Coverage module
AI-D&O is the directors and officers module from Mayflower Specialty, written for claims that arise from how a board and its executives oversee, disclose and rely on AI. It is built for exposures such as securities and derivative suits alleging AI-washing or failed oversight, which standard D&O wordings may leave silent or exclude, and it is placed through brokers on A- (Excellent) AM Best rated paper.
At a glance
Definition
Definition
AI D&O insurance is directors and officers liability cover that addresses AI in its wording, so that claims arising from a company's use, oversight or disclosure of AI are dealt with in the policy rather than argued over after a loss. It protects the board members and executives who answer for decisions about AI.
Boards now answer for AI in two ways: for what the company says about its AI, and for how well the board oversees the AI systems the business relies on. Both arrive as claims against directors and officers, which is the exposure D&O insurance exists to cover, and both are becoming more common as AI moves into filings, earnings calls and core operations.
Many D&O policies were drafted before generative AI and say nothing about it, while some insurers have begun adding AI exclusions at renewal. AI-D&O is written to address AI claims affirmatively, so that a board knows where it stands before a claim arrives.
Sources Cornerstone Research, July 29th 2026 (opens in a new tab)Hunton Andrews Kurth, May 2025 (opens in a new tab)
Real case
SettledMarch 18th 2024
The SEC settled charges against two investment advisers, Delphia and Global Predictions, for false and misleading statements about their use of AI, with civil penalties of $225,000 and $175,000. Announcing the settlements, then-Chair Gary Gensler said that “such AI washing hurts investors.”
Source SEC press release 2024-36, March 18th 2024 (opens in a new tab)
Written for
AI-D&O is written for claims against directors and officers that arise from the company's use, oversight or disclosure of AI, such as securities and derivative claims alleging AI-washing or failed oversight. These claims tend to reach the board by four routes.
Shareholders allege that statements about the company's AI, in filings, on earnings calls or in marketing, overstated what the technology does or how much the business relies on it, and that the share price fell when the gap came out. More recent suits allege the opposite failure, that a company under-disclosed how AI could disrupt its business.
When an AI system causes a significant loss, shareholders may bring a derivative suit alleging that the board failed to oversee it, for instance by never asking for reports on AI risk or by ignoring warning signs. These claims test whether the board had a reporting system for AI and whether it used one.
Regulators examine AI claims under existing securities and consumer protection law. The SEC settled its first AI-washing cases in 2024 and created a Cyber and Emerging Technologies Unit in February 2025, and an investigation can name individual officers as well as the company.
Sources SEC press release 2024-36, March 18th 2024 (opens in a new tab)SEC press release 2025-42, February 20th 2025 (opens in a new tab)
Directors and officers increasingly rely on AI-generated analysis for decisions on acquisitions, pricing or capital. When a decision built on flawed output harms the company or its investors, the claim lands on the people who made the decision rather than on the model.
Whether a particular claim is covered depends on the policy wording and the facts. AI-D&O is written for these exposures, subject to the policy terms.
The record
Each matter below is dated and sourced, and together they show regulators and shareholders treating statements about AI as ordinary securities statements. That is why the AI wording in a D&O policy now matters to every board whose company talks about its AI.
January 14th 2025
SettledThe SEC settled charges that restaurant technology company Presto Automation made materially false statements about its AI drive-thru ordering product, including claims that its AI removed the need for human order-taking when most orders required human intervention. The order imposed no civil penalty, and The D&O Diary described it as apparently the SEC's first AI-washing action against a public reporting company.
Source SEC administrative proceeding 33-11352, January 14th 2025 (opens in a new tab)
April 9th 2025
ChargedThe SEC and federal prosecutors in New York charged Albert Saniger, founder of the startup Nate, alleging that he raised about $42 million from investors on false claims about the AI behind the company's app, and the charges remain allegations.
Source DLA Piper on the SEC and DOJ charges, April 2025 (opens in a new tab)
June 25th 2026
FiledThe D&O Diary reported that AI securities suits are moving beyond AI-washing toward allegations that companies under-disclosed how AI would disrupt their business, citing a suit against ZoomInfo filed on June 25th 2026.
15
AI-related securities class actions filed in the first half of 2026, on pace to nearly double the 2025 total
73%
Share of the $529 billion Disclosure Dollar Loss Index from AI-related filings in the first half of 2026
72%
S&P 500 companies that flagged AI as a material risk in 2025 annual reports, up from 12% in 2023
Existing cover
A standard D&O policy may respond to an AI-washing or oversight claim, because both allege wrongful acts by directors and officers. The difficulty lies in the wording around AI, which is either missing, so that cover has to be argued after the loss, or newly restrictive, because some insurers now add AI exclusions at renewal.
Many D&O forms were drafted before generative AI and do not mention it. Silence can work in the policyholder's favor, but it leaves the answer to a coverage dispute, often while the underlying claim is already being defended.
Hunton Andrews Kurth reported an “absolute” AI exclusion introduced by W. R. Berkley for D&O, E&O and fiduciary liability that removes cover for claims “based upon, arising out of, or attributable to” any actual or alleged use, deployment or development of AI. The Financial Times reported in November 2025 that AIG, Great American and W. R. Berkley had sought US regulatory approval for AI exclusions.
Sources Hunton Andrews Kurth, May 2025 (opens in a new tab)Insurance Journal, August 17th 2026 (opens in a new tab)Insurance Business, reporting the Financial Times, November 24th 2025 (opens in a new tab)
Standard terms can narrow cover for AI claims even without an AI exclusion. Fines and penalties are often excluded or uninsurable, conduct exclusions apply once wrongdoing is established, and a professional services exclusion can remove claims that the company's AI product failed a customer.
“The market has been restrained in taking any drastic actions with either affirmative or exclusionary language.”
Greg Eskins, Marsh, on AI wording, quoted in Business Insurance, April 2026
Source Business Insurance, April 7th 2026 (opens in a new tab)
Before renewal
Review the AI wording in the D&O policy, including any new definition of AI or exclusion, at least 90 days before renewal, while there is still time to negotiate the wording or add cover.
Your program
AI-D&O can be bought in two ways, depending on what the existing D&O program says about AI.
Option A
AI-D&O is a primary module written for AI claims against directors and officers, bought alongside the D&O program the company already carries. It suits a company that wants its board's AI exposure addressed in a policy written for it.
Start an AI-D&O applicationOption B
Where the existing D&O policy excludes AI or is silent on it, AI DIC Excess sits over the tower and is written to respond where the underlying policy does not, subject to its terms. It suits a company that wants to keep its current D&O program and insurers in place.
How AI DIC Excess worksScenarios
These scenarios show how AI reaches the board in practice, and how each would test the AI wording in a D&O policy.
These scenarios are hypothetical, and whether a policy responds depends on its wording and the facts.
A listed wealth platform describes its portfolio engine as AI-driven in its annual report. A short seller's report says the engine runs mostly on fixed rules, the share price falls sharply and shareholders sue the CEO, the CFO and the directors for misleading statements.
Hypothetical · Written for: AI-D&O
A health technology company's AI triage feature is found to under-prioritize some patients. After a regulator opens an inquiry, shareholders file a derivative suit alleging that the board never asked for reports on the feature's accuracy or bias.
Hypothetical · Written for: AI-D&O
A software company's board approves a restructuring based on AI-generated demand forecasts that prove badly wrong. Investors allege that the directors relied on the forecasts without testing them, and the claim names each director personally.
Hypothetical · Written for: AI-D&O
Who it is for
AI-D&O is designed for companies whose directors and officers could face claims over how the company uses or describes AI.
The supplemental application also places these uses of AI outside Mayflower's underwriting appetite:
Underwriting
Mayflower underwrites on the applicant's AI governance, so the questions that matter most for AI-D&O concern how the board oversees AI and how the company describes it. The questions below are plain-language summaries of the supplemental application, which has the exact wording.
Completing the application does not bind coverage. How underwriters assess AI risk
Section III · AI governance
Does the company have a dedicated AI oversight body with a written charter, or is AI oversight built into enterprise risk management?
Why it is asked: Shows who is accountable for AI risk between board meetings.
Section III · AI governance
How often do the board or the C-suite receive reports on AI risk and governance?
Why it is asked: Oversight claims turn on what the board was told and when.
Section III · AI governance
Which roles have written accountability for AI risk, such as an executive sponsor, a head of AI or an AI legal and compliance lead?
Why it is asked: Named owners show that warnings had a route to decision-makers.
Section III · AI governance
Has the company adopted a formal AI governance framework, such as the NIST AI Risk Management Framework or ISO/IEC 42001, and how fully is it implemented?
Why it is asked: A recognized framework gives directors a benchmark for their oversight.
Section VII · Regulatory environment and compliance
Have the company's AI systems or AI governance been audited externally in the past 24 months?
Why it is asked: Independent review supports the accuracy of what the company says about its AI.
Section VII · Regulatory environment and compliance
Has the company faced regulatory inquiries, investigations or enforcement actions relating to AI in the past three years?
Why it is asked: Regulatory history shows how the company's AI statements have been received.
Section VIII · Claims and loss history
Has any claim, suit, regulatory action or complaint arisen from an AI or algorithmic system in the past three years?
Why it is asked: AI loss history is read alongside the D&O, EPL and E&O loss runs.
FAQ
Further reading
AI-D&O
Apply online, or talk to the team about how AI-D&O would sit with your current D&O tower.
Placed through brokers on A- (Excellent) AM Best rated paper.
