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ARTICLE · 03 APRIL 2025

A Regulatory Assessment Of AI Performance Guarantees

Holland & Knight
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With the warranty industry evolving in the U.S., companies seeking to modernize conventional warranties by leveraging advanced technologies such as artificial intelligence (AI)...

United StatesTechnology
Alex Selarnick
Alex Selarnick
Greg Hoffnagle
Greg Hoffnagle
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Highlights

  • With the warranty industry evolving in the U.S., companies seeking to modernize conventional warranties by leveraging advanced technologies such as artificial intelligence (AI) are faced with unique regulatory questions and risks.
  • Before offering an AI performance guarantee, it is important for companies to understand the potential risks in doing so, as it is common for these types of programs to straddle the boundary between insurance and other regulated risk-sharing arrangements, and the laws governing these offerings are not always defined or clear.
  • In order to reduce risk in offering an AI performance guarantee, companies should consider carefully defining AI performance and warranty scope, avoiding common characteristics of insurance products and employing other best practices.

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