AI Exclusions in Contractor Insurance: What Changed in 2026
No, and it never did. A standard general liability policy pays for injuries and property damage you cause, not for a job you priced too low, so a bad estimate was never an insurance claim, whether you wrote it on a legal pad or in a chatbot. What changed in January 2026 is narrower: new optional exclusions let your insurer refuse injury and damage claims that arise out of generative AI.
This is general information, not insurance or legal advice. Your policy and your agent are the final word.
Your liability policy never covered a mispriced estimate
Commercial general liability, the policy most contractors carry to get licensed and land jobs, responds to bodily injury and property damage caused by an accident, plus a narrower set of personal and advertising injury claims like defamation. An underbid kitchen is none of those. When you leave $4,000 of cabinets off an estimate, nobody is hurt and nothing is damaged; you are simply out $4,000.
Insurance people call that business risk, and the policy is built to leave it with you. As the International Risk Management Institute explains, a CGL does not pay economic damages from professional services, such as delay costs or redesign. That is the job of contractor's professional liability, a separate policy that many small residential shops never buy.
So the honest answer to the question in the title has nothing to do with AI. The number on the estimate was always yours to get right.
What the January 2026 AI exclusions actually say
Verisk's ISO division, which writes the standard forms most insurers build their policies on, released three generative AI exclusions with an edition date of January 2026. According to the Independent Insurance Agents and Brokers of America, CG 40 47 removes coverage for bodily injury, property damage and personal and advertising injury arising out of generative AI. CG 40 48 removes only the personal and advertising injury part.
The third, CG 35 08, does the same job in the products and completed operations coverage, the part of the policy that answers for your work after you have finished and left. The forms define generative AI broadly: a machine-based system trained on data that can create content, including text, images, audio, video or code. A chatbot qualifies, and so does an AI feature built into software you already use.
All three are optional. An insurer has to choose to attach one, and your policy changes at renewal, not overnight.
Where AI on your job can actually turn into a claim
The exclusions matter where AI touches something that can hurt a person, damage a house or harm someone's reputation, and the estimate is rarely that place. The riskier uses are the ones contractors think about least: marketing copy and images, and the technical instructions a crew follows on site. Cohen Seglias, a law firm that represents construction clients, named a hallucinated building specification as exactly the kind of claim the exclusion may bar.
Here is an example rather than a real case. A deck builder asks a chatbot for a ledger fastening schedule, the crew follows it, and a year later the deck pulls away from the house. Before an AI exclusion, that is a textbook completed operations claim. With CG 35 08 attached, the insurer has an argument that the loss arose out of generative AI.
| What happened | General liability before | With an AI exclusion attached |
|---|---|---|
| You underbid a job using AI numbers | Not covered: business loss | Not covered: nothing changed |
| AI-written ad copies a competitor's slogan and they sue | Often covered as advertising injury | Could be excluded (CG 40 47 or CG 40 48) |
| An AI-drafted install detail leads to water damage after you finish | Often covered as completed operations | Open to an exclusion argument (CG 35 08) |
| Your own crew member is hurt following AI-written safety steps | Workers' comp, not general liability | Workers' comp, not general liability |
One honest limitation: almost none of this has been tested in court yet. Lawyers expect fights over how loose a connection to AI is enough, so until those cases come down, read the exclusion as broad.
The estimate is the safest place to use AI, if every number is yours
Here is where we land, and some contractors will disagree: using AI on your estimate is a smaller insurance worry than using it on your ads or your install details. A wrong number on an estimate costs you money, which was never insured. A wrong instruction in the field can cost someone a ceiling, which was.
That does not make AI pricing safe. It makes it uninsured, which is why we argued in what AI gets wrong on a contractor's estimate that it should check the work, not set the price. The protection is the same in every case: a person reads every line before it leaves, and nothing goes out on the strength of a chatbot alone.
That is how we built Hank AI, the assistant inside Jobkore. He starts from your own catalog and default labor rate, his changes show on the estimate for you to read, and he has no way to send anything to a client. You send it.
A review will not automatically defeat an exclusion written around "arising out of," but it keeps the mistake from happening, which beats arguing about it later.
What to ask your agent before your next renewal
Most contractors never see the endorsements on their policy; they see the certificate a client asks for. Ask your agent for the full forms schedule, the list of every endorsement by number, and look for CG 40 47, CG 40 48, CG 35 08 or a carrier's own AI exclusion under a different number. As of fall 2026, adoption is uneven: some carriers have filed to use the forms and others have not.
If one is there, ask whether it reaches AI built into software you use, not just tools you open yourself. Ask whether a professional services exclusion is already on the policy, because that one has been removing design-related coverage for years. If you do any design work, ask what contractor's professional liability would cost.
We are not insurance agents, and your policy wording is what counts. The point is to know before a claim, not after.
While you are at it, look at the terms and conditions on your estimates. They are the other half of how a pricing dispute gets settled, and unlike your policy, you wrote them.
This week: get your forms schedule
Email your agent and ask for the complete forms and endorsements schedule on your general liability policy, plus your renewal date. Read it with this post open and circle any exclusion with "artificial intelligence" or "professional services" in its name. Then write down every place AI touches your business: estimates, ads, website copy, photos, install notes. Anything on that list that could hurt a person or damage a house gets a human check before it leaves your hands.
It is the most boring email you will send this month, and the one most likely to matter on the day something goes wrong.
Frequently Asked Questions
Does general liability insurance cover AI mistakes?
It depends on the mistake and the policy. General liability covers bodily injury, property damage and advertising injury, never money you lose on a bad price. Since January 2026, insurers can also attach optional ISO exclusions that remove coverage for injury and damage claims arising out of generative AI.
What is the difference between CG 40 47 and CG 40 48?
CG 40 47 excludes bodily injury, property damage and personal and advertising injury arising out of generative AI. CG 40 48 excludes only personal and advertising injury, such as defamation or copyright claims over AI-made content. A third form, CG 35 08, applies the exclusion to products and completed operations.
Is the AI exclusion on every contractor insurance policy?
No. The ISO forms are optional, so an insurer has to choose to attach one, usually at renewal, and adoption is uneven across carriers. The only way to know is to ask your agent for the full forms schedule and look for an exclusion with artificial intelligence in its name.
Does insurance cover an underbid or mispriced estimate?
No, and it never did. Losing money on a job you priced too low is a business loss, not bodily injury or property damage, so general liability does not respond. That stays true whether a person or an AI tool wrote the number, which is why every price needs your own review.
Do contractors need separate AI insurance?
Most small residential contractors do not need a dedicated AI policy. Start by finding out whether your general liability carries an AI exclusion, and keep AI away from anything that could injure someone or damage property without a person checking it first. If you do design work, ask about professional liability.
