Agentic Insurance platform Counterpart expanded its AI liability protection across its professional lines portfolio, adding new affirmative AI coverage and a Technology Errors and Omissions insuring agreement to its Miscellaneous Professional Liability and Allied Health products.
The Los Angeles insurtech said the shift targets a growing coverage gap as small businesses lean harder on AI tools while many carriers push exclusions into traditional policies.
The company says AI adoption has exploded. About 92% of small businesses now use some form of AI for marketing, customer service, research, or internal decision work. As those tools spread, insurers have tightened wording in E&O, D&O, cyber, and CGL contracts.
Research from the Harvard Law School Forum on Corporate Governance shows more AI related exclusions hitting the market and leaving insureds exposed.
Ommid Farashahi, insurance coverage partner at BatesCarey, said AI risks keep evolving fast and traditional policies don’t guarantee protection. He said companies should look at affirmative AI cover if they want to avoid gaps created by silent wording or narrowing endorsements.
AI-related risks are rapidly evolving. Coverage is by no means guaranteed by traditional E&O, D&O, cyber, and CGL policies, which are ‘silent’ on such exposures and may be mitigated through AI-related exclusions or other policy limitations.
Ommid C. Farashahi, Insurance Coverage Partner, BatesCarey
“To avoid any potential gap in coverage, companies should consider affirmative cover for the concentric circles of AI-related liability,” says Ommid C. Farashahi.
For insurers, AI is still a gray area. Coverage is often silent, leaving business owners unsure about how their policies actually respond to these growing exposures. Counterpart’s Affirmative AI Coverage removes that uncertainty by directly addressing errors generated from first and third-party AI tools.
Counterpart’s expanded coverage addresses claims tied to both first party and third party AI. That includes generative AI errors, hiring bias driven by automated screening, and misclassifications triggered by AI assisted assessments.
Mike Muglia, who leads professional liability at Counterpart, said AI risk moved from theory to litigation. He said small business owners rely on AI to work faster and handle more volume but often misjudge the liability it creates.
He said the new endorsements give brokers practical tools for everyday AI related claims, whether the issue stems from flawed outputs, bad decisions, or embedded bias.
A lot of small business owners and startup leaders are using AI to work faster, process more information, and deliver a higher level of service, but they don’t always see the liability that comes with it.
Mike Muglia, Professional Liability Lead, Counterpart
“These endorsements give our brokers practical solutions for claims that come from everyday AI use, whether it’s bad outputs, decision errors, or machine-generated bias,” Mike Muglia said.
Counterpart continues working with brokers to adapt liability products as exposures shift. The company has placed more than 28,000 policies through 2,800 brokers and plans further expansion across additional professions and risk classes.
