Hunton Insurance Recovery Blog

Risk professionals and insurers alike continue to monitor the rapid evolution and deployment of  artificial intelligence (AI). With increased understanding comes increased efforts to manage and limit exposure. Exclusions to coverage offer insurers potentially broad protection against evolving AI risk. Most recently, one insurer, Berkley, has introduced the first so-called “Absolute” AI exclusion in several specialty lines of liability coverage, signaling an even broader effort to compartmentalize AI risk.

In April 2025, the Eleventh Circuit reversed a judgment against a Florida lodge and held that a jury should determine whether the failure of the lodge’s insurer to initiate settlement proceedings before a claim was filed constituted bad faith. In reversing the district court, the Eleventh Circuit reinforced the key duty imposed on insurers under Florida law to diligently and carefully investigate claims and act with an appropriate degree of care to protect their insureds or face consequences such as bad faith liability.

A Delaware court recently held in Mattel, Inc. and Fisher Price, Inc. v. XL Insurance America, Inc., et al., that a series of product liability claims dating back to 2013 constituted a single “occurrence” under the toy manufacturer’s and distributor’s commercial general liability (CGL) policies.

The case stemmed from Mattel’s request for defense and indemnity coverage in response to claims that certain toys caused bodily injuries to infants. The CGL coverage tower, which included policies issued by multiple primary, excess, and umbrella insurers, spanned from 2011 to 2020.

It was only a matter of time before new insurance coverages targeting the risks posed by artificial intelligence (AI) would hit the market. That time is now.

As the use of AI continues to proliferate, so too does our understanding of the risks presented by this broad and powerful technology. Some risks appear novel in form while others mirror traditional exposures that have long been viewed as insurable causes of loss. AI-related risks are made all the more novel because the meaning of AI itself is not only up for debate, but is constantly evolving as the technology matures. This mixture of old and new has the potential to create coverage gaps in even the most comprehensive insurance programs. Hence the development of specialized, AI-specific insurance solutions. In just the past few weeks, two new affirmative AI coverages have entered the market, signaling an acceleration in this trend.