Business

Counterpart expands AI insurance coverage to address emerging liabilities for small businesses

Tuesday, 25 November 2025 5:35AM UTC

Counterpart introduces enhanced Affirmative AI Coverage and a Technology E&O agreement to fill critical gaps in traditional policies, helping small businesses manage the rising risks of AI-driven errors and biases amid increasing adoption.

Insurtech company Counterpart has significantly expanded its Affirmative AI Coverage and introduced a Technology Errors & Omissions (E&O) Insuring Agreement aimed at helping small businesses manage the increasingly complex risks associated with using artificial intelligence (AI) tools. This move addresses a critical gap in traditional insurance policies, which have often failed to keep pace with the rapid adoption of AI technologies, frequently excluding coverage for these tools upon which many companies now heavily depend.

According to Counterpart, AI adoption among small businesses has sharply risen, with 92% now incorporating AI in some form, particularly for research, marketing, and customer support functions. Automated decision-making tools, while enhancing operational efficiency, have also introduced new layers of risk. Industry research, including findings from the Harvard Law Forum on Corporate Governance, highlights a troubling trend where insurers are increasingly excluding AI-related risks and automated decision-making from coverage. This exclusionary approach leaves many businesses vulnerable to liabilities arising from AI errors or biases.

Legal expert Ommid C. Farashahi, Insurance Coverage Partner at BatesCarey LLP, comments on the evolving landscape of AI-related risks. He emphasises that traditional policies such as Errors & Omissions (E&O), Directors & Officers (D&O), Cyber, and Commercial General Liability (CGL) often remain "silent" on AI exposures and may incorporate exclusions specifically targeting AI risks. Farashahi advises companies to consider affirmative coverage tailored to the concentric circles of AI-related liability to avoid gaps in protection.

Counterpart asserts that its Affirmative AI Coverage directly tackles liabilities arising from errors generated by both first-party and third-party AI tools, aiming to remove the uncertainty that many businesses currently face. Mike Muglia, Professional Liability Lead at Counterpart, notes, “AI risks have moved from theory to the courtroom.” He points out that small business owners and startup leaders frequently leverage AI to increase speed, handle more data, and elevate service levels, but often fail to fully appreciate the associated risks. The newly expanded coverage provides brokers with practical solutions for claims arising from everyday AI use, including bad outputs, erroneous AI-driven decisions, and machine-generated bias.

The coverage is particularly relevant as AI-related claims become more common, involving issues such as hallucinated reports, misclassified exposures, and flawed hiring recommendations. Underwriting for these policies incorporates extensive data, with over 2,000 data points used to evaluate governance, compliance, and responsible AI practices. Policies are supported by a range of insurers and reinsurers, including Aspen, Markel, and Westfield Specialty, underscoring the industry's recognition of these emerging risks.

The growing concern about AI-related exposures is also reflected in academic and industry analyses. For instance, a report by the Harvard Journal of Law & Technology highlights the uncertainty surrounding AI in corporate governance, particularly around directors and officers' liability. The absence of standard AI exclusions in many D&O policies, driven by insurers' desire to maintain attractive offerings, calls for increased disclosure of AI use and the development of tailored coverage options, themes echoed in Counterpart’s approach. Additionally, global reinsurers like Munich Re have begun offering AI-specific policies, signalling an evolving market response to these challenges.

Counterpart’s proactive expansion of Affirmative AI Coverage and the addition of Technology E&O agreements represent significant steps in bridging the insurance protection gap for small businesses increasingly reliant on AI. Their solution offers a vital toolset for brokers and insureds navigating the uncertain terrain of AI liability, where traditional policies might leave clients exposed.

📌 Reference Map:

^[1], ^[2], ^[3], ^[4], ^[6], ^[7] (Reinsurance News, Businesswire, AI Journ, TheInsurer, Business Insurance) - Paragraphs 1, 2, 3, 4, 5, 6
^[5] (Harvard Journal of Law & Technology) - Paragraph 4

Source: Noah Wire Services

More on this

https://www.reinsurancene.ws/counterpart-expands-affirmative-ai-coverage-to-help-small-businesses-address-the-emerging-risk/ - Please view link - unable to able to access data
https://www.reinsurancene.ws/counterpart-expands-affirmative-ai-coverage-to-help-small-businesses-address-the-emerging-risk/ - Insurtech Counterpart has expanded its Affirmative AI Coverage and added a Technology E&O Insuring Agreement to address the new and complex risks many companies are now exposed to as a result of businesses adopting artificial intelligence (AI) tools. While reliance on AI tools grows, traditional insurance policies have largely failed to keep pace, often excluding coverage for the very technologies companies now depend on, Counterpart states. AI adoption among small businesses has surged, with 92% now using AI in some form, primarily for research, marketing, and customer support. Automated decision-making tools have quickly become part of daily operations, improving efficiency but also amplifying risk. Insurers are increasingly excluding AI-related risks and automated decision-making from coverage, a trend that leaves many businesses vulnerable, according to research from the Harvard Law Forum on Corporate Governance. Ommid C. Farashahi, Insurance Coverage Partner at BatesCarey LLP, said: “AI-related risks are rapidly evolving. Coverage is by no means guaranteed by traditional E&O, D&O, Cyber, and CGL policies, which are ‘silent’ on such exposures and may be mitigated through AI-related exclusions or other policy limitations. To avoid any potential gap in coverage, companies should consider affirmative cover for the concentric circles of AI-related liability.” As AI is still a gray area for many insurers, Counterpart argues its Affirmative AI Coverage directly addresses errors generated from first and third-party AI tools, removing uncertainty. “AI risks have moved from theory to the courtroom,” said Mike Muglia, Professional Liability Lead at Counterpart. “A lot of small business owners and startup leaders are using AI to work faster, process more information, and deliver a higher level of service, but they don’t always see the liability that comes with it.” He continued: “These endorsements give our brokers practical solutions for claims that come from everyday AI use, whether it’s bad outputs, decision errors, or machine-generated bias. As more businesses rely on AI to run and grow, these risks are only becoming more common.”
https://www.businesswire.com/news/home/20251121123510/en/Leading-Insurtech-Counterpart-Addresses-Critical-Coverage-Gap-With-Affirmative-AI-Coverage - Counterpart, a leading insurtech company, has expanded its Affirmative AI Coverage and introduced a Technology Errors & Omissions (E&O) Insuring Agreement to address emerging risks associated with businesses adopting artificial intelligence (AI) tools. As AI adoption among small businesses has surged, with 92% now using AI in some form, traditional insurance policies have often failed to keep pace, frequently excluding coverage for the technologies companies now depend on. This trend leaves many businesses vulnerable, as insurers are increasingly excluding AI-related risks and automated decision-making from coverage. Ommid C. Farashahi, Insurance Coverage Partner at BatesCarey LLP, highlighted the evolving nature of AI-related risks and the inadequacy of traditional policies in addressing these exposures. He emphasized the importance of companies considering affirmative cover for AI-related liabilities to avoid potential coverage gaps. Mike Muglia, Professional Liability Lead at Counterpart, noted that while many small business owners and startup leaders are leveraging AI to enhance efficiency and service delivery, they may not fully recognize the associated liabilities. He stated that the new endorsements provide brokers with practical solutions for claims arising from everyday AI use, including issues like inaccurate outputs, decision errors, and machine-generated bias.
https://aijourn.com/leading-insurtech-counterpart-addresses-critical-coverage-gap-with-affirmative-ai-coverage/ - Counterpart, a leading insurtech company, has expanded its Affirmative AI Coverage and added a Technology Errors & Omissions (E&O) Insuring Agreement to address the emerging risks associated with businesses adopting artificial intelligence (AI) tools. As AI adoption among small businesses has surged, with 92% now using AI in some form, traditional insurance policies have often failed to keep pace, frequently excluding coverage for the technologies companies now depend on. This trend leaves many businesses vulnerable, as insurers are increasingly excluding AI-related risks and automated decision-making from coverage. Ommid C. Farashahi, Insurance Coverage Partner at BatesCarey LLP, highlighted the rapidly evolving nature of AI-related risks and the inadequacy of traditional policies in addressing these exposures. He emphasized the importance of companies considering affirmative cover for AI-related liabilities to avoid potential coverage gaps. Mike Muglia, Professional Liability Lead at Counterpart, noted that while many small business owners and startup leaders are leveraging AI to enhance efficiency and service delivery, they may not fully recognize the associated liabilities. He stated that the new endorsements provide brokers with practical solutions for claims arising from everyday AI use, including issues like inaccurate outputs, decision errors, and machine-generated bias.
https://www.cov.com/-/media/files/corporate/publications/2023/09/ai-comes-to-the-board-room--harvard-journal-of-law-technology.pdf - The article discusses the emerging risks associated with the use of artificial intelligence (AI) in corporate governance, particularly focusing on directors and officers (D&O) liability. It highlights that while AI tools are increasingly being integrated into business operations, there is a lack of standard exclusions in D&O policies concerning AI-related claims. The authors suggest that insurers have not yet developed AI-specific exclusions due to the recent emergence of AI technologies and the desire to maintain attractive policy offerings. They recommend that directors disclose the use of AI tools in corporate processes to mitigate potential claims of fraudulent conduct. The article also notes that some insurers are moving to address AI-related risks, citing Munich Re's 'aiSure™' policy as an example. Overall, the piece emphasizes the need for clear disclosures and the development of appropriate insurance coverage to address AI-related liabilities.
https://www.theinsurer.com/ti/news/mga-counterpart-adds-affirmative-ai-cover-to-professional-liability-policies-2025-11-24/ - Counterpart, a managing general underwriter, has introduced expanded affirmative artificial intelligence (AI) coverage and a new technology errors and omissions (E&O) insuring agreement under its miscellaneous professional liability product. The new coverage provides protection for AI-generated mistakes, decision errors, and biased outputs, addressing emerging AI-related claims such as hallucinated reports, misclassified exposures, and flawed hiring recommendations. Underwriting is based on more than 2,000 data points used to evaluate governance, compliance, and responsible AI use. Policies are backed by insurers and reinsurers including Aspen, Markel, and Westfield Specialty. The article highlights the growing importance of addressing AI-related risks in professional liability insurance and the proactive steps taken by Counterpart to fill this coverage gap.
https://www.businessinsurance.com/counterpart-offering-expanded-ai-coverage/ - Counterpart, a managing general underwriter, has introduced expanded affirmative artificial intelligence (AI) coverage and a new technology errors and omissions (E&O) insuring agreement under its miscellaneous professional liability product. The new coverage provides protection for AI-generated mistakes, decision errors, and biased outputs, addressing emerging AI-related claims such as hallucinated reports, misclassified exposures, and flawed hiring recommendations. Underwriting is based on more than 2,000 data points used to evaluate governance, compliance, and responsible AI use. Policies are backed by insurers and reinsurers including Aspen, Markel, and Westfield Specialty. The article emphasizes the importance of addressing AI-related risks in professional liability insurance and the proactive measures taken by Counterpart to offer comprehensive coverage solutions.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 9

Notes: The narrative is recent, with the earliest known publication date being November 24, 2025. It has been republished across multiple reputable outlets, including Business Insurance and The Insurer, indicating a high freshness score. The narrative is based on a press release from Counterpart, which typically warrants a high freshness score. No discrepancies in figures, dates, or quotes were found. The content includes updated data and addresses emerging risks associated with AI adoption among small businesses. No similar content appeared more than 7 days earlier. The update justifies a higher freshness score but should still be flagged.

Quotes check

Score: 10

Notes: The quotes from Ommid C. Farashahi and Mike Muglia are unique to this narrative, with no identical matches found in earlier material. This suggests potentially original or exclusive content.

Source reliability

Score: 10

Notes: The narrative originates from Counterpart, a reputable insurtech company, and is supported by multiple reputable outlets, including Business Insurance and The Insurer. This indicates a high level of reliability.

Plausability check

Score: 10

Notes: The claims about the surge in AI adoption among small businesses and the corresponding risks are plausible and supported by industry research. The narrative is consistent with recent developments in the insurance industry, and the language and tone are appropriate for the topic. No excessive or off-topic details are present, and the tone is professional and consistent with corporate communications.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative is recent, with original quotes and a reliable source. The claims are plausible and supported by industry research, with appropriate language and tone. No significant credibility risks were identified.

Insurtech
AI liability
Small business insurance