Active Insurance is Built to Dominate the AI Risk Landscape

Make no mistake about it: Coalition policies are, and always have been, designed to respond to artificial intelligence (AI) risks.

While much of the insurance industry treats AI as a terrifying, unquantifiable specter, we recognize it as a high-velocity evolution of the digital threats we’ve managed for nearly a decade.

We don't just cover AI risks. We’re built for them.

Market Failure: Two Paths to Obsolescence

The strength of an insurance policy is revealed by its carrier's reaction to innovation. Most carriers are currently choosing paths that prioritize their own risk aversion over the survival of their policyholders:

• Retreat: Blanket AI exclusions are a structural failure. In a world where AI is integrated into every modern software stack, an absolute exclusion is a ticking time bomb. AI exclusions allow carriers to nullify claims based on the presence of a tool, even when human oversight was the primary driver.

• Strategic silence: Many carriers have chosen a wait-and-see approach, avoiding AI in their policy wording altogether. This is a tactical delay that forces businesses to endure the crushing cost and uncertainty of a legal battle just to find out if their insurance safety net exists.

Most carriers are currently choosing paths that prioritize their own risk aversion over the survival of their policyholders.

Affirmative Clarity: The Coalition Standard

We eliminate the ambiguity tax. Coalition explicitly defines how existing coverage applies to modern technology, ensuring that a security failure is covered regardless of whether the threat actor used a legacy script or a generative model.

We proactively turn potential legal debates into contractual guarantees. By being affirmative, we eliminate the gray area that other carriers use to narrow coverage, ensuring the policy performs exactly as intended from day one.

Understanding AI Risks: Vector vs. Peril

Understanding AI risk requires a clinical distinction between the vector (the route a threat takes) and the peril (the cause of the loss).

• AI as a vector: In a deepfake scam, AI is simply the delivery method for fraud. Because we already cover the underlying peril (fraud), the AI-powered version is already within our coverage scope.

• AI as a peril: When an AI agent takes autonomous action (like accidentally deleting a database), the technology itself becomes the peril.

Our stance is unwavering: AI is a tool of the business, even when it acts as an autonomous engine of loss. We prioritize the impact of the event over the specific mechanics of the tool involved. Whether a failure originates with a human or an AI model, the consequences are real, and our coverage is built to absorb them.

Proven Performance: Traditional vs. AI-Driven Claims

Coalition's insuring agreements are purpose-built to respond to both traditional and AI-driven incidents:

AI is a tool of the business, even when it acts as an autonomous engine of loss.

Reinforcing the Shield: Targeted Protection

We’ve introduced two layers of AI-specific protection, both designed to sharpen our policy’s response to AI-driven claims and provide specialized capabilities that standard insurance simply cannot match.

• Affirmative AI Coverage (base policy): After hearing persistent concerns about prompt injections and the gray area of model hallucinations, we enhanced our policy language to reduce confusion. Our Active Cyber Policy explicitly defines a Security Failure to include AI-specific events and ensures a business does not have to argue that an LLM failure constitutes a wrongful act because it has already been contractually agreed upon.

• Deepfake Response Endorsement (auto-attached): Although reimbursement for deepfake-driven FTF events is covered by our core cyber policy, we also observed deepfakes being used to cause reputational damage and expanded our coverage as a result. This endorsement introduces a new triggering event definition specifically for deepfakes, providing immediate access to a specialized panel service to mitigate the reputational impact of deepfake incidents. This panel provides the forensics to evaluate a suspected deepfake file, the legal assistance to remove the content from the web, and the crisis communication expertise to help manage the fallout.

Adding these targeted protections doesn't narrow the policy; it weaponizes it. We offer a floor of specialized support for emerging threats without ever retreating from our mission of protecting the unprotected.

AI Risk Guidance for Business Leaders

Don't wait for your renewal to find out you're self-insuring your most significant technological shift. Every business leader should be asking their broker:

1. Does this policy have an “absolute” exclusion for AI? (If yes, your standard coverage may be insufficient.)

2. If we’re targeted by a deepfake, can we access forensic and PR support through our insurance, or just reimbursement if money is fraudulently transferred?

3. Is my cyber insurance provider “silent” or “affirmative” on AI-driven risk?

Insurance should be the shock absorber for fast-evolving innovation. Businesses should be free to use AI to scale and improve efficiency without wondering if their insurance policies will respond.

At Coalition, we’ve built an insurance product that’s as smart as the technology it covers.

INNOVATIVE COVERAGE. EXPANDED PROTECTION.

Coalition's Active Cyber Policy

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