AI and your professional indemnity cover: a question worth asking

5 days ago
3 min read

Updated: 4 days ago

Introduction

A professional firm that begins using these tools in its work has changed how its advice is produced. The advice is still checked, still signed, and still the firm's responsibility, and most people reasonably assume their existing cover responds as it always did. That assumption is worth testing rather than making, because insurance responds to the terms of the policy rather than to reasonable assumptions.

The market is moving on this. Some insurers are silent, some are asking questions at renewal, and a few have begun introducing specific wording. Silence in a policy is not the same as cover, and the moment to establish the position is before a claim rather than during one.

1. AI and your professional indemnity cover is a question for your broker

Ask it explicitly and in writing.

Whether the policy responds to a claim where these tools were used in producing the work, whether there are conditions attached, and whether it must be disclosed. A written answer is what you want.

2. Check the disclosure position at renewal

Where problems begin.

If the proposal form asks about your working methods, systems or processes, a material change may need disclosing. Non-disclosure of something material can affect a claim regardless of whether it caused the loss.

3. Read any new wording carefully

The market is introducing it.

Exclusions or conditions specific to the use of automated or generative systems are beginning to appear. These may be narrow or broad, and the difference matters considerably to a firm that has adopted them.

4. Understand that responsibility does not transfer

The underlying principle.

Advice produced with the assistance of a tool is your advice. The client engaged you, the duty is yours, and no arrangement with a software vendor changes that. This is consistent across professional regimes.

5. Check your professional body's position

A separate obligation.

Many regulators and professional bodies have issued guidance on the use of these tools in professional work, covering supervision, competence, confidentiality and disclosure to clients. This may impose requirements beyond insurance.

6. Document your supervision and checking

Useful evidence either way.

Records showing that output was checked, by whom, against what, and that a competent person exercised judgement. This supports both a defence and an insurance position, and its absence is difficult to explain afterwards.

7. Consider the confidentiality dimension separately

A different exposure.

A breach of client confidentiality through a third-party service may engage different cover from a professional negligence claim, and possibly none. Cyber and data cover are separate policies with separate terms.

8. Ask what happens with a subcontracted supplier

Frequently overlooked.

If a supplier or subcontractor uses these tools in work you are responsible for, your position depends on your contract with them and their own cover. This is worth establishing rather than assuming.

9. Review the position annually

Both the market and your use will change.

What you do with these tools this year is different from last year, and the insurance market is changing faster than usual. An annual conversation at renewal is proportionate.

Insurance terms, professional regulation and the duties owed to clients vary substantially by jurisdiction and by profession, and the position on these tools is developing. Nothing here substitutes for your own policy wording, your broker's advice and your professional body's current guidance.

Conclusion

Put the question to your broker in writing, because silence in a policy is not the same as cover.

Check whether a change in working methods needs disclosing at renewal, read any new exclusions or conditions specific to these systems, understand that professional responsibility for the work remains yours, check your professional body's guidance which may go further than insurance, document supervision and checking as evidence, treat confidentiality and data exposure as a separate cover question, establish the position where suppliers use these tools in your work, and revisit the whole question each year.