures, rather than leaving you to assume they fit somewhere in traditional wording.

There are three positions worth distinguishing:

• Affirmative cover: the policy explicitly addresses specified AI-related risks.
• Silent wording: AI is not clearly addressed. Cover might still respond, but the interpretation matters.
• An AI exclusion: an endorsement or exclusion removes particular AI-related claims from cover.

CFC identifies model errors, data-quality issues, algorithmic bias and AI-generated content disputes among the exposures its affirmative approach addresses. The point is greater clarity about how insurance applies when AI is involved. CFC's technology insurance explanation

Affirmative does not mean unlimited. It is not a guarantee that your model will perform correctly or that every AI-related loss will be paid. Policy terms, exclusions, insured activities and limits still apply.

You Do Not Have to Be an "AI Company"

You might build proprietary models. Or you might run a SaaS business that has added an AI assistant, a consultancy using AI-generated analysis, or a platform connecting customers to third-party models.

Using someone else's technology does not automatically remove your exposure to a customer claim.

The stakes also change when AI moves from suggesting actions to taking them. An agent that can alter records, issue instructions or access customer systems creates different risks from a tool that drafts text for someone to review. CFC's analysis highlights how these exposures can cross technology, professional liability and cyber insurance. CFC on autonomous AI risks

The useful question is not simply, "Do we use AI?"

It is: "What could happen if the AI we build, supply or rely on gets something wrong?"

AI Exclusions Are Becoming a Real Consideration

There is evidence of insurers developing more explicit boundaries around AI.

In the United States, Verisk has introduced optional generative AI exclusion endorsements for its ISO General Liability programme. This demonstrates that AI exclusions are becoming a concrete underwriting tool, not just a theoretical concern. These are optional US forms, not a blanket change to Australian insurance. Verisk's General Liability update

CFC has also acknowledged that some market participants are responding to uncertainty through exclusions. Its stated approach is to embed clearer affirmative AI language across relevant products instead. CFC's June 2026 announcement

For Australian founders, the takeaway is straightforward: check the wording at purchase and renewal. Do not assume last year's treatment of AI remains unchanged, or that "technology insurance" automatically answers every AI exposure.

What Could an AI-Related Claim Look Like?

These hypothetical examples show why more than one part of an insurance programme may matter.

An incorrect output causes financial loss.

Your platform generates an inaccurate analysis that a customer uses to make a costly decision. They allege your technology or service failed. Professional indemnity, also called technology errors and omissions, is the relevant area to examine.

An automated workflow exposes confidential information.

An AI integration retrieves another customer's records and includes them in a response. Privacy liability, incident response and cyber provisions may become relevant.

Generated content triggers an infringement allegation.

A customer receives a demand alleging that material supplied through your service infringes copyright. The intellectual property and media liability wording needs examination, rather than an assumption that cyber insurance will handle it.

CFC's Australian technology brochure describes professional indemnity, specified intellectual property and media liability, and cyber protection within its technology offering. Whether a particular scenario is covered depends on the issued policy and circumstances. CFC's Australian technology brochure

CFC has also published a recruitment-platform case study involving flawed training data that disproportionately screened out qualified candidates from a demographic group, leading to a discrimination lawsuit. It illustrates an important point: an AI-related claim does not require a hacker or a data breach. Read CFC's case study

Why It Matters in UpSure's Instant Quote Offer

The CFC-backed technology package available through UpSure's Instant Quote includes affirmative AI cover. Reporting on the launch specifically identified it alongside professional indemnity, cyber and management liability. Insurance News coverage

That inclusion reflects how technology businesses actually operate.

CFC's position is that AI often amplifies familiar commercial risks, rather than creating an entirely separate category. Software can make mistakes. Services can cause customer losses. Content can attract infringement allegations. AI changes how those events happen, but the underlying need for protection remains. CFC's approach to affirmative AI cover

For UpSure, a fast quote should still lead to cover that recognises the technology our clients use.

The benefit is not simply another feature on a checklist. It is a clearer starting point for understanding which AI exposures the policy is designed to address.

Five Questions Worth Asking

Before buying or renewing, ask:

• Does the policy expressly address AI, and are there AI exclusions or endorsements?
• Does our declared business activity accurately describe what we build and how we use AI?
• How are third-party models, integrations and autonomous agents treated?
• Which sections could respond to customer financial loss, privacy incidents or infringement allegations?
• What limits, excesses, conditions and defence-cost provisions apply?

Keep sensible controls alongside the cover: appropriate human review, access restrictions, testing and records of important decisions. Insurance is a financial backstop, not a replacement for responsible deployment.

Build With AI. Insure With Clarity.

You should not have to discover your policy's position on AI after a customer makes a claim.

Eligible Australian technology businesses can explore UpSure's CFC-backed Instant Quote pathway. More complex activities or contractual requirements may need a conversation with our team.

Explore Instant Quote or speak to an UpSure expert.

General information only, not advice tailored to your business. Eligibility and cover depend on underwriting acceptance and the issued policy's terms, conditions, exclusions, limits and endorsements. Examples illustrate potential exposures, not guaranteed coverage outcomes. A quote is not confirmation that cover has been bound.