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

Jan 9, 2026Risk Management

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.

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.