  Artificial Intelligence (AI) has received an increasing amount of attention
in multiple areas. The uncertainties and risks in AI-powered systems have
created reluctance in their wild adoption. As an economic solution to
compensate for potential damages, AI liability insurance is a promising market
to enhance the integration of AI into daily life. In this work, we use an
AI-powered E-diagnosis system as an example to study AI liability insurance. We
provide a quantitative risk assessment model with evidence-based numerical
analysis. We discuss the insurability criteria for AI technologies and suggest
necessary adjustments to accommodate the features of AI products. We show that
AI liability insurance can act as a regulatory mechanism to incentivize
compliant behaviors and serve as a certificate of high-quality AI systems.
Furthermore, we suggest premium adjustment to reflect the dynamic evolution of
the inherent uncertainty in AI. Moral hazard problems are discussed and
suggestions for AI liability insurance are provided.
