Our Take
The first comprehensive AI liability product arrives as law firms face unclear exposure from AI tools they can't fully control.
Why it matters
Legal teams using AI tools currently operate without clear liability coverage, and most major insurers are avoiding AI risks entirely due to unknown exposure levels.
Do this week
Legal teams: audit your current professional liability policy for AI exclusions this week so you can assess coverage gaps before client work expands.
Corgi offers modular AI coverage after $108M raise
Corgi, a Y Combinator-backed insurance startup, launched AI liability coverage for both AI companies and their business users after raising $108M (company-reported). The coverage targets law firms and other professional service providers using AI tools.
The company's AI and Algorithmic Liability Endorsement (CORG-TECH-0038) offers modular coverage including algorithmic bias liability, AI hallucination and defamation claims, training data misuse, data poisoning attacks, deepfake liability, and regulatory investigation defense. Users select specific modules with individual limits and retention levels.
CEO Nico Laqua confirmed the dual coverage approach: "Where the liability is, we cover." The policy covers legal defense and damages when customers allege AI tools failed to perform as intended and caused financial loss.
Major insurers are avoiding AI liability entirely
Most established insurance companies refuse AI-related coverage because they cannot assess risk levels in the emerging market. This creates a coverage gap for law firms increasingly dependent on AI tools for client work.
Only one legal AI company, Orbital, currently offers insurance against its own outputs for residential property work. Meanwhile, law firms face potential liability for any AI-generated work sent to clients, regardless of how it was created, under most jurisdictional rules.
The timing matters as AI adoption accelerates. Legal teams report AI usage is becoming synonymous with standard legal outputs, but professional liability policies often exclude emerging technology risks.
Coverage gaps require immediate attention
Law firms should audit existing professional liability policies for AI exclusions before expanding AI tool usage. Current policies likely exclude algorithmic decision-making, automated content generation, and third-party AI service failures.
Corgi's modular approach allows firms to select coverage for specific AI risks rather than comprehensive policies. However, the company's offerings appear to be evolving rapidly as new AI liability scenarios emerge.
Professional service providers should also verify whether their current carriers will add AI endorsements or if they need separate coverage. The regulatory landscape remains unclear, making proactive coverage assessment critical before liability questions arise in practice.