---
title: "Memo: reviewing professional indemnity, cyber and D&O wordings for AI exclusions and \"silent AI\" exposure"
url: "https://ailawframework.com/precedents/insurance-law/ai-exclusion-and-silent-ai-review-memo"
type: "precedent"
site: "AI Law Framework"
id: "a22-ai-exclusion-and-silent-ai-review-memo"
area_id: "A22"
kind: "memo"
ai_level: "yellow"
version: 1
law_stated_as_at: "2026-10-17"
---

# Memo: reviewing professional indemnity, cyber and D&O wordings for AI exclusions and "silent AI" exposure

> An original memo structure for reviewing a client's PI, cyber and D&O programme for how it treats AI-related losses: express AI exclusions, silent AI, definitions, sub-limits, notification and disclosure, with a…

Canonical page: https://ailawframework.com/precedents/insurance-law/ai-exclusion-and-silent-ai-review-memo  
Law stated as at: 2026-10-17

Site index for agents: https://ailawframework.com/llms.txt

An original memo structure for reviewing a client's PI, cyber and D&O programme for how it treats AI-related losses: express AI exclusions, silent AI, definitions, sub-limits, notification and disclosure, with a findings table and recommendations for renewal.

## Key facts

- Kind: Memo. An internal or advice memo.
- Practice area: [Insurance Law](https://ailawframework.com/precedents/insurance-law.md)
- Jurisdictions: Australia
- AI level: Yellow. AI can help in set ways. A lawyer checks specific points before use.
- Law stated as at: 2026-10-17
- Status: Maintained. Checked on 2026-10-17 against the 3 authorities it cites, for Australia.

## When to use it

Use when advising an insured business (including a law firm) or a broker on whether its insurance programme responds to AI-related claims and losses, typically before renewal or after adopting significant AI tools. Adapt for an insurer reviewing its own wordings.

## How AI may be used

AI may scan wordings for AI-related terms, exclusions and definitions and build the comparison table, but whether a particular AI-related loss falls within cover is a matter of interpretation for the lawyer.

**AI may:**

- Search each wording for AI-related terms, technology exclusions and relevant definitions
- Build a side-by-side table of the programme with clause references
- List questions for the broker or insurer about intent and endorsements

**AI must not:**

- Must not conclude that a loss is or is not covered
- Must not treat the absence of the word "AI" as meaning a loss is covered or excluded
- Must not be given confidential policy wordings in a tool whose terms allow training

**The lawyer checks:**

- The wordings reviewed are the current wordings, schedules and endorsements
- Each scenario is analysed against the actual words of each policy
- Renewal disclosure advice reflects the client's actual AI use
- Recommendations are practical and prioritised

## Authorities

- [Insurance Contracts Act 1984 (Cth) ss 21, 37, 40, 54](https://www.legislation.gov.au/C2004A02944/latest/text)
- [ASIC Report 798 Beware the gap: Governance arrangements in the face of AI innovation (October 2024)](https://www.asic.gov.au/regulatory-resources/find-a-document/reports/rep-798-beware-the-gap-governance-arrangements-in-the-face-of-ai-innovation)
- [Statement on the use of artificial intelligence in Australian legal practice (Law Society of NSW, Legal Practice Board of WA, Victorian Legal Services Board and Commissioner, 6 December 2024)](https://lsbc.vic.gov.au/news-updates/news/statement-use-artificial-intelligence-australian-legal-practice)

## Full text and drafting notes

The full text and the drafting notes are not part of this public page. Signed-in firm accounts can read them at https://ailawframework.com/precedents/insurance-law/ai-exclusion-and-silent-ai-review-memo and through the signed-in MCP connector https://ailawframework.com/mcp/firm.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*