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Board Liability in the Age of AI: A 2025 Guide to AI D&O Insurance

  • Writer: Steven Barge-Siever, Esq.
    Steven Barge-Siever, Esq.
  • May 24
  • 4 min read

By Steven Barge-Siever, Esq.

Upward Risk Management’s AI Practice


As artificial intelligence transforms how companies build, operate, and compete One thing hasn’t changed: director and officers are still responsible when things go wrong.


As AI permeates every aspect of business strategy, boards are being pulled into the crosshairs - facing liabilities from disruptive technologies that traditional, standard D&O coverage may not fully contemplate.


This guide is designed to help founders, GCs, and investors understand how director and officer liability changes when machine learning enters the picture - and how to ensure D&O insurance is structured to actually work in today’s environment.


Download the full guide here: AI D&O Insurance Guide – PDF



AI D&O - The Age of AI Insurance Guide

Why This Matters

AI startups are under a new kind of scrutiny. The SEC has already signaled that inflated claims about AI capabilities ("AI Washing") can amount to securities fraud. Lawsuits are now reaching past product errors and targeting the boardroom - raising serious questions about whether your AI D&O policy is ready.


What used to fall under Tech E&O or Cyber is now showing up in AI D&O. Because it’s no longer just about the technology failing - it’s about why leadership greenlit it in the first place.


Directors aren’t just overseeing innovation anymore. They’re being held accountable for it.


Litigation Trends Reshaping Board Liability

AI-driven litigation is rising - and not just from bad predictions or biased algorithms. The real action is happening in disclosures, governance, and misrepresentation.


Case in Point: Mobley v. Workday

Workday didn’t hire the plaintiff. But their AI hiring tool allegedly enabled systemic discrimination. The lawsuit proceeded - not just against the employer, but against Workday itself.


Why it matters: The courts are carving out new paths for liability when AI is involved, and boards are in the spotlight.



Case in Point: SEC v. Jordan-Jones

A startup CEO raised $500K claiming he built a blockchain-based platform. In reality, the product didn’t exist - and the funds went to personal expenses. The SEC and DOJ brought civil and criminal charges.


Why it matters: As tech hype outpaces reality, founders face real D&O exposure for exaggerating product readiness — especially in emerging sectors like AI and blockchain.



6 Common Gaps in AI D&O Insurance

  1. Professional Services Exclusions: AI platforms that provide insights or recommendations may be classified as advice - limiting coverage.

  2. Tech E&O Deflection: Some D&O carriers try to push claims into Tech E&O - even when the board is clearly involved.

  3. Contractual Liability Carveouts: SLAs and MSAs may open up liability that D&O doesn’t cover.

  4. Silent Oversight Exclusions: Ambiguity around governance failures leaves critical gaps - especially for board claims.

  5. Regulatory Sublimits: SEC, FTC, and EEOC investigations are often partially or completely excluded.

  6. Insufficient Side A Excess: If indemnification fails (e.g., in bankruptcy or derivative suits), personal protection evaporates.


Use our Policy Review Tool to find these before a claim does.


How Underwriters "Rate" AI Risks

AI companies aren’t just judged by their sector - they’re underwritten based on how deeply AI is embedded in their product, operations, and public claims. Underwriters look past buzzwords to assess model risk, regulatory exposure, and the credibility of your technical narrative.

Factor

Risk Signal

Capital Raised

High capital = bigger claims, more scrutiny

Industry

Healthcare, finance, and regulated sectors face higher litigation risk

Public AI Claims

Unsubstantiated claims = red flag for SEC & plaintiffs

Model Explainability

“Black box” logic = higher defense cost

Use of Third-Party LLMs

Raises indemnity and data provenance concerns

Board Oversight

Weak governance increases risk perception

Claims History

Prior investigations increase premiums


AI D&O Pricing Benchmarks (2025)

D&O pricing for AI companies is no longer guesswork. In 2025, carriers are applying distinct pricing tiers based on use case, revenue, funding stage, and perceived risk severity. Here’s how the market is shaping up.

Stage

Typical Limits

Retention

Premium (Per $1M)

Seed (<$5M)

$1M–$2M

$5K–$50K

$8K–$12K

Series A ($5M–$15M)

$2M–$3M

$25K–$100K

$10K–$18K

Series B ($15M–$40M)

$3M–$10M

$35K–$250K

$12K–$25K

Series C+ ($40M–$100M)

$5M–$10M

$100K–$250K

$16K–$40K+

Need personalized pricing? Try our analytics tools.


How to Build AI-Specific D&O Coverage

  1. Risk Mapping: Understand regulatory, contractual, and model-specific risk across your stack.

  2. Coverage Benchmarking: Compare structure, limits, and terms with similar AI companies.

  3. Negotiation: Close gaps. Add endorsements. Remove silent exclusions.

  4. Scalability: Ensure your program can grow with enterprise contracts, funding rounds, and global exposure.


Next Steps with URM’s AI Practice (Plug)

  • Custom AI Risk Report : Think like an underwriter—before they’ve seen your application.

  • Policy Review: We combine legal review and AI parsing to catch exclusions most brokers miss.

  • Strategy Consultation: 15+ year experts build a D&O program for how your AI company actually operates.



About URM’s AI Practice

Upward Risk Management LLC is a boutique insurance firm specializing in venture-backed technology and artificial intelligence companies. Founded by attorney and insurance expert Steven Barge-Siever, Esq. URM merges deep legal experience with insurance precision to deliver coverage that holds up when tested.



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