Armilla AI Raises Lloyd's-Backed Coverage to $25M as Traditional Insurers Retreat from AI Risk

Armilla AI Raises Lloyd's-Backed Coverage to $25M

First dedicated AI liability coverholder expands capacity with “all risks” coverage scope as generative AI exclusions spread across global insurance markets

Most insurance policies weren’t designed for generative AI or AI agents. After two years of focused underwriting development, we believe our expanded policy gives risk managers a clear path forward.”

— Karthik Ramakrishnan, CEO & Founder of Armilla AI

WILMINGTON, DE, UNITED STATES, January 21, 2026 /EINPresswire.com/ -- Armilla AI today announced it has expanded its standalone AI Liability Policy to offer limits up to $25 million per organization, with enhanced coverage for generative AI and autonomous agents. The expansion comes as traditional insurers increasingly exclude or restrict AI-related risks across their portfolios.

With generative AI scaling rapidly across industries, enterprise risk managers are confronting new exclusions and increasing uncertainty across their existing insurance towers. As traditional carriers revise or narrow coverage for AI-related risks, protection gaps are widening. Brokers increasingly recognize a professional responsibility to ensure clients are informed of AI-specific coverage options required for program completeness, claims clarity, and governance defensibility.

Armilla's primary policy is built specifically for this moment. Unlike coverage retrofitted from cyber, E&O or general liability templates, it's designed around how AI systems actually fail, and responds ahead of traditional policies.

When generative AI and AI agents misadvise customers, make incorrect decisions, or disclose sensitive data, the consequences are immediate. Traditional insurance offers uncertain coverage or exclusions. Armilla provides clear, affirmative protection tailored for AI risk.

“Most insurance policies weren’t designed for generative AI or AI agents.” said Karthik Ramakrishnan, CEO of Armilla AI. “But companies are already deploying these systems at scale. After two years of focused underwriting development, we believe our expanded policy gives risk managers a clear path forward.”

Purpose-Built for What Traditional Forms Can’t Cover
Armilla’s all-risks policy provides broader coverage than traditional forms were ever designed to support. Instead of relying on endorsements or DIC structures retrofitted to legacy wording and logic, it establishes a purpose-built, standalone framework that responds to the full and evolving range of AI-related risks, picking up where today’s policies fall short.

The updated policy now extends to include traditional General Liability coverages, while introducing affirmative protection for AI regulatory violations, non-breach privacy incidents, data leakage, and other risks that traditional programs now exclude, sub-limit, or treat ambiguously, including:

- AI Model Error Liability: Third-party financial loss resulting from hallucination, inaccuracies, drift, or measurable underperformance
- AI Model Output Liability: Claims tied to harmful or misleading outputs, including defamation, trade secret exposure, and confidentiality breaches
- AI Agent Failures: Claims arising from incorrect decisions, improper tool use, or escalation errors
- Non-Breach Privacy & Data Leakage Liability: Regulatory investigations or third-party claims stemming from unintended disclosures through AI outputs
- AI-Driven Property Damage: Damage to third-party property caused by AI-enabled automation, generative AI and AI agents
- AI Regulatory Violations: Defense costs and insurable fines arising from investigations under AI regulations such as the EU AI Act and Colorado AI Act

Lloyd's Backing and Target Market
Armilla became the first Lloyd's Coverholder dedicated exclusively to AI liability in 2024, following its participation in Lloyd's Lab. The company launched its standalone product in April 2025.

Today, Armilla serves a broad range of companies, from AI scale ups to large technology platforms, to Middle Market and Fortune 1000 enterprises embedding generative or agentic AI into core operations. Each policy includes independent AI system certification and risk reporting, informed by more than 500 AI evaluations across regulated industries. Priority sectors include financial services, healthcare, human resources, telecommunications, retail, professional and customer services.

About Armilla AI
Armilla AI is a Lloyd’s Coverholder and Managing General Agent (MGA) and recognized pioneer of underwriting and insurance solutions for artificial intelligence. Backed by A-rated global insurers, Armilla provides AI software performance warranties, and standalone AI liability insurance empowering companies to unlock safe, secure AI adoption with confidence.

For more information or to request a quote, visit www.armilla.ai or contact press@armilla.ai.

Karthik Ramakrishnan
Armilla AI
email us here

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