ABSTRACT
This Essay predicts that concerns about the insurability and insurance of AI liability will prove to be either exaggerated or unwarranted as the future unfolds. AI liability is already covered by a number of existing forms of ‘silent’ liability insurance. We also predict the growth of ‘affirmative’ AI insurance that expressly covers specified AI losses. There are already tiny bits of such insurance. That is how cyber insurance began, and it is now a thriving, $16.5 billion business in the US alone. We believe that affirmative AI insurance will develop in a similar fashion, and that courts should anticipate such a development. With these insights and predictions on the table, we argue that AI liability and insurance issues should be analyzed in discrete categories that will render resolution of the issues manageable, and consideration of the availability of insurance concrete and therefore most feasible. Liability for bodily injury and property damage involving AI, for example, need not have unavoidable implications for other forms of liability. In short, pessimism is not warranted because the insurance market will fill the need for AI coverage, just as it has in the past for other new forms of liability.
Sharkey, Catherine M and Abraham, Kenneth S, Insurance and the Law of Artificial Intelligence (November 4, 2025), Insurance Law Journal (January 2026); NYU Law and Economics Research Paper Forthcoming; NYU School of Law, Public Law Research Paper Forthcoming; Virginia Law and Economics Research Paper No 2025-74.
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