Short answer
Start with the requested lines, limits, endorsements, timing, and indemnity. A certificate of insurance confirms selected facts about a policy; it does not create coverage, override exclusions, or make an AI product’s contractual promise insurable. Send a materially new contract to the appropriate broker and legal reviewer before signature, especially when the agent, data, service, or authority is new.
Evidence frame
- Established
- A certificate summarizes selected policy facts; an endorsement changes policy rights; and an indemnity is a contractual promise. They are related but not interchangeable.
- Clara inference
- A customer’s insurance clause is an early signal about the loss paths and evidence the customer expects the AI company to be able to explain.
- Hypothesis
- Comparing contract requirements with current policy wording, system authority, and customer-facing promises before signature could expose gaps while they are still negotiable.
- Unknown
- Whether a particular requirement is satisfied, enforceable, or covered depends on the contract, endorsement, policy form, facts, governing law, and carrier response.
The insurance clause is part of the deal
Customers use insurance clauses to manage the consequences of a vendor’s work: injury, property damage, technology failure, data exposure, professional error, or a promise that exceeds the vendor’s control. The clause may also be a template copied from a much larger supplier relationship.
Read it as a list of questions. What line is required? At what limit? On what basis? Is an endorsement required? How long must the policy remain in force? Does the contract also require indemnity, a waiver, primary and non-contributory wording, or notice of cancellation?
The goal is not to reject every request. It is to find the difference between what the customer asks for, what the company promises, and what the policy can actually respond to.
Common requirements, decoded
| Term | Usually means | Question for an AI company |
|---|---|---|
| Certificate of insurance | A summary of selected lines, limits, dates, and named parties. | Does the certificate match the actual policy and the contract’s required endorsements? |
| Additional insured | The counterparty receives defined protection under the vendor’s liability policy. | Is the status scheduled or blanket, and does it cover the requested operations? |
| Waiver of subrogation | The insurer waives certain recovery rights against the counterparty. | Is the waiver available for the relevant line, party, and work? |
| Primary and non-contributory | The vendor’s policy is intended to respond before the counterparty’s insurance. | Does the policy and endorsement actually provide that order of response? |
| Higher limits or umbrella | The customer wants more available limit than the primary policy carries. | Can the umbrella follow the relevant underlying coverage and authority? |
| Indemnity | The contract shifts specified losses or claims between the parties. | Does the insurance cover the liability assumed, or is the promise broader? |
The words are familiar; the scope is not. An additional insured endorsement does not turn a technology E&O promise into general liability coverage, and a certificate is not the policy itself.
AI adds a second reading of the clause
An AI contract can describe a service in broad language while the actual system changes underneath it. Compare the requested insurance with four facts:
- What the company says the AI will do for the customer.
- What the agent is permitted to do in production.
- What data, credentials, systems, and third parties it can reach.
- What happens when the model, tool, workflow, or human approval changes.
A policy written around “software services” may need a closer look if the company now makes consequential decisions, handles regulated work, moves money, changes code, or controls a physical system. Clara’sAI exclusions research shows why the form’s definitions and exclusions should be reviewed rather than inferred from a certificate.
A safer workflow before signature
- Extract every insurance, indemnity, security, and notification requirement.
- Map each requirement to the operation, agent, data, or contract promise it protects.
- Compare the requested line and limit with the current policy, endorsements, and covered services.
- Identify new authority, customers, jurisdictions, sites, or equipment that need separate review.
- Negotiate requirements that are disproportionate to the pilot or cannot be supported by the actual program.
- Obtain the certificate and endorsements before the date the contract requires them.
Keep the extracted requirements in the company’s risk context. The next customer should not require the team to reconstruct the same facts from email threads.
Contracts are evidence of delegated responsibility
The commercial contract tells an underwriter and a risk team what the company promised, what the customer expects, and which party is meant to carry a consequence. For an agent company, that allocation should be connected to the agent’s actual authority and the controls that constrain it.
Clara’s research treats the contract, the technical system, and the insurance policy as three views of the same risk—not interchangeable documents, but documents that should not contradict one another. The gap between them is where an ordinary procurement request becomes an underwriting question.
Common questions
What is a certificate of insurance?
A certificate is a summary of selected policy facts such as lines, limits, dates, and named parties. It is not the policy and generally cannot expand coverage or override exclusions.
What does additional insured mean?
It means the counterparty receives defined protection under the vendor’s liability policy for covered claims arising from the vendor’s work. The exact scope depends on the policy and endorsement.
Can a customer require AI-specific insurance?
A customer can request insurance, limits, endorsements, or other risk controls in a contract. Whether the request is commercially reasonable, available, or necessary depends on the work, negotiation, market, and applicable law.
Does an insurance clause guarantee that a claim will be covered?
No. The clause allocates a contractual obligation. Coverage still depends on the policy, facts, exclusions, conditions, limits, and the way the claim is presented.
When should an AI company send a contract for insurance review?
Before signature, especially when the contract introduces new services, authority, data, jurisdictions, physical operations, limits, additional insureds, or indemnities.