How do you prevent the camera from treating a character AI like a wall?
For example when a character walks to close to the player the camera gets blocked out and you
have to move away from them so the camera can reset back to how it was.
Game type: Third person
Take a look at collision channels -> after you have created a special one for your ai, you can set the collision of your camera to ignore the actors with the special collision channel 
https://www.unrealengine/en-US/blog/collision-filtering
https://docs.unrealengine/latest/INT/Engine/Physics/Collision/HowTo/AddCustomCollisionType/index.html