Insurance is a necessity for every company in 2025. Whether it’s company liability insurance, public liability insurance, or professional liability insurance, if you’re running a company, it’s essential that you’re covered from any unforeseen risks.
Even for new businesses, where the budget is a little tighter, there’s no excuse to avoid protecting yourself. Depending on the type of work you do, for instance, professional liability insurance at NextInsurance.com can cost as little as $19 – a particularly strong investment when considering insurance companies pay more than $22 million in business claims every day.
The business and insurance landscape has always been this way, but if anything, attaining insurance has become even more important than ever. This is especially true when noting the AI uptake that has been observable over the last two years.
According to a recent study, over 50% of US companies are currently using AI, with a further 42% interested in ‘exploring AI’ in the next twelve months. But while artificial intelligence is undoubtedly revolutionizing industries, transforming business operations, and creating new efficiencies across the board, it is also reshaping the landscape of business liability.
AI Increasing Risk of Business Liability
Because AI tech is still in its early stages, companies now face unique risks tied to its capabilities – including errors and ethical implications. AI systems, while powerful, are not infallible.
A number of errors can occur in AI algorithms that can lead to significant consequences, such as misdiagnoses in healthcare, bias or discrimination in hiring or lending decisions, or even product recalls caused by AI-driven manufacturing errors. These issues introduce a whole new category of liability, where businesses may be held accountable for outcomes influenced solely by AI errors.
Data privacy is another big concern. AI relies on massive amounts of data to operate, and this data can easily involve sensitive customer information. Breaches or misuse of this data can lead to legal claims and regulatory fines, with companies having to comply with privacy laws such as GDPR or CCPA.
Even if the claims are payable by your company, more people than ever are aware of data privacy, which means you’ll face unprecedented reputational damage. In another important study, it was revealed that 60% of companies go out of business within six months of a data breach, and this is largely down to customers turning away due to fear of being unsafe and unprotected.
How to Implement AI Effectively
If you’re planning on implementing AI into your business operations, it needs to be done effectively, both from a practical and liable standpoint. This can largely be done by reducing exposure to AI-related risks. Make sure you’re continuously monitoring and testing your AI systems for accuracy, fairness, and ethical compliance, and be as transparent as possible to both customers and stakeholders about how AI is used in decision-making.
As well as this, you should invest in robust cybersecurity measures to safeguard sensitive data, ensuring it remains protected from breaches or unauthorized access. In order for AI to be implemented effectively, it’s also essential to provide training for your employees. Ensure your team understands how to work alongside AI tools, interpret AI-driven insights, and identify potential issues, such as bias or inaccuracies.
Along with this, you should be creating a framework that clearly defines who is accountable for the outcomes of AI decisions, whether that’s an internal AI team, a compliance officer, or an external partner. This will then help if an unforeseeable event does bring a claim against you, as you can communicate with legal and insurance experts to identify risks – and who is accountable for those risks – proactively in order to secure adequate liability coverage.
Conclusion
There’s no doubt that AI is a game changer in the business landscape, and largely for positive reasons. But as with anything that shakes up traditional business operations, it carries a lot of risks along with it. It’s your job to understand and recognize` those risks, and put the right steps in now to protect your business.