The insurance market for lawyers has reached a critical turning point. In May 2026, EPIC Insurance Brokers & Consultants published its 16th Annual Lawyers' Professional Liability Claims Survey. The survey gathered data from 13 leading lawyers' professional liability (LPL) insurers. These 13 carriers collectively cover more than 80 percent of Am Law 200 law firms. The survey revealed that legal malpractice claims frequency is rising for the first time in five years. The report named artificial intelligence as one of the key new risk vectors driving this increase.
Eileen Garczynski, the principal of EPIC Law Firm Group and the author of the survey, explained the situation. "After five years of relative stability, we are seeing a clear inflection point," Garczynski stated in the EPIC industry claims survey. "Legal malpractice claims frequency is rising again, and severity continues to accelerate, driven by economic pressure, increasingly complex work, and new risk vectors, like AI, that law firms are still learning to manage."
Faced with this rising threat, many law firm owners expect immediate changes to their insurance policies. It is easy to assume that carriers have already rewritten their policies, added strict exclusions, or created premium discounts for firms that have strict AI policies. However, the actual state of the insurance market is much more nuanced. This article explores what claims data actually shows, what questions are appearing on renewal applications, why insurers have not excluded AI yet, and what carriers are telling firms to do right now.
The claims data: AI-related malpractice exposure is no longer theoretical
The May 2026 EPIC claims survey provides concrete numbers regarding the rising risks in the legal industry. The survey showed that 8 out of the 13 surveyed insurers experienced higher claim frequency over the past year. In addition, 11 of the 13 insurers reported materially higher spending on defense costs. Nine-figure losses, which are claims that exceed 100 million dollars, are no longer considered unusual outliers. Due to these factors, a majority of the surveyed insurers plan to raise their rates in 2026.
The most notable finding involves generative AI. Just over half of the surveyed insurers, specifically 7 out of 13, reported an increase in AI-related claims over the past year. This is the clearest evidence to date that generative AI is causing real professional liability exposure. These are not merely hypothetical risks discussed at industry conferences. They represent real claims with paid losses or financial reserves.
At the same time, AI is not yet the dominant cause of malpractice claims. Traditional errors still lead the market. Conflicts of interest remain the single largest driver of malpractice claims. In the survey, 46 percent of insurers ranked conflicts of interest as the first or second most common error. AI is a rising factor, but it sits alongside older, systemic risks. Garczynski summarized the risk by stating, "The duty of competence cannot be delegated to technology." She also noted that "escalating defense costs are reshaping the economics of professional liability."
What's actually on the application -- one confirmed example
Law firms are beginning to see AI questions on their insurance paperwork. A primary example is the AmTrust Lawyers Professional Liability Application (AmTrust PRO, form LPLPRO-APP-01, dated May 2023). In Section III, which covers internal procedures, question 13 lists standard checkboxes for internal controls. Beside options for docket controls and conflict-of-interest procedures, the form asks if the firm allows the use of Artificial Intelligence software to draft documents. If the firm checks the box, it must attach a written description of its practices.
AmTrust treats AI usage as a basic internal procedure on par with engagement letters, retainer agreements, and document retention rules. This placement has significant legal consequences. The representation statement at the end of the AmTrust application states that all answers are deemed material to the acceptance of the risk. The application is incorporated directly into the final insurance policy. If a firm describes its AI drafting procedures, that description becomes a formal representation. If the firm's actual daily practices drift from that written description, the discrepancy can complicate the resolution of a future claim.
By contrast, other major carriers have taken a slower approach. CNA describes itself as the nation's leading provider of LPL coverage, insuring more than 50,000 law firms and 155,000 lawyers nationwide. CNA has not attached a similar explicit AI question to its public-facing application forms. The market remains in a state of transition. At least one insurer has put AI directly on its application, while the largest writer in the country has not, even though CNA has published extensive risk-management guidance.
The primary risk for most firms is not a sudden, hostile exclusion. According to reporting in the ABA Journal, the real danger is that lawyers assume their decades-old policies automatically cover a brand-new kind of error. Firms often only discover the gaps in their coverage after they file a claim.
Why there's no AI exclusion on your malpractice policy (yet)
As of mid-2026, no major U.S. lawyers' professional liability carrier has publicly filed a blanket, named AI exclusion on its standard policy form. Most AI-related claims are being evaluated under existing policy language. This language was written long before generative AI existed. The insurance trade press often calls this "silent" coverage because the policy remains silent on the technology rather than addressing it directly.
This situation differs from other business insurance lines. According to a Fenwick client alert, the Insurance Services Office introduced an explicit generative AI exclusion into standard commercial general liability forms in January 2026. Multiple insurers have also added broad AI exclusions to their directors and officers, employment practices, and fiduciary liability policies.
The LPL market has not followed this path yet. This is likely because the legal malpractice market is smaller and more fragmented. It relies on specialized carriers and state-affiliated mutual insurers. These organizations move more slowly and cautiously on form language than the broader commercial property and casualty market.
Meanwhile, alternative products are emerging in the broader market. Armilla AI launched a third-party AI liability insurance product underwritten at Lloyd's in April 2025. This product explicitly covers financial losses from AI hallucinations, model drift, and system underperformance. However, this product is designed for software vendors and companies that build or deploy AI systems generally. It is not marketed as a legal malpractice replacement or as an add-on policy for law firms. Law firms still do not have a purpose-built, standalone AI malpractice product available to buy.
What carriers and bar-affiliated insurers are actually telling firms to do
Instead of writing new exclusions, carriers are publishing detailed risk-management guidelines. They want law firms to adopt written policies that govern how attorneys use AI legal document drafting tools and other systems.
CNA
CNA published a risk-management guide titled "Building a Safe and Practical Law Firm Artificial Intelligence Policy: A Risk Management Playbook." It outlines a five-step process for managing AI risk:
- Assess actual needs: Firms should evaluate their specific AI requirements and risks instead of adopting or banning the technology reflexively.
- Build a governance framework: The framework must define permitted uses, such as brainstorming, first drafts, style edits, and issue-spotting. It must also list prohibited uses, such as uploading privileged client data into unapproved tools or relying on AI citations without human verification. The policy must cover confidentiality, client transparency, billing integrity, and supervisor accountability.
- Train all staff: Firms should implement mandatory training, including onboarding for new hires and recurring professional education.
- Monitor AI performance: Firms must track accuracy, watch for biased outputs, and keep logs of prompts and results. They must also maintain an incident-response protocol for hallucination events, which includes issuing errata letters and notifying courts when necessary.
- Review and update: The firm must review and update its AI policy at least semi-annually to keep pace with changing technology.
Wisconsin Lawyers Mutual Insurance Company (WILMIC)
WILMIC has insured Wisconsin attorneys since 1986. It published risk guidance describing AI tools as powerful but imperfect assistants that require constant human oversight. WILMIC recommends that firms verify every AI-generated output through careful attorney review. Firms should document which tools they use, outline their specific verification procedures, and build hands-on training programs before using tools for client work. Finally, firms should explicitly review their professional liability coverage to ensure it matches their current technology practices.
Lawyers Mutual of North Carolina
This carrier published risk-management guidance through its consultant, Camille Stell. The guidance warns that misuse or over-reliance on AI can result in errors, missed deadlines, and malpractice claims. Stell recommends that firms explicitly define approved tools and contexts. Lawyers must review every AI output before using it in contracts, emails, or pleadings. The guidance also states that lawyers must never enter confidential or personally identifiable client information into open or free AI platforms. Staff training and periodic policy reviews are essential to prevent claims.
North Carolina Bar Association
In an article titled "Beyond the Ban: Why Your Law Firm Needs a Realistic AI Policy in 2026," Catherine Reach argued against outright bans on technology. Reach suggested that bans are unrealistic. Instead, firms should create governed-use policies grounded in the state's ethics rules.
Crucially, Lawyers Mutual of North Carolina has advised firms to keep a documentation file that answers specific vendor-vetting and billing questions. This is because carriers and brokers active in North Carolina are increasingly asking for this documentation during renewal conversations. This is the clearest evidence connecting bar rules directly to the insurance underwriting process.
Are there premium discounts for firms with an AI policy?
Many law firms hope that implementing a written AI policy will lower their insurance costs. However, this research found no confirmed, named-carrier premium discounts tied specifically to having an AI-use policy.
Some online marketing and advisory sites claim that carriers apply standard premium surcharges or that firms will lose preferred risk status if they use AI without a policy. This research did not find any named carriers, filed rates, or official sources to back up those claims. These figures appear to circulate primarily among advisory groups rather than insurance trade press or carrier filings.
The reality is different. Having documented AI governance does not earn a specific, advertised discount line item. Instead, it is treated as an underwriting factor during renewals. Sharing a written AI policy with a broker helps demonstrate that the firm is a well-managed risk. This leads to a smoother renewal process and helps protect the firm's insurability, but it does not guarantee an automatic rate reduction.
FAQ
Does my law firm's malpractice insurance cover AI mistakes?
Probably, but you should not assume coverage without checking. Most existing lawyers' professional liability policies were written before generative AI became common. These policies do not mention the technology explicitly. This means an AI-related claim is typically evaluated under general policy language. Many lawyers assume they are covered, but this coverage has not been widely tested or confirmed with their carriers.
Are malpractice insurers excluding AI-related claims?
No major U.S. legal malpractice carrier has filed a blanket, named AI exclusion on its LPL policy form. Other insurance sectors have moved much faster. The Insurance Services Office added a generative AI exclusion to standard commercial general liability forms in January 2026. AI exclusions have also appeared in directors and officers policies. However, the legal malpractice market remains silent on AI exclusions.
Do insurance applications ask if my firm uses AI?
Yes, at least one major application does. The AmTrust Lawyers Professional Liability Application asks firms to confirm if they allow the use of artificial intelligence software to draft documents. If they do, they must attach a written description of their procedures. Other major carriers, including CNA, have not yet added explicit AI questions to their public-facing application forms.
Is there evidence AI is actually causing malpractice claims?
Yes. The EPIC 16th Annual Lawyers' Professional Liability Claims Survey found that 7 out of 13 major insurers reported an increase in AI-related claims over the past year. This is the first claims-level evidence showing that generative AI is producing real liability exposure. However, traditional errors remain more common. Conflicts of interest are still the single largest driver of malpractice claims.
What do malpractice insurers recommend firms actually do about AI?
Carriers like CNA, WILMIC, and Lawyers Mutual of North Carolina advise firms to adopt a written AI use policy immediately. This policy should define permitted and prohibited uses, require strict human review of all AI outputs, protect client confidentiality by avoiding free platforms, train staff, and undergo a review at least twice a year.
The bottom line
The legal malpractice insurance market is in a period of transition. The EPIC survey proves that AI is now a real, rising factor in professional liability claims. At the same time, the actual policy documents and applications are still catching up to the technology. Only one carrier, AmTrust, has added a direct AI question to its application form. The largest carrier, CNA, has not done so, even though it has published the most detailed risk-management playbook in the industry. No major carrier has filed a blanket AI exclusion, and no confirmed premium discounts exist.
For managing partners and firm owners, the practical takeaway is clear. You should not assume your policy automatically protects you against AI errors, but you also do not need to fear a secret exclusion. To protect your coverage, you should follow the identical advice published by every major carrier. You must establish a written AI policy, mandate human review of all technology outputs, and maintain clear documentation of your procedures.
Your written policy will also help you address the ethical demands of your practice. Eileen Garczynski’s warning that the duty of competence cannot be delegated to technology aligns perfectly with professional standards. This is the same expectation outlined by bar associations in What the bar actually requires when you use AI. While some courts are still deciding how to handle technology disclosures, as detailed in Courts are writing their own AI rules, and they don't agree, insurers are focusing on a simpler issue. They want to see that your firm has a formal system to catch errors before they lead to a lawsuit.
If your firm is adopting AI legal research tools or updating its practice management software with AI, you must treat these tools as powerful but imperfect assistants. If you do not have a written policy in place, you should draft one before your next renewal cycle. Having that documentation ready for your broker is the best way to ensure a smooth renewal and secure your coverage. If a court decides to issue sanctions for an unverified citation, as discussed in Courts are sanctioning lawyers for AI-hallucinated citations, your insurance policy will be your last line of defense. You must ensure that your internal governance matches what you represent to your carrier.