Artificial Intelligence Insurance (AI) Policy Information
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:
- What Is Artificial Intelligence Insurance?
- How Much Does Artificial Intelligence Insurance Cost?
- Why Do Artificial Intelligence (AI) Companies Need Insurance?
- Does Cyber Liability Cover Artificial Intelligence And Machine Learning Failures?
- Does Your Company Need Artificial Intelligence (AI) Insurance?
- What Does Artificial Intelligence Insurance Cover & Pay For?
What Is Artificial Intelligence Insurance?
Artificial Intelligence (AI) insurance is a type of insurance coverage that protects businesses using AI technology against potential losses, such as data breaches, errors or omissions in AI systems, and AI-related legal liability claims. The coverage helps businesses manage the risks associated with AI technology, ensuring they can continue to adopt and use AI with confidence.
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?
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?
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.
What Does Artificial Intelligence Insurance Cover & Pay For?
Here are spme reasons why artificial intelligence (AI) companies might be sued:
Intellectual Property Infringement: AI companies may face lawsuits for alleged infringement of intellectual property rights, such as patents, copyrights, or trademarks. Insurance coverage, such as intellectual property liability insurance, can help protect AI companies by providing financial assistance to defend against such claims and pay for damages or settlements if found liable.
Data Breach or Privacy Violation: AI companies deal with vast amounts of data, and a data breach or privacy violation can result in legal claims from affected parties. Cyber liability insurance can provide coverage for legal costs, notification expenses, and damages associated with data breaches or privacy violations, helping AI companies manage the financial impact of such lawsuits.
Product Liability: AI companies that develop and deploy AI-based products or services may face lawsuits if their products or services cause harm or damage to users or third parties. Product liability insurance can provide coverage for legal defense costs, damages, and settlements, helping AI companies protect themselves against such claims.
Errors and Omissions: Mistakes or errors in AI algorithms or systems could lead to financial losses or other damages for clients or customers. Errors and omissions (E&O) insurance, also known as professional liability insurance, can provide coverage for legal defense costs, damages, and settlements in case of alleged professional negligence, errors, or mistakes in the performance of AI services.
Breach of Contract: AI companies may face lawsuits related to breach of contract claims, such as failure to deliver promised AI solutions or services, or not meeting performance expectations. Commercial general liability (CGL) insurance can provide coverage for legal defense costs, damages, and settlements related to breach of contract claims, depending on the policy's terms and conditions.
Employment Practices Liability: AI companies may face lawsuits related to employment practices, such as wrongful termination, discrimination, or harassment claims from employees or job applicants. Employment practices liability insurance (EPLI) can provide coverage for legal defense costs, damages, and settlements associated with such claims, helping AI companies manage the financial risks of employment-related lawsuits.
In each of these examples, insurance can play a crucial role in protecting AI companies by providing financial assistance to cover legal defense costs, damages, and settlements, which can help mitigate the financial impact of lawsuits. However, it's important to note that insurance policies have terms, conditions, and limits, and coverage may vary depending on the specific policy and circumstances. Therefore, it's crucial for AI companies to carefully review and understand their insurance policies and work with qualified insurance professionals to ensure they have appropriate coverage tailored to their unique needs and risks.
Commercial Insurance And Business Industry Classification
- SIC CODE: 8731 Commercial Physical And Biological Research
- NAICS CODE: 541712 Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
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.
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.
- Application Development
- Amazon Seller
- Artificial Intelligence
- Computer Electronic Repair
- Computer Programming
- Computer System / Network Developer
- Cyber Liability
- Data Breach
- eBay Sellers
- Electronic Data Processing
- Electronic Data Processing Equipment
- Internet Business
- Internet Service Provider
- IT Consultant
- Online Store
- Social Media
- Software Developer
- Technology Services
- Website Design
- Specialty Computer
The information technology (IT) industry is constantly evolving and adapting to new technologies and trends. It is a critical component of many businesses and organizations, as it helps them to communicate, store data, and operate efficiently. However, the IT industry also faces unique risks and challenges that can lead to financial losses, legal issues, and damage to reputation. This is why it is essential for IT businesses to have commercial insurance to protect their assets and interests.
One of the main risks that IT businesses face is data breaches and cyber attacks. Hackers can gain access to sensitive information stored on a company's servers or systems, leading to data theft, identity theft, and other crimes. Insurance can provide coverage for these types of events, helping IT companies to mitigate the financial and legal consequences.
Another risk that IT businesses face is the possibility of equipment failure or malfunction. This can result in downtime and lost productivity, which can have a significant impact on a company's bottom line. Commercial insurance can help IT businesses to cover the costs of repairs and replacements, as well as any lost revenue or expenses incurred due to the equipment failure.
IT businesses may also face legal issues, such as intellectual property disputes or contract disputes with clients. Insurance can provide coverage for legal fees and damages, helping IT companies to defend their interests and protect their reputation.
Overall, the IT industry needs business insurance to protect against the many risks and challenges it faces. Without adequate coverage, IT businesses may be vulnerable to financial losses and legal issues that could impact their operations and success.
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.