AI and Professional Liability: What Every Architect and Engineer Needs to Know in 2026

Jan 9, 2026Risk Specialty Group

Is your firm’s AI use creating coverage gaps you don’t know about? If you’re using ChatGPT, Midjourney, or any AI tool in your design work, you should be aware of recent developments.

Some insurance carriers are adding AI exclusions to professional liability policies right now. Verisk’s new exclusion forms are now in effect as of January 1, 2026. And while AI is not excluded on the majority of professional liability policies for Architects & Engineers right now, this is something that needs to be on your radar. Your next policy renewal could leave you exposed.

Understanding how AI affects your professional liability insurance should become a top question for design professionals this year.

Are new AI exclusions being added to E&O policies?

Yes. And the changes are happening faster than most firms realize. According to Hunton Andrews Kurth and the National Law Review, Berkley has introduced an “absolute” AI exclusion for D&O, E&O, and Fiduciary Liability policies. The word “absolute” is what is most concerning.

It specifically names ChatGPT, Bard, Midjourney, and DALL-E by name.

The Independent Agent (IIABA) reports that Verisk’s standardized exclusion forms CG 40 47 and CG 40 48 are now in effect as of January 1, 2026. These give insurers ready-made language to exclude AI losses.

AIG, Great American, and WR Berkley are filing for regulatory approval to exclude AI liabilities. Philadelphia Insurance and Hamilton Select have already excluded AI-related claims from E&O coverage.

If your policy renews this quarter, check the new language carefully.

Why does AI create real liability for design professionals?

The short answer: AI hallucinations. And they happen far more often than most professionals expect.

Stanford Law School research shows general-purpose AI tools hallucinate at rates between 58% and 88%. That means more than half the time, these tools generate plausible but false information.

Even “legal-grade” AI tools designed for professional use still hallucinate 20-33% of the time. Jones Walker LLP documented over 300 cases of AI-generated legal hallucinations in court filings since 2023.

Remember Mata v. Avianca? A lawyer was sanctioned for citing fake cases generated by ChatGPT. The cases didn’t exist. The courts weren’t amused.

For architects and engineers, hallucinations pose specific dangers. AI might suggest building materials that don’t exist. It might recommend structural approaches that violate code. It might generate specifications that cannot be built as designed.

The AIA Trust’s February 2025 guidance identifies many categories of AI risk for design professionals. These include competence questions, confidentiality breaches, and standard of care implications.

Verisk’s analysis of AI liability risks makes one thing clear: professionals remain responsible for AI outputs they incorporate into their work.

If an AI tool produces an error that leads to a claim, the design professional bears the liability. Not the AI vendor.

How widespread is AI adoption in architecture?

The numbers reveal a profession in transition—with uneven risk exposure.

According to AIA Research from March 2025, only 8% of architecture firm leaders report full AI integration. Another 20% are implementing solutions.

In 2024 one-third of architecture firms incorporated AI tools in some fashion in day-to-day operations. That’s a significant portion working with tools that insurers are actively excluding from coverage.

Large firms lead adoption at 61%. Midsize firms follow at 42%. Small firms trail at 27%.

Here’s what concerns risk managers: 78% of architects want to learn more about AI’s potential. But 78% also expressed concerns about AI use. They’re right to be cautious.

The generational divide adds complexity. Architects under 35 are 66% likely to use AI image generators. Those over 50? Only 41%.

Younger team members may be using AI tools that firm leadership have not evaluated for risk implications. That’s a governance gap with insurance consequences.

What about cyber risks from AI use?

AI creates data exposure that many firms haven’t considered.

When employees upload client information to AI platforms, confidentiality risks emerge. Project details, client data, and proprietary designs may be exposed to third-party systems.

Your cyber liability insurance may provide protection that your E&O policy now excludes. But coverage varies significantly by carrier and policy language.

The intersection of AI liability and cyber risk is exactly why design professionals need specialized guidance—not generic insurance advice.

Frequently Asked Questions

Does my E&O policy cover errors made by AI tools?
Coverage varies significantly by carrier and policy. Some insurers are adding AI exclusions to professional liability policies in 2026. Review your policy language carefully, especially sections addressing technology errors, computer-aided design, and emerging risks.
Who is liable if AI-generated designs contain errors?
The design professional who stamps or seals the work typically bears liability. Courts and licensing boards hold the licensed professional responsible for verifying accuracy and meeting standard of care requirements—regardless of whether AI assisted.
Should I disclose AI use in client contracts?
Yes. Transparent disclosure protects both parties and allows for clear liability allocation. Many firms are adding AI-specific clauses to their professional services agreements addressing tool usage, verification processes, and responsibility for outputs.
What are AI hallucinations and why do they matter?
AI hallucinations occur when systems generate plausible but incorrect information. In design work, this might include non-existent materials, impossible structural solutions, or unbuildable specifications. These errors can lead to project failures and professional liability claims.
How can I protect my firm while still using AI tools?
Implement verification protocols requiring licensed professionals to review all AI outputs. Document your AI governance policies. Train staff on proper use. Work with an insurance professional to ensure your coverage addresses AI-related risks.

What should design professionals do now?

The AIA Trust offers clear guidance: “Firms should treat AI as a support tool—not a replacement—for sound professional judgment.”

Effective risk management services start with understanding your actual exposure. Here’s where to begin:

  • Review your current E&O policy for AI-related exclusions, especially if your policy renews this quarter
  • Document which AI tools your employees use and how outputs are verified
  • Update client contracts to address AI use, disclosure requirements, and liability allocation
  • Establish QA/QC procedures ensuring licensed professionals review all AI-generated work
  • Consider supplemental coverage for risks your standard E&O policy now excludes

At Risk Specialty Group, we work with design professionals navigating emerging risks like AI liability. We’re not just another insurance vendor. We’re your guide in navigating how these changes affect your firm.

We work with over 20 “A” rated carriers who specialize in architects, engineers and other design firms.

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