Scenario Library / Hallucination liability
Hallucination liability

Consultancy refunds government after report contains AI-fabricated citations

Deloitte Australia agreed to repay the final instalment of an A$440,000 government contract after its report for the Department of Employment and Workplace Relations was found to contain fabricated references and a fake court quote. The firm later disclosed it had used generative AI.

Professional Services 2025 Verified in a source

Insurance products that may respond

Misc. professional liabilityTech E&O

Why it matters for insurance

Classic professional-services exposure: client reliance on AI-assisted work product. Fee refund is first-party loss; follow-on claims possible.

Could your AI create this exposure?

See how AI-aware Tech E&O, Cyber, and D&O respond, and get a program built for your risk.

This is an educational research summary built from public information. Allegations in pending cases are unproven, and the insurance notes above are for discussion, not coverage advice. Whether any policy responds depends on its specific wording, exclusions, endorsements, the facts, and applicable law.

Reviewed by Andrei Craciunescu, CA Licensed Insurance Broker #4467994