Hunton Insurance Recovery Blog

A recent securities class action, Dunn v. Upstart Holdings, Inc., brought against Upstart – a fintech lender – underscores emerging AI-related D&O risks. Filed April 2026 in California federal court, the suit alleges that Upstart and its executives misled investors about the performance of its AI loan underwriting model. When Upstart’s AI Model 22 underperformed, the company’s stock plunged, prompting an investor lawsuit claiming that management knew about calibration failures. The case spotlights the D&O insurance implications of artificial intelligence in corporate operations. Company executives face new exposures if AI algorithms malfunction or produce biased outcomes. For policyholders, D&O policies may provide coverage for defense and, possibly, liability in securities suits alleging misrepresentations about AI systems. Insurers, however, are starting to add AI exclusions or sublimits, wary of the unpredictable liability posed by opaque AI models.