Are AI Add-Ons Addressed in Business Insurance?

Artificial intelligence is reshaping every industry in Texas — and the commercial insurance market is scrambling to keep pace. Here is exactly where AI coverage stands for Texas businesses in 2026.

The Market Just Shifted: ISO Exclusions Took Effect in January 2026

The most important development in business insurance and AI happened at the start of this year. Two new Insurance Services Office endorsements — CG 40 47 and CG 40 48 — took effect in January 2026, allowing carriers to exclude generative AI claims from standard commercial general liability policies. CG 40 47 is the broader exclusion, removing coverage under both Coverage A for bodily injury and property damage and Coverage B for personal and advertising injury for claims arising from generative AI. CG 40 48 excludes only Coverage B. For most Texas businesses using AI tools in their daily operations, this means their standard CGL policy may now have a significant gap that did not exist before January 2026.

Standalone AI Liability Insurance Has Arrived

The insurance market has responded to these new exclusions with dedicated products. Specialty insurer HSB launched the first major standalone AI liability product for small and mid-sized businesses in March 2026 — designed to pay for AI-related losses that some general liability policies now exclude, including bodily injury, property damage, and advertising injury for claims stemming from AI-generated content. The insurance market is beginning to move from silence on AI to scrutiny of AI — and insurers may add exclusions to future policies and spin off AI risk into standalone add-on products, exactly as happened with cybersecurity decades ago.

Cyber Insurance Is the Most Active Coverage Line for AI

For Texas businesses already carrying cyber insurance, the most immediate AI protection may already be partially in place. Cyber insurers have been the most active in adding AI-affirmative endorsements — with Coalition launching a deepfake response endorsement, Embroker adding AI coverage to eligible technology E&O and cyber quotes in August 2025, and AXA XL introducing generative AI coverage through its cyber policy. Directors and officers, errors and omissions, employment practices liability, and cyber policies can all play a role in mitigating AI risks — but no two AI endorsements are identical, making policy review critical.

What Texas Businesses Should Do Right Now

For most small and medium-sized enterprises running AI agents in 2026, existing business insurance is unlikely to cover AI errors cleanly — and the gap is growing. Review your commercial general liability policy immediately to determine whether your carrier has attached CG 40 47 or CG 40 48 exclusions at your last renewal. Ask your broker specifically about AI write-back endorsements that restore coverage removed by those exclusions, and consider whether a standalone AI liability policy makes sense for your specific operations. Contact the Texas Department of Insurance at 800-252-3439 with any questions about your commercial coverage.