Does My E&O Policy Cover AI-Assisted Design Work in 2026?

Mar 4, 2026Risk Management

Key Takeaways

  • Most E&O policies still cover AI design work in early 2026. The majority of in-force professional liability policies do not yet include a specific AI exclusion.
  • That’s changing at renewal. Verisk’s new AI exclusion forms took effect January 1, 2026, and major carriers are rolling out similar language.
  • Berkley, Philadelphia, and Hamilton Select have already excluded AI from certain E&O products. AIG, Great American, and W.R. Berkley are following.
  • The exposure isn’t the tool. It’s the policy language. Two firms using the same AI can have very different coverage depending on which carrier wrote their E&O.

Renewals are the pressure point. Every design firm should audit policy language before signing a 2026 or 2027 renewal.

Architect reviewing professional liability policy for AI exclusion endorsements in a modern design studio

Does your E&O Policy Cover AI Design Work Right Now?

For most architecture and engineering firms holding policies written before 2026, yes. A typical professional liability (E&O) insurance policy in force today doesn’t carry a specific artificial intelligence exclusion. That means a claim involving AI-assisted design work is generally still treated as a standard professional negligence claim. It doesn’t matter whether the error came from ChatGPT, a Midjourney rendering, or an AI plugin inside CAD. E&O responds to the negligent act, not the tool that helped produce it.

That answer is true for today. It won’t be true at renewal for many firms. Carriers are filing new AI exclusion language with state regulators right now. Some have already moved. The real question isn’t whether E&O covers AI design work in general. It’s whether a specific policy, with a specific renewal date and a specific carrier, still answers yes.

Travis Landers at Risk Specialty Group has reviewed dozens of design firm renewals this year. Only a handful have carried absolute AI exclusions so far. Most contain softer language that carves out certain AI uses while keeping core coverage intact. Reading the policy language matters more than reading the carrier’s marketing materials.

What Changed in E&O Coverage for AI in 2026?

Three things shifted between the 2025 and 2026 renewal cycles.

First, Verisk published two new endorsement forms (CG 40 47 and CG 40 48) that took effect January 1, 2026. These forms provide carriers with ready-made language to exclude losses arising from generative AI. They apply to the Commercial General Liability side first. But the industry signal from IIABA is directional.  Some E&O forms across the market are now being rewritten to match.

Second, Berkley introduced what the market has come to call an “absolute” AI exclusion. It applies to Directors and Officers, Errors and Omissions, and Fiduciary Liability products. The endorsement names ChatGPT, Bard, Midjourney, and DALL-E specifically. Hamilton followed with its own Generative AI Exclusion. Philadelphia Insurance and Hamilton Select went further, excluding AI-related claims from E&O entirely.

Third, AIG, Great American, and W.R. Berkley filed for regulatory approval to introduce their own versions. Filings don’t appear overnight on every policy. They surface at renewal, line by line, in endorsements that many firms skim past.

The net effect: E&O coverage for AI design work is no longer a single market condition. It now varies by carrier, state, product line, and whether a particular endorsement was triggered at the firm’s last renewal.

Insurance policy endorsement schedule showing AI exclusion language effective January 2026

How Does a Design Firm Check Its Policy for AI Exclusions?

A four-step policy audit works for most firms. It takes less than thirty minutes with the full policy PDF in hand.

  • Check the declarations page for endorsement schedules. Look for any form number starting with CG 40. Those are the Verisk GL forms. Also, look for a carrier-specific AI exclusion, such as Berkley’s PC 51380 or Hamilton’s Generative AI Exclusion. Any endorsement with “artificial intelligence,” “generative AI,” or “machine learning” in the title deserves a closer read.
  • Search the policy body for the word “artificial.” Most exclusions appear under a heading with “artificial intelligence” or within the exclusions section of the insuring agreement. A policy without such a word is usually silent on AI, meaning coverage follows the standard negligent-act trigger.
  • Read the definitions section. Some carriers add AI language not through a new exclusion but by narrowing existing definitions. “Professional services” or “covered products” may be redefined to carve out work produced by non-human systems.
  • Confirm the retroactive date. Even if the current policy covers AI, a future renewal with an exclusion doesn’t automatically wipe out coverage for past AI-assisted work. The claims-made trigger and retroactive date often preserve that protection.

Firms seeking the broader 2026 picture of AI liability across the industry can find it in Risk Specialty Group’s 2026 AI liability guide for architects. For the tactical policy check, the four steps above cover the audit.

What AI Design Work Stays Covered vs. What Might Not Be?

Coverage rarely breaks down cleanly along “AI vs no AI” lines. It breaks down by how the AI was used and what the claim actually alleges.

AI use that generally stays covered under most current E&O policies:

  • Design work where AI assists a licensed professional who reviews, verifies, and stamps the output.
  • AI-generated renderings are used for client visualization when the construction documents themselves are produced by humans.
  • AI-drafted specifications that a licensed engineer reviews, revises and seals.
  • Internal productivity tools (scheduling, document summarization, meeting notes) that don’t touch the design deliverable.

AI use is more likely to trigger a coverage dispute:

  • Deliverables produced primarily by AI and passed through with minimal human review.
  • Designs that rely on AI outputs containing hallucinated code references or nonexistent materials.
  • Client data is uploaded to AI platforms that later surface in a breach claim.
  • Work produced by AI tools specifically named in a Berkley, Hamilton, or carrier-specific exclusion endorsement.

Stanford Law School research documented hallucination rates between 58% and 88% on general-purpose AI tools, and 20% to 33% on specialized “legal-grade” systems. For a design firm, a hallucinated beam specification or a nonexistent building code citation isn’t an abstract risk. It’s a claim waiting to happen. Data leakage claims typically fall under a cyber liability insurance policy rather than E&O, which is why many firms now need both lines to work together.

Design firm owner conducting a four-step policy audit for AI exclusion endorsements

What Should a Firm Do If It Finds an AI Exclusion?

Finding an AI exclusion on a policy isn’t a crisis. It’s a negotiation starting point.

  • Ask for a carrier walk-back. Many 2026 AI exclusions were added defensively, not based on carrier loss experience. Firms with documented AI governance policies, verification workflows, and licensed professional sign-off procedures often get broader language than the standard form.
  • Negotiate a carve-back for supervised AI use. A carve-back keeps the exclusion for unsupervised or autonomous AI while restoring coverage for tools used under human oversight. The AIA Trust guidance on generative AI in architectural practice is worth citing in carrier conversations.
  • Document the firm’s AI governance program. A two-page internal policy covering tool approval, verification steps, client disclosure, and professional sign-off gives a broker something to negotiate with. It also shows underwriters that the firm treats AI as a risk-managed activity.
  • Get a second carrier quote. AI exclusion adoption varies widely across carriers. An independent broker with access to multiple markets can place coverage that a direct-writer cannot. Risk Specialty Group works with over twenty “A” rated carriers, and the appetite for AI-assisted design work differs meaningfully among them.

Firms that get caught off guard at renewal are usually the ones who assumed their E&O would roll over with identical language. In 2026, that assumption needs to be verified every single year.

Frequently Asked Questions About E&O and AI Design Work

Does my E&O policy cover errors from ChatGPT or Midjourney?

Usually, yes, on in-force policies written before 2026, AI exclusion endorsements appeared. Coverage depends on the specific carrier, the endorsement schedule, and whether the claim alleges professional negligence or a tool failure. A policy language review is the only way to confirm for a specific firm.

What is the Verisk AI exclusion?

Verisk released two endorsement forms (CG 40 47 and CG 40 48) effective January 1, 2026. The forms provide carriers with standardized language to exclude bodily injury and property damage arising from the use of generative AI. They primarily apply to Commercial General Liability but signal broader market movement toward E&O lines.

Which insurers have already excluded AI from E&O policies?

Berkley introduced an “absolute” AI exclusion spanning D&O, E&O, and Fiduciary products. Hamilton filed a Generative AI Exclusion naming specific tools. Philadelphia Insurance and Hamilton Select have excluded AI-related claims from E&O entirely. AIG, Great American, and W.R. Berkley are filing similar language.

If a design firm uses AI, should it disclose that to the carrier?

Yes.  Some carriers now ask about AI use directly on renewal applications, and accurate disclosure is a contractual obligation. Firms that document governance policies, verification steps, and licensed professional review often receive broader coverage terms than firms that decline to answer or leave it vague.

Does cyber liability cover AI-related errors that E&O excludes?

Cyber liability covers 1st-party costs for the design firm itself, such as forensic investigations, business interruption, and ransom payments in the event of a cyber breach. An E&O “network security” endorsement won’t cover those. The endorsement on most E&O policies is 3rd-party only, meaning it responds to claims from clients but not to the firm’s own breach costs. For AI-specific exposures, such as client data uploaded to ChatGPT that later surfaces in a breach, the cyber policy is the right line. For professional negligence claims arising from AI-assisted design output, that’s still an E&O question. Many design firms now need both lines working together. (More on the distinction in Why Engineering Firms Are Prime Targets for Cyber Attacks in 2026.)

What should design professionals do now?

Effective risk management services start with understanding your actual exposure.

Don’t assume your current coverage is adequate. Pull your policy. Read the cyber-related language. Look for exclusions, sublimits, and gaps.

Then ask yourself:

  • What would two weeks of downtime cost in lost revenue?
  • What would you do if you paid out $50,000 to a fake invoice?
  • What would you do if you could no longer access your design plans and email account?

If those questions concern you, it’s time for a real conversation about standalone cyber coverage.

At Risk Specialty Group, we’re not just another insurance provider. We’re your guide in navigating the complex world of cyber risk for design professionals.

We work with over 20 “A” rated carriers who specialize in architects, engineers, and design firms. We know what questions to ask because we’ve seen what happens when firms don’t have the right coverage.

Ready to understand where you stand?
Just a Quote — For those who know what coverage they need
Conversation & Quote — For those unsure about cyber coverage gaps
Full 360° Review — Comprehensive risk analysis including emerging cyber exposures

Contact Risk Specialty Group: 713-552-1900 | info@riskspecialtygroup.com

About the Author

Travis Landers, ARM, is the President and Founder of Risk Specialty Group, a Houston-based insurance and risk management firm serving design professionals. A UT Austin McCombs School of Business graduate with over 25 years of entrepreneurial experience, Travis founded RSG in 2010 to help architects, engineers, and consultants navigate the complex world of insurance and risk management. Under his leadership, RSG has earned the IIABA Best Practices Agency designation multiple years running. Risk Specialty Group serves design professionals across Texas, Arizona, Arkansas, California, New Mexico, and Oklahoma.

Are your firm's Cyber risks actually covered? If you're like most design professionals, the answer might surprise you.

According to the World Econo

Does your E&O policy cover cyber attacks?

For most design professionals, the answer is no.

The most common coverage in Professional Liability policies regarding any type of virus transmission is called "network security" liability. But this is only for "3rd party" expenses, such as when a design firm gets sued by one of their clients for the transmission of a virus. It covers the cost of defense and any "3rd party" costs that the client incurs. However, it does not provide any "1st party" coverage for the design firm itself in the event of a cyber attack or breach. Also, these endorsements typically offer sublimits that cap payouts at a fraction of actual incident costs.

Only true Cyber Liability covers 1st party costs associated with a cyber attack or breach on the design firm. That is why the coverage within a Professional Liability is called "network security" and not "cyber liability".

What about a major ransom demand? What about two weeks of system downtime? What about paying a fake invoice for $85,000?

That's a different category of loss entirely. The vast majority of design firms enter 2026 without true cyber coverage.

The FTC's cyber insurance guidance recommends standalone cyber coverage for businesses.

Why are engineering firms prime targets?

Fifty-nine percent of AEC firms experienced a cybersecurity threat in the past two years, according to Dodge Data & Analytics. Cyberattacks on construction companies doubled in Q1 2024 compared to Q1 2023.

The reasons are structural. Engineering firms hold exactly what attackers want:

  • Time-sensitive projects where delays cost real money
  • Critical infrastructure plans of interest to nation-state actors
  • Detailed client information across multiple projects
  • Smaller IT budgets than the data they protect would suggest

Design professionals are more than twice as likely to face ransomware attacks compared to other industries, according to research from CyberPress and FalconFeeds.

DragonForce, a ransomware group that attacked O&S Engineers & Architects in February 2025, specifically targets architecture and engineering firms. They kn

Frequently Asked Questions

Does my professional liability policy cover cyber attacks?
Just 3rd party claims, if at all. Typical coverage within an E&O policy that is associated with cyber threats are usually called "Network & Security" Liability endorsements and these only cover 3rd party claims. These are claims from your clients alleging you (the design firm) spread a virus to them and would cover the costs to restore your client. There is usually no coverage for the design firm itself for a cyber breach it experiences and the internal expenses associated with it. That's why a standalone Cyber Liability policy is needed to cover these 1st Party expenses. Review your policy language carefully.
Is the cyber add-on to my E&O policy enough protection?
Usually not. Cyber endorsements tend to offer lower limits, narrower coverage, and more exclusions. And they usually only cover the expenses to restore a client or other 3rd party. Not the Design Firm itself.
Why are engineering firms prime targets for ransomware?
Three reasons: deadline pressure, valuable data, and inadequate defenses. Attackers know engineering firms can't afford extended downtime. That pressure makes engineering firms more likely to pay ransoms quickly.
What happens if client data or CAD files are breached?
You face immediate costs for forensic investigation, legal counsel, and notification. Longer term, you may face lawsuits, regulatory penalties, and reputational damage. Cyber insurance covers these costs. Your E&O likely won't.
How much does cyber insurance cost for design firms?
Premiums vary based on firm size, revenue, and security measures. Many design firms find coverage more affordable than expected, especially compared to the potential cost of an uninsured breach. For firms with Revenues of $1M to $5M the annual premiums can range from $1,000 to $3,000 depending on the limits and coverages selected.

What should design professionals do now?

Effective risk management services start with understanding your actual exposure.

Don't assume your current coverage is adequate. Pull your policy. Read the cyber-related language. Look for exclusions, sublimits, and gaps.

Then ask yourself:

  • What would two weeks of downtime cost in lost revenue?
  • What would you do if you paid out $50,000 to a fake invoice?
  • What would you do if you could no longer access your design plans and email account?

If those questions concern you, it's time for a real conversation about standalone cyber coverage.

At Risk Specialty Group, we're not just another insurance provider. We're your guide in navigating the complex world of cyber risk for design professionals.

We work with over 20 "A" rated carriers who specialize in architects, engineers, and design firms. We know what questions to ask because we've seen what happens when firms don't have the right coverage.

Ready to understand where you stand?
Just a Quote — For those who know what coverage they need
Conversation & Quote — For those unsure about cyber coverage gaps
Full 360° Review — Comprehensive risk analysis including emerging cyber exposures

Contact Risk Specialty Group: 713-552-1900 | info@riskspecialtygroup.com

About the Author

Travis Landers, ARM, is the President and Founder of Risk Specialty Group, a Houston-based insurance and risk management firm serving design professionals. A UT Austin McCombs School of Business graduate with over 25 years of entrepreneurial experience, Travis founded RSG in 2010 to help architects, engineers, and consultants navigate the complex world of insurance and risk management. Under his leadership, RSG has earned the IIABA Best Practices Agency designation multiple years running. Risk Specialty Group serves design professionals across Texas, Arizona, Arkansas, California, New Mexico, and Oklahoma.