Your Business Insurance May Have Quietly Stopped Covering AI

A German reinsurance company bought a cyber insurance startup on Wednesday. I know. Stay with me for about two minutes, because there's something underneath this one that could show up on your next renewal.

Munich Re announced August 19 that it's buying At-Bay for an enterprise value of $575 million, with the deal expected to close early next year. At-Bay is a top ten cyber insurer in the US, roughly $278 million in written premiums, and it sells almost entirely to small and mid sized businesses. What makes them different is they don't just write you a policy and disappear. They watch your systems and tell you what to go fix before something happens.

So one of the biggest reinsurers on earth just paid half a billion dollars to get closer to small business risk. That's the part I'd pay attention to. Insurance companies get paid to be right about what's about to go wrong.

The thing on your renewal

Here's what's happening on the other side of the same trend. ISO, the outfit that writes the standard policy forms most carriers build off of, rolled out new endorsements that took effect in January. Two of them are worth knowing by name. CG 40 47 and CG 40 48. There's a third, CG 35 08, that covers the products side.

In plain English, they're optional add-ons that let your carrier pull coverage for anything "arising out of generative artificial intelligence" out of your general liability policy. Bodily injury, property damage, personal and advertising injury. And the definition of AI in a lot of this language is written wide enough to cover about any system that generates text, images, audio, or code from a prompt.

Optional is the operative word. Your carrier decides. Which means the only way you find out is to look, or to have your agent look for you.

What this could look like for a real shop

Say your office manager uses ChatGPT to speed up writing a proposal, and it puts a warranty term in there that you don't actually offer. Customer holds you to it and it goes sideways. Or your ad copy came out of an AI tool and a competitor says it's lifted from theirs. Or you tried one of those AI resume screeners and somebody who didn't get hired has a problem with how it sorted people.

Those are not weird edge cases. Those are the exact buckets those endorsements name.

I'm not an insurance agent and this isn't legal advice. Coverage lawyers will tell you these exclusions get read narrowly by courts, and that policies written before 2026 usually have no AI language in them at all. That's true. It's also not something you want to be researching for the first time while you're sitting on a claim.

The ten minute version

Pull your general liability declarations and scroll the endorsement list. Search the PDF for "artificial intelligence" or for those form numbers. It's a two minute job and most owners have never done it once.

Then call your agent and ask it straight. Does my policy have a generative AI exclusion on it, and if it does, what does that take off the table for a business like mine? Make them answer in normal words, not form numbers.

Last thing, write down what your team actually uses AI for. Not a policy document, just a list on one page. Marketing copy, customer emails, proposals, scheduling, whatever it is. You want that list in front of you for the conversation, and most owners I sit down with can't produce it off the top of their head.

Worth knowing too: carriers have started selling coverage that goes the other direction. HSB, the Munich Re arm that'll be running At-Bay, put out an AI liability product for small and mid sized businesses back in March. Ask about that on the same call if you find a gap.

Why I'm writing about an insurance deal

Because it's the tell. When the standard forms grow an AI exclusion and a reinsurer pays $575 million to sit closer to small business risk in the same calendar year, that's the money saying small business AI use is now a real, priceable exposure. It stopped being a novelty somewhere around last year and most of us didn't update anything.

Almost every owner I talk to around Toledo and Maumee is well past deciding whether to use this stuff. They're using it every day. The paperwork just hasn't caught up, and the paperwork is the part that matters on the worst day you have.