Who is liable when my company's AI chatbot gives customers wrong advice?

In short

Who is liable when your company's AI chatbot gives customers wrong advice? In Germany it is usually your company, not the software vendor. In 2024 a Canadian airline had to pay about 812 Canadian dollars after its bot promised a fare that did not exist. Pure financial loss from wrong advice is mostly covered only by professional indemnity insurance, from about 190 euros a year.

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Who is liable when my company's AI chatbot gives customers wrong advice?

What it costs

Published premiums in Germany for cover that is relevant when a chatbot gets things wrong, as of October 2026.

Example	Typical range
IT professional indemnity, sum insured 125,000 euros, turnover up to 30,000 euros	190 euros a year
IT professional indemnity, sum insured 1 million euros, turnover up to 250,000 euros	440 to 590 euros a year
General liability for consultants and IT service providers, low turnover	from about 65 euros a year
Cyber insurance for small firms with turnover up to 500,000 euros	from about 400 euros a year

Premiums from a published premium table and cost overviews,

deductible 250 euros for professional indemnity.

Your premium depends on sector, turnover and sum insured.

Worked example

Online shop, chatbot promises free returns that do not exist

Assumed figures: how one wrong chatbot answer becomes expensive once it reaches many customers.

Customers relying on the promise	200
Return shipping per case	about 8 euros
Goodwill or compensation in total	about 1,600 euros
Staff time to handle the cases	internal, not insured

This is a pure financial loss. General liability will usually not pay; professional indemnity only if such information is part of the insured activity.

Why your business answers for its chatbot

An AI chatbot is not an employee and not a legal person, it is a tool. From the customer's point of view, whatever it says, your company says. If the chatbot gets a price, delivery time, cancellation rule or refund wrong, that can be a breach of duty under German law even before any contract exists: starting contract negotiations already creates duties of care (§ 311 (2) BGB).

Whether a German court treats the chatbot like an assistant you are responsible for (§ 278 BGB) or sees your own fault in using a faulty tool makes little difference to the customer. A blanket disclaimer for everything the chatbot says only goes so far, because standard terms cannot exclude liability for intent or gross negligence (§ 309 no. 7 BGB).

The Canadian airline chatbot case

In February 2024 a tribunal in British Columbia ruled on a chatbot that had told a passenger, after a death in the family, that he could claim a bereavement discount after travelling. The airline's actual fare rules did not allow that.

The airline argued the chatbot was responsible for its own statements. The tribunal rejected this: a company is responsible for all information on its website, whether it comes from a static page or a chatbot. In total the airline had to pay around 812 Canadian dollars. This is Canadian law, but it shows how courts react to the idea of a chatbot acting on its own.

What the EU AI Act requires from chatbots

Since 2 August 2026 Article 50 of the EU AI Act, Regulation (EU) 2024/1689, applies: an AI chatbot that talks directly to people must make clear that they are dealing with an AI, unless that is obvious from the context. The notice has to be clear and given at the latest at the first interaction.

The chatbot's vendor is mainly responsible for the design. As the business using it, you make sure the notice stays visible, for example a line at the start of the chat or a label next to the input field. A name like "your assistant" or a sentence in your terms is not enough. In Germany the Federal Network Agency (Bundesnetzagentur) has supervised compliance since 29 July 2026.

Which insurance pays for wrong chatbot advice

General business liability insurance (Betriebshaftpflicht) is built for injury and property damage. A customer who pays too much or misses a deadline because of a wrong chatbot answer usually has a pure financial loss without either. That is the job of professional indemnity insurance, called Vermögensschadenhaftpflicht in Germany, for IT firms often IT-Haftpflicht.

Check whether your policy expressly includes or excludes damage caused by AI you use. Dedicated AI error policies exist so far mainly for larger companies. For a small business with a customer service chatbot, professional indemnity with a suitable sum insured is usually the realistic route.

Damage caused by the chatbot	General liability	Professional indemnity	Cyber insurance
Wrong price or fare information	mostly no	yes, if included	no
Wrong information on deadlines or cancellation	mostly no	yes, if included	no
Chatbot leaks customer data	no	partly	yes, data breach
Fine from the regulator	no	only if insurable and included	only if insurable and included

When you do not need extra cover

If your chatbot only answers opening hours, directions or passes questions on to staff, the risk of wrong advice is low. A clear AI notice and regular checks of the answers are usually enough. It becomes critical once the chatbot quotes prices, promises goodwill refunds or gives advice on tax, health or contracts.

Advice on covering AI risks

Norman Nammert works as an insurance broker (Versicherungsmakler) and arranges general liability, professional indemnity and cyber insurance, checking whether your policy covers the use of an AI chatbot. The insurer pays the broker's commission, so the advice is free for you.

Step by step

Decide what the AI chatbot may answer and what it must not.
Let it quote prices, deadlines and refund rules only from checked sources.
Show a clear notice "You are chatting with an AI" at the start.
Spot check conversations and correct wrong answers.
Check your liability policy for pure financial loss and AI clauses.
If the chatbot gives advice, take out professional indemnity with a suitable sum.

Checklist

AI notice visible at the first message
Chatbot cannot make binding promises on price or refunds
Handover to a human for complaints and legal questions
Chat logs are kept so cases can be reviewed
Financial loss from information included in your insurance

Common mistakes

Assuming the software vendor is liable to your customers
Relying on a blanket disclaimer in the chat window
Assuming general liability covers every wrong answer
Letting the chatbot pose as a human "team member" without an AI notice

Questions and answers

Frequently asked

Is the software vendor liable instead of my company?

Towards your customer, your company is usually liable.

Whether you can recover the money from the vendor depends on your contract with them,

and many vendors cap their liability tightly.

Is a promise made by the chatbot binding?

It depends on the case.

Even without a contract, wrong information can lead to damages because duties of care already

apply during contract negotiations under German law.

Do I have to label my chatbot as AI?

Yes, since 2 August 2026 under Article 50 of the EU AI Act, unless it is obvious to users.

The notice must be clear at the latest at the first interaction.

What does breaching the disclosure duty cost?

The AI Act allows fines of up to 15 million euros or 3 percent of worldwide annual turnover.

For small and medium sized businesses the lower amount applies.

Does a "no guarantee" note help?

Only to a limited extent.

Standard terms cannot exclude liability for gross negligence,

and customers may generally rely on information on your website.

Is there insurance specifically against AI errors?

A few insurers offer it, mainly for larger companies and AI vendors.

For small businesses, professional indemnity, for IT firms IT-Haftpflicht, is the usual route.

Sources

NAMMERT insurance broker

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