Does Cyber Insurance Cover AI Data Breaches?

An AI-related data breach can occur if information submitted to a model is disclosed, a connected account is compromised, or a provider’s systems are breached. Cyber coverage may address forensic investigation, legal advice, notification, and resulting liability when the facts fit the policy. FTC guidance identifies these types of response costs and asks businesses to consider attacks on data held by vendors, but the policy must include the particular data and service involved.

Check whether prompts, uploaded files, customer records, and model logs meet the definition of protected information. Confirm coverage for data held by an AI vendor, the event trigger, approved response providers, and any sublimit for notification or regulatory proceedings. Read exclusions for voluntary disclosure and contractual liability, and distinguish a privacy breach from a model error or IP dispute. Review notice deadlines in both the policy and vendor agreement.