Embracing AI? Make Sure Your Insurance Keeps Up

Artificial intelligence (AI) is no longer a distant innovation — it’s already reshaping how New Zealand businesses operate, from the trades to the legal sector and everything in between.

We’re seeing it firsthand: Builders using AI to calculate structural depths, lawyers referencing AI-generated summaries, and business owners using generative tools to automate admin, marketing, or customer responses. For many, it’s about saving time, increasing productivity, or staying competitive.

But with these new efficiencies come new risks — and, importantly, new insurance implications.

This article provides Dawson Insurance’s perspective on insights recently shared at an IBANZ webinar, where Duncan Cotterill presented timely advice about AI in the workplace and what it could mean for professional liability.

 

AI Isn’t Always Right — and That Matters

We’ve all read the headlines and seen the cautionary tales: AI tools can hallucinate or generate inaccurate responses. Most users understand this — but mistakes made using AI in a business context can still have very real consequences.

If incorrect AI-generated output leads to bad advice, flawed calculations, or missed legal references, you could find yourself liable for the outcome.

 

Example: A builder relies on an AI tool to calculate retaining wall depths and builds based on those recommendations. If the wall fails and causes damage or injury, a claim could follow — and whether that’s covered by insurance depends on the policy.

 

Is Your Policy Fit for Your New Tech?

Most existing business or professional indemnity insurance policies weren’t written with AI-generated risks in mind. And depending on the wording, claims stemming from the use of AI tools may be excluded or fall into a grey area.

That’s why it’s important to:

• Review your policy wording carefully for exclusions related to automation or technology
• Disclose AI use to your broker — especially if it’s part of your advice, work output, or client service
• Consider whether cyber cover or updated PI (professional indemnity) wording may be needed

 

It’s Not About Avoiding AI — It’s About Understanding Your Exposure

Using AI in business isn’t a bad thing. In fact, many SMEs are already benefiting from its ability to reduce admin time or streamline internal processes.

But it’s important to know where AI use crosses into territory that could carry liability — like providing advice, doing calculations, or drafting formal documents.

Having the right insurance in place helps protect you if things go wrong — regardless of whether a mistake was made by a person, a system, or something in between.

 

Talk to Your Broker

If you’re not sure whether your current policies reflect the way your business is evolving, we’re here to help.

The team at Dawson Insurance can talk you through your current cover, highlight any risk areas, and support you to make informed decisions about what protection you really need. Call one of our team today to discuss.