AI adoption is opening insurance coverage gaps for car wash operators
As washes lean on computer vision, license plate recognition, and predictive maintenance, insurers are rewriting policy language and adding AI exclusions that could leave owners exposed.
By The Car Wash News Staff
3 min read
The technology that is making car washes faster and smarter is also creating new liabilities that many older insurance policies were never written to cover. As operators add computer vision, license plate recognition, predictive maintenance, and AI-driven customer tools, insurers are quietly reshaping what they will and will not pay for.
Writing for Auto Laundry News, Kimberly Grizzle of independent agency The Insurancenter lays out how artificial intelligence is changing both wash operations and the coverage operators need to protect them.
Where AI creates new exposure
Modern washes now use AI across the site. Predictive maintenance systems monitor motor temperatures, vibration, and component wear to flag failures before they cause downtime. Computer vision measures vehicle size and position in real time to adjust brush pressure and reduce damage. Chatbots handle inquiries and memberships around the clock, and license plate recognition automatically identifies returning members and initiates billing.
Each of these tools generates and stores sensitive data, and that is where the risk grows. According to the reporting, a breach involving customer information, payment details, or vehicle data could trigger financial losses, regulatory penalties, and reputational harm. Operators using facial recognition, biometric systems, or vehicle tracking may also face different privacy laws depending on the state where they operate.
The article also points to algorithmic errors. A malfunctioning vision system could misread a vehicle and set equipment in a way that causes physical damage, while a faulty predictive maintenance algorithm could miss a mechanical problem entirely. Both raise unresolved questions about who is liable when an AI system contributes to a loss.
How insurers are responding
For years commercial policies were largely silent on AI, neither covering nor excluding related claims. That is changing. The article notes that the Insurance Services Office introduced generative AI exclusion endorsements for commercial general liability policies effective in 2026, allowing insurers to exclude claims tied to AI-generated content or outputs. Because many carriers use ISO forms, these exclusions could spread across the market.
Other lines are shifting too. Professional liability and errors and omissions policies are adding AI-related restrictions. Directors and officers coverage is being affected by scrutiny of so-called AI washing, where companies overstate their AI capabilities. Crime and fidelity policies may not respond to deepfake fraud or AI-enabled social engineering unless specific endorsements are added.
Cyber insurance stands out as an exception. The article reports that many cyber insurers are affirming coverage for AI-driven cyberattacks, including data breaches, ransomware, and business interruption. But cyber policies typically exclude bodily injury and physical property damage, so a wash system that physically damages a vehicle would likely fall outside that coverage.
Why it matters for operators
The core warning is that reviewing policy limits alone is no longer enough. Owners need to understand how each policy defines artificial intelligence, generative AI, and automated decision-making, and where new exclusions sit. A coverage gap discovered after a claim can be far more costly than the premium savings.
The article recommends documenting every AI technology in use, including third-party software with embedded AI, and disclosing it during underwriting to avoid disputes later. Strong cybersecurity practices such as employee training, multifactor authentication, network monitoring, and incident response planning can reduce both the frequency of incidents and insurance costs.
Practically, operators should coordinate cyber, general liability, garage keepers, property, and equipment breakdown policies rather than assuming any single line covers an AI-related loss. Bring current systems to each renewal conversation and ask directly how AI claims will be handled. The washes that manage this well will capture the efficiency gains of AI without inheriting a hidden coverage hole.
