How Professional Liability Insurance Can Protect You from the Cost of AI-driven Professional Errors 

Artificial intelligence (AI) is transforming the way Maryland businesses operate. From automated data analysis to AI-assisted decision making, professionals across industries are integrating advanced tools to improve efficiency and deliver better results. But with these benefits comes a new category of risk: AI-driven professional errors.

When a business relies on AI-generated output that proves inaccurate, incomplete or biased, the financial and legal consequences can fall on the business using it. That’s where business insurance, specifically professional liability insurance, becomes essential.

The Rising Risk of AIdriven Mistakes

AI tools are powerful, but they’re not infallible. Even well-trained systems can:

• Misclassify data
• Generate incorrect reports
• Provide flawed predictions
• Automate processes incorrectly
• Introduce bias into decision-making
• Misinterpret client inputs or context

For Maryland professionals, including consultants, financial advisors, tech firms, health care providers, architects and more, these errors can lead to client disputes, financial losses and costly legal claims.

How Professional Liability Insurance Helps Protect Your Business

Professional liability insurance (also known as errors and omissions insurance) can help businesses cover financial losses when their services or advice cause harm. When AI is part of your workflow, this coverage becomes even more critical.

Claims Resulting from AI-generated Errors

If an AI tool produces incorrect information that leads to client losses, your business may still be held responsible. If the allegation involves negligence in the delivery of professional services, professional liability insurance may help cover legal defense costs, settlements and judgments, subject to policy terms, conditions and exclusions.

HumanAI Interaction Mistakes

Many AI errors occur when humans rely too heavily on automated outputs. If an employee misuses or misinterprets AI-generated data, coverage can help shield your business from resulting claims.

Technology-related Service Failures

AI systems can malfunction, produce inconsistent results or fail to update properly. When these issues impact your professional services, liability coverage helps manage the fallout.

New Regulations

As AI-related regulations evolve at the state and federal levels, professional liability insurance may help cover defense costs arising from alleged failures in professional services involving AI use, as businesses adapt to new compliance requirements. However, many policies exclude coverage for regulatory fines and penalties unless specifically endorsed and insurable by law.

Why Maryland Businesses Need Tailored Coverage

Maryland’s business landscape is diverse, with professionals in technology, consulting, health care, finance, real estate and more increasingly relying on AI. But not all professional liability policies automatically account for AI-related exposures.

That’s why working with a knowledgeable insurance partner matters.

Contact Us

AI can elevate your business, but it can also expose you to professional risk. With the right professional liability insurance, you can innovate while protecting your reputation, finances and clients.

To explore tailored coverage options for your business, connect with Lyceum Insurance Services today.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.