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Common industry risks   

Understanding the risks in your industry and how our comprehensive coverage responds to protect your business.

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The Risks

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Risks Response

Management Liability

An AI business faces staff disputes, employee data complaints, regulatory inquiry, or internal fraud

Management Liability may respond to employment, statutory, crime, tax audit and inquiry cost claims.

Technology Liability Insurance

A system outage, cyber event or platform failure disrupts your operations and results in claims or losses for your business and clients.

Technology Liability Insurance may respond to claims arising from professional errors, cyber incidents and business interruption losses.

Funds Transfer Fraud

A fraudulent email or spoofed instruction tricks your team into transferring funds to a scammer, resulting in direct financial loss.

Cyber Insurance may respond to losses arising from funds transfer fraud where a fraudulent electronic instruction causes a payment loss.

Cyber Insurance

Unauthorised access to your AI platform exposes training, user or employee data and triggers legal and regulatory action.

Cyber Insurance may respond to breach response costs, legal expenses, damages and regulatory penalties arising from a data breach or privacy liability.

Professional Indemnity

A model error, flawed output or failed integration causes client loss and a formal dispute over your professional services.

Professional Indemnity Insurance may respond to claims of alleged negligence or errors in your professional services, including defence costs.

Management Liability

The Risks

An AI business faces staff disputes, employee data complaints, regulatory inquiry, or internal fraud

Risks Response

Management Liability may respond to employment, statutory, crime, tax audit and inquiry cost claims.

Technology Liability Insurance

The Risks

A system outage, cyber event or platform failure disrupts your operations and results in claims or losses for your business and clients.

Risks Response

Technology Liability Insurance may respond to claims arising from professional errors, cyber incidents and business interruption losses.

Funds Transfer Fraud

The Risks

A fraudulent email or spoofed instruction tricks your team into transferring funds to a scammer, resulting in direct financial loss.

Risks Response

Cyber Insurance may respond to losses arising from funds transfer fraud where a fraudulent electronic instruction causes a payment loss.

Cyber Insurance

The Risks

Unauthorised access to your AI platform exposes training, user or employee data and triggers legal and regulatory action.

Risks Response

Cyber Insurance may respond to breach response costs, legal expenses, damages and regulatory penalties arising from a data breach or privacy liability.

Professional Indemnity

The Risks

A model error, flawed output or failed integration causes client loss and a formal dispute over your professional services.

Risks Response

Professional Indemnity Insurance may respond to claims of alleged negligence or errors in your professional services, including defence costs.

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Important: Scenarios are examples only. Coverage is subject to policy terms, conditions and exclusions. Limits and sub-limits might apply. Policy wordings vary between insurers. Refer to the PDS or Policy Wording for details.

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Products

Coverages for Artificial Intelligence

Professional Indemnity, Management Liability, and more for Artificial Intelligence businesses from leading insurers

Management Liability

Bundled insurance for executives and boards incl D&O, EPL, Statutory Liability and Tax Liability insurance

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IT Liability

Covers Professional Indemnity and Public & Products liability for tech service providers

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Intellectual Property

Covers claims from copyright, patent, and trademark disputes. This can be included in Professional Indemnity insurance

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Cyber & Technology

Includes Professional Indemnity and Cyber & Technology Liability insurance for tech businesses

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Claim examples

Artificial Intelligence claim examples

Real-world examples of common claims AI businesses may face.

Intellectual Property Dispute
SCENARIO

A third party alleges an AI system was trained using copyrighted material without permission. The claimant pursues legal action for intellectual property infringement and associated financial loss.

WHY IT’S COVERED

Information Technology Liability Insurance may respond to intellectual property infringement claims arising from technology services, including defence costs. Standalone Intellectual Property Insurance may also provide broader cover.

Data Privacy Incident
SCENARIO

An AI platform experiences unauthorised access to training data containing personal information. Affected individuals allege privacy breaches and the business incurs legal costs responding to claims and regulator enquiries.

WHY IT’S COVERED

Cyber & Technology Insurance may respond to claims or regulatory investigations arising from privacy breaches, data security failures or unauthorised access, including defence and associated legal costs.

Client Disputes Project Outcomes
SCENARIO

An AI consultancy delivers a machine learning solution that does not perform as specified in the contract. The client claims the solution failed to meet agreed requirements and seeks damages for lost revenue.

WHY IT’S COVERED

Information Technology Liability Insurance may respond to claims alleging failure to perform services as agreed, errors or omissions in service delivery, or unintentional breach of contract, including defence costs.

AI Model Error Causing Loss
SCENARIO

An AI developer provides a predictive model used by a client to automate pricing decisions. A flaw in the model produces inaccurate outputs, causing the client financial loss. The client alleges negligence and seeks compensation.

WHY IT’S COVERED

Information Technology Liability Insurance may respond to claims arising from errors or failures in AI or technology services, including where inaccurate outputs lead to financial loss, including defence costs.

SCEANRIO

A support worker gave a participant the wrong medication due to a mislabeled pillbox. The participant experienced severe drowsiness and dehydration, requiring overnight hospitalization.

WHY IT'S COVERED

Costs included $8,200 for hospital and rehabilitation, $12,500 for legal defence, and a $7,500 settlement to resolve the claim out of court.

Intellectual Property Dispute

SCENARIO

A support worker gave a participant the wrong medication due to a mislabeled pillbox. The participant experienced severe drowsiness and dehydration, requiring overnight hospitalization.

WHY IT’S COVERED

Costs included $8,200 for hospital and rehabilitation, $12,500 for legal defence, and a $7,500 settlement to resolve the claim out of court.

SCENARIO

A support worker gave a participant the wrong medication due to a mislabeled pillbox. The participant experienced severe drowsiness and dehydration, requiring overnight hospitalization.

IS THIS COVERED?

Costs included $8,200 for hospital and rehabilitation, $12,500 for legal defence, and a $7,500 settlement to resolve the claim out of court.

SCEANRIO

A third party alleges an AI system was trained using copyrighted material without permission. The claimant pursues legal action for intellectual property infringement and associated financial loss.

IS THIS COVERED?

Information Technology Liability Insurance may respond to intellectual property infringement claims arising from technology services, including defence costs. Standalone Intellectual Property Insurance may also provide broader cover.

Intellectual Property Dispute
SCEANRIO

An AI platform experiences unauthorised access to training data containing personal information. Affected individuals allege privacy breaches and the business incurs legal costs responding to claims and regulator enquiries.

IS THIS COVERED?

Cyber & Technology Insurance may respond to claims or regulatory investigations arising from privacy breaches, data security failures or unauthorised access, including defence and associated legal costs.

Data Privacy Incident
SCEANRIO

An AI consultancy delivers a machine learning solution that does not perform as specified in the contract. The client claims the solution failed to meet agreed requirements and seeks damages for lost revenue.

IS THIS COVERED?

Information Technology Liability Insurance may respond to claims alleging failure to perform services as agreed, errors or omissions in service delivery, or unintentional breach of contract, including defence costs.

Client Disputes Project Outcomes
SCEANRIO

An AI developer provides a predictive model used by a client to automate pricing decisions. A flaw in the model produces inaccurate outputs, causing the client financial loss. The client alleges negligence and seeks compensation.

IS THIS COVERED?

Information Technology Liability Insurance may respond to claims arising from errors or failures in AI or technology services, including where inaccurate outputs lead to financial loss, including defence costs.

AI Model Error Causing Loss
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Important: Scenarios are examples only. Coverage is subject to policy terms, conditions and exclusions. Limits and sub-limits might apply. Policy wordings vary between insurers. Refer to the PDS or Policy Wording for details.

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FAQs

Artificial Intelligence insurance queries

How do I make a claim?

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You should notify your insurer as soon as you become aware of a claim or circumstance that may give rise to a claim which could include a client complaint, you discovering an incident or an allegation of harm. Claims should be made in writing and handled in line with the claims notification requirements which will be outlined in your policy wording.
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How do I make a claim?

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What is a Certificate of Currency?

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A Certificate of Currency is issued by an insurance company and is something you can use as proof that your existing insurance policy is valid. It contains all the information regarding your policy. You may be asked from time to time to prove your insurance - for loans to your business, for landlords of your premises, or for certain clients you might have. The moment you purchase your insurance from upcover you can send your proof of insurance to whoever requires it, at just a click of a button.
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What is a Certificate of Currency?

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How quickly do I need to report an incident to my insurer?

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You should notify your insurer as soon as you become aware of any incident, claim, or circumstance that may give rise to a claim. Professional Indemnity insurance typically operates on a "claims made and notified" basis, meaning both the claim must be made against you AND you must notify the insurer during the active insurance period (or discovery period if applicable). Late notification after policy expiry may not be covered unless you have purchased an extended discovery period. Prompt notification is essential to protect your rights under your insurance.
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How quickly do I need to report an incident to my insurer?

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What is a retroactive date?

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A retroactive date is the earliest date from which a claim can arise and still be covered under your policy. Professional Indemnity and certain other claims-made policies will only respond to claims arising from acts, errors or omissions that occurred on or after the retroactive date listed in your policy schedule. If an incident occurred before your retroactive date, it typically will not be covered even if the claim is made during the current policy period. Maintaining continuous cover without gaps helps protect your retroactive date — check your policy schedule or ask your broker if you are unsure of your retroactive date.
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What is a retroactive date?

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What factors might impact the cost of policy premiums of insurance for AI businesses?

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Several factors can impact the cost of policy premiums for AI businesses in Australia. These include the type of coverage your business activity requires, such as Professional Indemnity, Public and Products Liability, or Cyber insurance, which can all be included inside an Information Technology policy. The nature and scope of your business activities, the services you provide, and the sensitivity of the data you hold may also affect your premium. Other contributing factors include annual turnover, number of employees, location, claims history, and the cover limits and applicable excess you select. Because each business is different, costs can vary significantly, and premiums may change at renewal in line with risk and claims experience.
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What factors might impact the cost of policy premiums of insurance for AI businesses?

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Do AI developers need Professional Indemnity insurance?

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Professional Indemnity Insurance is designed to cover claims arising from professional negligence, errors or omissions in the services you provide. While it is not a legal requirement for AI developers in Australia, it is commonly held by AI developers across Australia. Many clients, professional associations and booking platforms may expect you to hold current Professional Indemnity cover before engaging your services. Without this type of cover, you could be personally liable for legal costs and compensation claims. Speaking with an insurance broker can help you understand the level of cover appropriate for your circumstances.
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Do AI developers need Professional Indemnity insurance?

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