Does shadow AI trigger insurance exclusions?
Answer
Potentially, yes. Because broad AI exclusions such as Verisk CG 40 47 and Berkley PC 51380 apply to AI use without requiring it to be authorized, a claim involving shadow AI may fall within the same exclusion as sanctioned use. The outcome depends on the policy wording and the facts of the claim, not on whether the tool was officially approved.
Yes. AI exclusion endorsements like Verisk CG 40 47 and Berkley PC 51380 apply to all AI use — including unsanctioned shadow AI tools — meaning unauthorized employee AI use can void coverage.
Sources checked
- Independent Agent — Verisk to roll out new GL exclusions for generative AI last checked 2026-05-31
- PropertyCasualty360 — General liability endorsements: generative AI last checked 2026-05-31
- W.R. Berkley (carrier site) last checked 2026-03-20
Scope
General business and insurance-risk analysis, not legal advice. Unauthorized AI use can raise its own liability and governance issues independent of coverage; the insurance risk is that coverage you assumed applies may not respond to a shadow-AI claim. Shadow AI is generally not carved out of the exclusion — broad forms reach it, and wording that excludes claims 'arising out of' AI use does not typically condition on authorization. This is relevant wherever the Verisk and Berkley forms have been filed or adopted; the outcome still depends on the policy wording and facts. Confirm specifics with your broker.
Operational implication
The exposure is concentrated in what you cannot see: tools adopted by individuals outside any policy or review. Surfacing and documenting AI use reduces the gap between assumed and actual coverage.
Carrier Endorsement Details
Verisk — CG 40 47
Excludes bodily injury, property damage, and personal/advertising injury arising out of generative AI content, output, or interaction.
Key Provisions
W.R. Berkley — PC 51380
Absolute AI exclusion for D&O, E&O, and Fiduciary Liability — eliminates coverage for any claim "based upon, arising out of, or attributable to" AI use.
Key Provisions
Where this lands operationally
Gridex turns the compliance or coverage question into operated workflow controls: intake, review points, audit trails, and the places a person stays in the decision.
Map This Workflow With Gridex
Establish a recurring way to surface new AI tools across teams and record who uses what for which task, so shadow AI is documented rather than discovered during a claim.
Map This Workflow With Gridex →Related Questions
- Do AI exclusions cover shadow AI? Yes. AI exclusion endorsements like Verisk CG 40 47 and Berkley PC 51380 use broad language covering any AI use, including unsanctioned shadow AI tools used by employees without authorization.
- What is shadow AI? Shadow AI refers to artificial intelligence tools and services used by employees without IT department knowledge or organizational approval — including ChatGPT, AI writing assistants, and AI-powered browser extensions.
- What is Verisk CG 40 47? Verisk CG 40 47 is a CGL policy endorsement that excludes coverage for bodily injury, property damage, or personal/advertising injury arising out of AI systems.
- What does Berkley PC 51380 exclude? Berkley PC 51380 is an absolute AI exclusion for professional and management liability (D&O, E&O, Fiduciary) that eliminates coverage for any claim based upon, arising out of, or attributable to AI use.
- What AI documentation do insurers require? Insurers increasingly want documented AI governance programs, risk assessments, and usage inventories when underwriting technology-related policies. Hamilton's sublimit endorsement explicitly rewards governance documentation with higher coverage limits.