AI Malpractice Insurance — Verisk Generative AI Exclusions and What They Mean for Firm Governance

More than half of the major insurers covering 80% of Am Law 200 firms have seen an increase in AI-related malpractice claims, and Verisk is introducing new generative AI exclusions into its general liability endorsements — exclusions that, if adopted broadly, could remove coverage for bodily injury, property damage, and personal and advertising injury arising out of generative AI. For law firm risk management, the Verisk exclusion programme transforms AI governance from an ethics and compliance issue into an underwriting issue: firms that cannot demonstrate documented AI oversight, supervision protocols, and governance infrastructure risk gaps in their professional liability coverage. The DraftWise briefing characterises the emerging insurance market shift as potentially reshaping coverage across the industry. The practical response for law firms is to treat AI governance documentation — AI use policies, supervision records, competence training logs, and vendor contract terms — not only as compliance infrastructure but as insurance underwriting documentation. Firms that can demonstrate a structured and auditable AI governance programme will be in a stronger underwriting position than those relying on informal or undocumented practices. This connects directly to the bar ethics obligations now being formalised in Alabama, New York, California, and other jurisdictions: the evidence of meeting the professional conduct standard for AI supervision is the same evidence that supports a favourable underwriting profile.