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Aipedia: Marketing and PR agencies
Agency contracts should now say whether AI may be used, who carries the IP risk and how far warranties and indemnities go. Getting these terms wrong can leave an agency with liability its PI policy does not cover.
Part of: AI in Marketing and PR agencies
In short
Generative AI challenges standard agency terms on originality, IP warranties and indemnities. IPA/ISBA principle 11 expects client agreement before AI content is used, and the IPA offers members guidance on contract clauses, liability and indemnities, plus the 2025 IPA/ISBA Template Creative Services Framework Agreement with AI provisions. Key clauses cover consent, qualified IP warranties, capped indemnities, confidentiality and ownership of outputs. PI may exclude liability assumed under contract, so a wide indemnity for AI work can create uninsured exposure. Agencies should align contracts, processes and cover.
Most agency agreements were written for a world where the agency created work itself or licensed it from photographers, composers and libraries under clear terms. Generative AI disrupts three assumptions in those contracts: that the agency can warrant it owns or has licensed everything it delivers, that the client knows how the work was made, and that the agency can pass IP risk back to a supplier. Clients may respond by asking whether agencies use AI, requiring consent, and seeking wider warranties and indemnities. Agencies need terms that reflect how they actually work.
The IPA and ISBA 12 principles for generative AI in advertising set the baseline. Principle 11 expects agencies to be transparent with partners and include no AI-generated content in their materials without agreement. Principle 7 asks them to consider IP holders, principle 9 to carry out due diligence on tools, and principle 10 to keep human oversight including checking facts and permissions.
The IPA also provides member legal resources, including guidance on client contract clauses for AI use, liability and indemnity guidance for agencies on generative AI, an AI checklist and a template AI workplace policy. The IPA/ISBA Template Creative Services Framework Agreement (2025) has been updated with AI provisions. The detail of these documents is available to members only. The Online Advertising Taskforce's best practice guide for 2026 supports risk-based decisions on disclosure and oversight that can be reflected in contracts.
A clause recording that the client has agreed to AI use, for which tasks and with which tools, puts principle 11 into practice. It can be a general consent with a right for the client to opt out of AI for specific deliverables.
Traditional warranties say the deliverables are original and do not infringe third-party rights. With AI, an agency may not be able to give that without qualification. Agencies may limit the warranty to their knowledge, exclude AI outputs, or warrant only that they followed an agreed process.
An uncapped IP indemnity for AI-generated work can expose an agency to more than it earns from the account. Caps, carve-outs for client-supplied material and conduct of claims provisions are common negotiating points.
Clients may prohibit their confidential briefs or customer data being entered into public AI tools. IPA/ISBA principle 6 and UK GDPR point the same way.
Contracts should address who owns prompts, outputs and any trained models or brand-specific settings, and whether the agency may reuse them for other clients.
PI policies are commonly written to cover legal liability for negligence and, where included, IP infringement and defamation. Many may contain a contractual liability exclusion: liability you take on under a contract is not covered unless you would have had it anyway. An uncapped indemnity or a strict warranty of non-infringement can therefore create exposure that sits outside the policy. Insurers may also ask about AI use, and a contract that promises human review you do not actually carry out can weaken your position on both the claim and the cover. Our guide to AI contract clauses, indemnities and insurance explains these interactions more broadly, and PI or media liability for AI claims covers which policy responds.
Illustrative scenario: an agency signs a client's standard terms with an uncapped indemnity for any IP infringement in deliverables. It uses AI imagery across the campaign without telling the client. A rights holder later claims against the client, which calls on the indemnity and also says the agency breached the contract by using AI without consent. The agency's insurer considers the contractual liability exclusion, and the agency faces part of the claim alone.
Specific risks such as AI-generated images, AI music and voice and AI brand names and logos show where these clauses are tested. The marketing and PR agencies hub has the full series.
How Apex helps: Apex arranges PI for marketing and PR agencies. A broker can review how your client indemnities and warranties sit against your policy before you sign.
There is no statute requiring it, but IPA/ISBA principle 11 says agencies should include no AI-generated content in partners' materials without agreement. Client contracts may require consent, so using AI without it can be a breach of contract.
Not necessarily. Policies may exclude liability assumed under contract unless it would have existed without the contract. A wide or uncapped indemnity can go beyond what the policy covers, so check with your broker before agreeing one.
It is a template creative services framework agreement published by the IPA and ISBA, updated in 2025 with AI provisions. It is available to members. Its detailed AI terms are available to members.
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.
Start a PI quote Request a callbackApex 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.
