Aipedia: Claims management companies

Does claims firm PI cover AI errors?

Aipedia, by the Apex broking team · Last reviewed 2026-10-30

Claims firm PI usually covers negligent AI-assisted errors where the wording is silent on AI, but fines, fee refunds and remediation are commonly outside cover. Only personal injury CMCs must hold PI, so some claims firms may have no cover at all.

Part of: AI in Claims management companies

In short

PI is compulsory only for personal injury CMCs, under CMCOB 7.4: at least £250,000 any one claim, £500,000 aggregate, a maximum £10,000 excess, and cover for negligent acts, errors or omissions. Other CMCs meet CMCOB 7.2 financial resources rules instead and may hold no PI. Where a wording is silent on AI, AI-assisted negligence is usually treated like any other error, subject to the terms. Fines, fee refunds, remediation and dishonesty commonly sit outside cover. Watch for AI exclusions, aggregation and early notification of systematic errors.

Compulsory and voluntary PI for CMCs

Whether a claims firm's PI covers AI errors starts with whether the firm must hold PI at all. Under CMCOB 7.4, only firms that advise on, investigate or represent in personal injury claims must hold PI. Their cover must:

respond to negligent acts, errors or omissions of the firm and anyone acting for it, including employees and agents (7.4.3R);
provide at least £250,000 any one claim and £500,000 in aggregate each year (7.4.4R);
have an excess of no more than £10,000 per claim, include defence costs, and cover claims first made in the period or arising from circumstances notified in it (7.4.5R).

CMCOB 7.4 does not mention AI and does not set out a list of permitted exclusions. All other CMCs, including financial services, housing disrepair and employment firms, have no PI requirement and must meet financial resources requirements under CMCOB 7.2 instead. Their PI, if they buy it, is on whatever terms the market offers.

Silent AI: how most wordings respond

Many CMC PI wordings may say nothing specific about AI. Where that is the case, an error made with an AI tool is usually treated like any other negligent act, error or omission in the firm's professional services, subject to the policy terms. A missed limitation date from an AI summary, a wrong redress figure from document review, or a valid claim rejected by an automated screen could all fall within that, if a third party suffers a loss and brings a claim. The FCA's October 2026 good-practice page reinforces that the firm is responsible for AI outcomes, which also means insurers will see the AI error as the firm's error. Our general guide to whether PI covers AI mistakes explains silent AI in more detail.

AI and technology exclusions

Some insurers may add AI-specific wording, from narrow exclusions of autonomous decisions to broad exclusions of losses "arising from" AI use. For a voluntary PI buyer, an AI exclusion can remove much of the cover that matters. For a personal injury CMC, a broad AI exclusion sits uneasily with the CMCOB 7.4 requirement to cover negligent acts, errors or omissions, so check any such wording carefully with your broker. Our page on AI exclusions and clauses sets out the common forms, and affirmative versus silent AI cover explains the alternatives.

What sits outside cover

Fines and penalties: commonly excluded and may be uninsurable (see the fines exclusion).
Fee refunds: returning fees the firm should not have charged is not usually a PI loss (see AI fee calculations).
Remediation: the cost of reviewing a book of files or contacting customers is usually the firm's own cost.
Lost FOS case fees: the £250 case fee for unsuccessful referrals is a business cost.
Dishonesty and fraud: usually excluded, with some protection for innocent parties.
Contractual indemnities: promises to partner firms may go beyond what PI covers.

Aggregation and notification

AI errors tend to repeat. A single faulty prompt or model can affect hundreds of files, which raises two questions. First, whether the resulting claims are aggregated into one claim, which affects how many limits and excesses apply. Second, when the firm must notify. Most policies require prompt notification of circumstances that may give rise to a claim, and CMCOB 7.4.5R requires cover for claims arising from circumstances notified in the period. If you find a systematic AI error, talk to your broker about a circumstances notification before the claims arrive.

What to document

Insurers may ask how firms use AI. Good records help at renewal and when a claim is made:

a register of AI tools, uses and the senior manager responsible;
testing and monitoring results;
human review steps and sign-offs on each file;
vendor contracts and change logs;
complaints and errors linked to AI.

This mirrors the FCA's expectations on auditable records and SYSC 9.1.1R. Our guide to AI use and your PI: what to document has a fuller list.

How Apex helps

Apex arranges PI for claims management companies, both the compulsory cover for personal injury firms and voluntary cover for others. A broker reviews your wording, checks for AI and regulatory exclusions, and helps you present your AI controls. See AI in claims management and FCA AI rules for claims firms.

Sources

Frequently asked

Does compulsory PI for personal injury CMCs cover AI errors?

CMCOB 7.4.3R requires cover for negligent acts, errors or omissions of the firm and those acting for it, and the rule does not mention AI. An error made with an AI tool is usually treated as the firm's error, subject to the policy terms. Check any AI wording against the CMCOB 7.4 minimum terms.

Do financial services CMCs need PI?

There is no compulsory PI requirement for them in CMCOB 7. They must meet financial resources requirements under CMCOB 7.2 instead. Some may still buy PI because clients and partner firms can bring negligence claims, including over AI-assisted work.

Will PI pay an FCA fine or fee refunds after an AI failure?

Usually not. Fines are commonly excluded and may be uninsurable, and refunds of the firm's own fees are not usually a PI loss. PI is aimed at third-party claims for negligence and the related defence costs.

What should we do if we find a systematic AI error?

Stop or fix the tool, preserve records, and speak to your broker about notifying circumstances to your insurer promptly. Most policies require early notification, and late notice can put cover at risk. Consider whether consumers need to be contacted under the Consumer Duty.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.