Direct answer
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.
Carrier Endorsement Details
Excludes bodily injury, property damage, and personal/advertising injury arising out of generative AI under Coverage A and Coverage B. Part of the January 2026 ISO edition; companion forms address narrower scopes: CG 40 48 (Coverage B / personal and advertising injury only) and CG 35 08 (products and completed operations).
Key Provisions
Excludes BI and PD (Coverage A) and personal/advertising injury (Coverage B) arising from generative AI
Companion form CG 40 48 limits the exclusion to Coverage B only
Companion form CG 35 08 applies the exclusion to products/completed operations
Applies regardless of whether AI is owned, licensed, or embedded
Type: exclusion Policies: CGL
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
Absolute exclusion — no coverage for any AI-related claim
Applies to claims 'based upon, arising out of, or attributable to' AI
Covers owned, licensed, and third-party AI systems
No carve-back for incidental AI use
Type: exclusion Policies: D&O, E&O, Fiduciary
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.
Disclaimer: This content is provided for informational purposes only and does not constitute legal advice. AI regulations and insurance policy terms change frequently. Consult with a qualified attorney or insurance professional for advice specific to your situation. Gridex makes no warranties regarding the accuracy or completeness of this information.