AI in Advertising Raises Liability Concerns as Generative Technology Expands

As AI technologies like ChatGPT continue to expand into the advertising industry, businesses from global agencies to local startups are leveraging its capabilities. Major firms, like WPP, have partnered with Nvidia to enhance AI-generated content, while companies such as Meta plan to launch tools that make advertising more accessible to smaller businesses.

However, this ease of access brings potential legal risks, especially under the Commercial General Liability (CGL) policy, which covers personal and advertising injuries. Small businesses lacking the legal and insurance infrastructure of larger firms may inadvertently infringe on copyrights or defame competitors through generative AI tools.

Additionally, the increased use of AI-powered chatbots introduces further risks, including privacy violations and defamation claims, as evidenced by high-profile incidents. Privacy laws like GDPR and the California Delete Act further complicate matters, potentially leading to liability for improper data use or breaches. Insurers and risk management professionals need to be proactive in addressing these emerging risks, ensuring policies and protections evolve with the technology.