Mandatory AI Decision Failure Insurance Act InsureMind Passes in California: Companies Must Buy Liability Insurance for AI Errors

Mandatory AI Decision Failure Insurance Act InsureMind Passes in California: Companies Must Buy Liability Insurance for AI Errors

The California State Assembly passed the InsureMind Act on June 17 with 67 votes in favor and 12 opposed. The legislation requires all California companies deploying AI systems in critical decision-making domains — including healthcare, finance, judicial proceedings, and human resources — to purchase AI decision failure liability insurance.

Coverage includes personal injury, property damage, and economic losses resulting from erroneous AI decisions. Minimum coverage amounts are determined by the scope of the AI system's decision-making impact — AI systems targeting individuals require a minimum of $1 million in coverage, while systems affecting groups require a minimum of $50 million.

Supporters of the bill say mandatory insurance will compel companies to deploy AI systems more judiciously, as insurance premiums will be directly linked to AI error rates. The insurance industry has already begun developing specialized AI liability insurance products, with expected annual premiums ranging from 2% to 8% of the system's value.