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Artificial Intelligence Insurance (AI) Policy Information

Artificial Intelligence Insurance

Artificial Intelligence Insurance. Today, almost every major business, including many high-profile ones like Uber, Google, Tesla, and Amazon, amongst numerous others, rely heavily on Artificial Intelligence and machine learning (ML).

However, these systems are regularly tricked, bypassed, unintentionally misled, and evaded. Despite these otherwise big businesses' failures, many organizations, even those that are just starting up, are rarely aware of the risks their businesses face with the use of these technologies.

The unavailability of updated tools to remediate and limit the damage isn't being built as quickly as ML learning technology's evolution speeds past most barriers. That's why existing cyber insurance does not cover machine learning and AI; the same goes for legal remedies like copyright, anti-hacking, and liability does not cover these situations.

Fortunately, the emerging solution is artificial intelligence insurance, but the question is, do you need it, and does it cover your business entirely?

Artificial intelligence insurance protects your AI business from lawsuits with rates as low as $57/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked artificial intelligence insurance (AI) questions:

How Much Does Artificial Intelligence Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small artificial intelligence (AI) and machine learning businesses ranges from $57 to $79 per month based on location, application of AI, revenue, claims history and more. Premiums may vary as this is an emerging industry.

Why Do Artificial Intelligence (AI) Companies Need Insurance?

Artificial Intelligence

The past few years and recent events have proven that ML and AI aren't foolproof systems. The systems are prone to failures, and that can lead to disasters in the real world. AI systems can fail in two primary ways, i.e., unintentionally and intentionally.

Intentional Failures - Intentional failures are adversary attempts designed to subvert the AI system to mine information like private training data, stealing the design of the underlying algorithm, or gaming the AI to get a specific output.

A good instance of this is Tumblr, which announced that it would stop allowing people to upload porn images and takedown porno or explicit content; people who wanted to bypass the filter would do so by coloring the body images green. They often add the face of an owl to trick the AI and ML system.

Unintentional Failures - Usually, this is a failure that happens on its own accord without adversarial tampering. For instance, OpenAI managed to teach an ML system to play a boating game by mainly rewarding actions of receiving a high score.

However, the ML system started to hit the same targets, accruing more points and not finishing the race. It is the cause of unintentional failure which produces the right outcome, but it is practically unsafe for real-world use.

Artificial intelligence insurance is important because when (not if) something goes wrong, the proper coverage will be there to protect your operations from most failures.

Keep in mind cyber insurance doesn't protect against physical damages such as:

  • Bodily injuries sustained from self-driving cars.
  • Property damage caused by robots.
  • Reputational and brand damage caused by failures.

For these instances general liability and other coverages will be needed.

Does Cyber Liability Cover Artificial Intelligence And Machine Learning Failures?

To understand the relationship between traditional cyber insurance and insurance against AI failure, it is important to speak to your artificial intelligence insurance industry experts. However, broadly speaking, cyber insurance and AI failure are considered two separate issues.

That's why cyber insurance broadly covers information security, privacy liability, and business interruption.

AI failures that result in business interruption and breach of private information are covered by most cyber insurance policies available today. However, AI failures that may damage a brand's image, property damage, and bodily harm aren't likely covered with regular cyber insurance.

Cyber Insurance or Cyber Liability Insurance usually covers common failures like:

Model Stealing Attacks - A few years back, OpenAI created an AI system that automatically generated text but didn't disclose the underlying model mainly based on the grounds that the system could be misused to mainly spread disinformation. Researchers were able to recreate the algorithm and then release it, even before OpenAI released the full model.

Now, this is a very good example of how attacks like these could incur brand intellectual property losses and brand damage. However, hypothetically cyber insurance may cover this scenario since there is a breach of information.

Data Leakage - An example of this is that researchers were able to reconstruct faces, just using the name of the person and then access to the facial recognition system. The system was so effective that people could easily use a reconstructed photo to identify a person from a lineup.

If this was happening in real life, cyber insurance would be able to cover this breach of private information, which in the case of this particular instance is private training data.

Does Your Company Need Artificial Intelligence (AI) Insurance?

How Will Artificial Intelligence Change Commercial Insurance

When you decide to make machine learning systems a part of critical business processes, it introduces the risk of failure, leading to brand damage, data breach, property damage, business interruption, and even bodily harm.

Even when businesses are empowered to address these failure modes, they (businesses) need to recognize that it can be harder to defend against these attacks and attackers since they need to guard against all scenarios.

Though a hacker only needs to find one vulnerability to exploit. How your ML or AL model can be attacked is unknown for the most part until it is attacked.

Insurance companies in this space are very aware of the gap and are trying to reconcile the differences that exist between traditional software attack insurance and those against machine learning systems.

That's why cyber insurance is amongst the fastest growing insurance market that targets small and medium-sized businesses. Also, insurers want to maintain the momentum.

Since AI adoption has over the years more than tripled in the last 3 years, insurance providers recognize it as a huge market. Many insurance companies are in the process of formulating AI frameworks.

Countries are also considering various AI strategies emphasizing safety, privacy, and security of the ML systems, all of this can and will lead to regulations & requirements of artificial intelligence insurance in the near future.

Commercial Insurance And Business Industry Classification

Please note that to date, artificial intelligence does not have a separate industry code. These are the best fits from existing industry classifications.

Description for 8731: Commercial Physical And Biological Research

Division I: Services | Major Group 87: Engineering, Accounting, Research, Management, And Related Services | Industry Group 873: Research, Development, And Testing Services

8731 Commercial Physical And Biological Research: Establishments primarily engaged in commercial physical and biological research and development on a contract or fee basis. Noncommercial research establishments funded by endowments, grants, or contributions are classified in Industry 8733. Separate establishments of aircraft, guided missile, or spacecraft manufacturers primarily engaged in research and development on these products are classified in Manufacturing, Major Group 37.

  • Agricultural research,
  • Biological research commercial
  • Chemical laboratories, commercial research except testing
  • Engineering laboratories, commercial research: except testing
  • Food research commercial
  • Industrial laboratories commercial research: except testing
  • Physical research commercial
  • Research and development physical and biological: commercial

Description for 541715: Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

This U.S. industry comprises establishments primarily engaged in conducting research and experimental development (except nanotechnology and biotechnology research and experimental development) in the physical, engineering, and life sciences, such as agriculture, electronics, environmental, biology, botany, computers, chemistry, food, fisheries, forests, geology, health, mathematics, medicine, oceanography, pharmacy, physics, veterinary and other allied subjects.

Artificial Intelligence Insurance - The Bottom Line

Like all other types of insurance, artificial intelligence insurance starts with recognizing what you need, and doing so will help you get the best rates when they debut. Many insurance carriers are already rolling out bespoke policies that offer sufficient safety nets for these new technology industries.

Moving forward, businesses that use AI and ML will require insurance to do business in many industries. So, understanding your needs now will prepare you for when AI insurance goes mainstream and become mandatory.

Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.

Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Workers Compensation InsuranceWhat is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Liquor Liability InsuranceWhat is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).

Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law
Small Business Commercial Insurance

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.

Additional Resources For Information Technology & Internet Insurance

Learn about small business IT technology insurance policies that help protect IT businesses, consultants & subcontractors from the unique risks that small tech businesses face when they work.

Information Technology And Internet Insurance

Some the more popular IT businesses do IT contracting or freelancing work. These businesses have specific risks they face, and can have huge exposures to uncommon risks. Even if the business is very careful, a small oversight or mistake can lead to a large and expensive lawsuit.

For information technology companies, like some of the more popular ones listed below, data security is paramount:

Application Development (Mobile & Web), Business Intelligence / Data Mining Businesses, Computer Installation & Repair, Computer Programming, Computer Retail Store, Data Analysts, Architects & Scientists, Database Administrators, Frontend Developers, Hosting, IT Business Consulting, IT Project Management, IT Staffing, IT Training, Information Technology Consulting, Life Sciences & R&D, Network Architects, Network Security Consultants, System & Network Design, Technical Writing and Web Site Development.

The IT business segment has a critical need for professional liability and errors and omissions coverage. If coverage applies, the insurer has several rights and duties such as providing a legal defense against claims and suits brought by parties claiming damages. The insurer is permitted to investigate all claims to determine whether they are covered by the policy and they may choose to litigate, deny or settle claims.

Most policies providing coverage for electronic data liability, computer professional liability, and computer errors and omissions are claims-made contracts.

Minimum recommended small business insurance coverage: Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Computer Fraud, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Errors and Omissions Liability, Professional Liability, Umbrella Liability, Hired and Nonowned Auto Liability & Workers Compensation.

Other commercial insurance policies to consider: Building, Earthquake, Flood, Real Property Legal Liability, Forgery, Cyber Liability, Employment-related Practices Liability, Directors and Officers Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.

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