Platform function
An AI-powered talent intelligence platform built to automate hiring decisions. It uses proprietary algorithms to
assess how well candidates fit the role.
Incident overview
A large enterprise deployed an AI platform to streamline hiring in a high-volume recruitment campaign. Due to a flaw in the algorithm’s training data, the system disproportionately filtered out qualified candidates from a specific demographic group. A rejected candidate discovered this bias and filed a discrimination lawsuit, alleging unfair treatment and reputational harm.
CFC technology 5.0 policy responds
Coverage area
Response
Technology E&O
Covers legal defense and settlement costs for failure of the AI to perform as intended.
Media liability
Responds to reputational harm claims if the AI generated reports are defamatory or misleading.
Cyber liability
If the issue stemmed from corrupted training data or unauthorized access, cyber coverage kicks in.
Regulatory/defense
Covers costs if regulators investigate the platform for algorithmic bias or data misuse.
Affirmative AI coverage
Explicitly covers claims arising from AI decision making, including:
- Algorithmic bias
- Lack of explainability
- Discriminatory outcomes
- Bodily injury or property damage caused by AI systems
CFC technology 5.0 policy responds
Most tech policies are vague or silent on AI risks. CFC’s updated technology policy affirmatively includes AI
exposures, meaning:
- No ambiguity about coverage for algorithmic decisions
- Protection against evolving AI risks, including autonomous learning
- Support for regulatory scrutiny, including explainability and fairness requirements
Total estimated claim cost: $955,000
Get in touch if you have any questions or would like to learn more about CFC’s comprehensive tech cover.
Legal disclaimer: This example is intended for illustrative purposes only and not intended to address the circumstances of any particular insured. Each claim submitted to CFC by an insured is based on the terms and conditions of the coverage provided to that particular insured and the facts and circumstances relating to a particular claim.
