{"id":114948,"date":"2024-08-26T15:31:33","date_gmt":"2024-08-26T19:31:33","guid":{"rendered":"https:\/\/jumpcloud.com\/?p=114948"},"modified":"2024-10-17T12:09:47","modified_gmt":"2024-10-17T16:09:47","slug":"cyberinsurance-guide-for-msps","status":"publish","type":"post","link":"https:\/\/jumpcloud.com\/blog\/cyberinsurance-guide-for-msps","title":{"rendered":"Comprehensive Guide to Cyber Insurance for MSPs"},"content":{"rendered":"\n
Cybercrime is as lucrative as ever, generating millions in illicit revenues for threat actors. Between 2021 and 2023, global data breaches rose by 72%<\/a>, breaking all previous records.<\/p>\n\n\n\n Meanwhile, data breach costs continue to rise. The average cost of an enterprise data breach in 2024 is $4.88 million<\/a> \u2014 another all-time high.<\/p>\n\n\n\n This puts managed service providers (MSPs) in a tight position. Cyber liability insurance can help reduce exposure to steep losses associated with cyberattacks.<\/p>\n\n\n\n Cybercriminals target MSPs to gain access to customer data and infrastructure. Almost all MSPs<\/a> have suffered a successful cyberattack in the last 18 months. Nine out of 10 report facing more attacks now than during the height of the pandemic.<\/p>\n\n\n\n Cyber liability insurance<\/a> gives MSPs a valuable backup plan in the event of a catastrophic data breach. A good insurance plan can significantly soften the blow of an advanced cyberattack.<\/p>\n\n\n\n Cyber liability insurance provides coverage against cyberattacks and data breaches. This protects MSPs from the potentially unlimited damages they would otherwise be exposed to after an attack. A cyber insurance policy may cover investigation and recovery expenses, ransom payments, and more.<\/p>\n\n\n\n MSP cyber insurance provides financial protection against losses incurred after a cyberattack. That can include covering incident response actions, investigative efforts, and legal costs. This limits the potential damage that a successful cyberattack can cause.<\/p>\n\n\n\n Cyber insurance allows MSPs and their customers to manage cyberattack risk more effectively. Even the most secure organizations cannot guarantee every attempted attack will fail. A good insurance policy provides valuable resources when they are needed most.<\/p>\n\n\n\n There are several different types of MSP cyber insurance policies. Each policy covers different types of damages to a varying degree. Many policies cover first-party and third-party damages separately.<\/p>\n\n\n\n This type of cyber insurance policy protects against cyberattacks and data breaches. It covers the costs associated with the event itself \u2014 like incident response, data recovery, and ransom payments. These first-party costs are damages that stem directly from the cyber incident.<\/p>\n\n\n\n This type of cyber insurance policy protects against liability claims made by third parties. If individuals or organizations file court claims against you for failing to protect their data, this policy would cover the legal fees, court expenses, and settlement payments. Non-compliance fines are also covered by third-party cyber insurance.<\/p>\n\n\n\n MSPs have unique legal and financial exposure to cyberattack damages. Specialized MSP cyber insurance policies may include both first-party and third-party coverage. These contracts may feature an increased indemnity that matches the risk of third-party damages to multiple clients.<\/p>\n\n\n\n Cyberattack incidents are different from most other types of insurable events. As a result, cyber insurance policies typically provide multiple types of coverage. Each of these coverage areas may have its own terms and conditions, with unique indemnities for each.<\/p>\n\n\n\n This type of coverage focuses on the immediate costs of a data breach that exposes sensitive information. As liability insurance, it protects the organization from third-party claims. For example, it may cover settlement for a client that sues their MSP for failing to protect valuable intellectual property.<\/p>\n\n\n\n This type of coverage reimburses the MSP for first-party losses caused by a cyber incident. That includes bringing in third-party IT forensics teams, setting up a call center to notify customers of the incident, and investigating the incident itself. <\/p>\n\n\n\n Cyberattacks often lead to system failures that interrupt normal business operation. The average cost of downtime for enterprise organizations is $9,000 per minute<\/a>. Business interruption coverage provides payment for MSPs that suffer downtime as a result of cyberattack.<\/p>\n\n\n\n Errors and omissions coverage protects MSPs against damages related to unfulfilled contractual obligations. If a cyberattack interrupts your organization\u2019s ability to carry out routine operations for customers, this coverage will pay for the legal costs associated with customer disputes.<\/p>\n\n\n\n Every MSP has a unique security risk profile. The best cyber insurance policy is the one that meets that profile most closely. Not all policies cover the same types of events, and additional coverage often comes at a higher price.<\/p>\n\n\n\n As an MSP, your security risk profile is largely defined by your client portfolio. If your customers are high-value targets (like manufacturers and financial service providers<\/a>), your cyber insurance needs will reflect that. Your tech stack and access to in-house security expertise will also play an important role here.<\/p>\n\n\n\n Most insurance policies follow a general structure. Enhanced protection against cyber risks comes at a higher price. Your policy should cover the cyber incidents most likely to occur and provide some protection against less likely attacks. Be mindful of policy limits that might make you liable for damages in large-scale supply-chain attacks.<\/p>\n\n\n\n Cyber insurance is a relatively new phenomenon. Pricing and terms are important when selecting a provider, but a good reputation is vital. Higher-quality insurance providers will often require customers to demonstrate compliance with industry-standard frameworks. Be prepared to showcase your adherence to these regulations.<\/p>\n\n\n\n Cyber insurance premiums typically cost between $1,000 and $7,500 annually for small businesses<\/a>. Large organizations pay much more, but they also have more opportunities to reduce costs. Implementing secure technologies and adopting compliant workflows can significantly reduce cyber insurance premiums for MSPs.<\/p>\n\n\n\n Cyber insurance policies can be complex. MSP leaders must pay close attention to the terms and conditions of the policy before signing an agreement. Here are three key areas to focus on when considering MSP cyber insurance:<\/p>\n\n\n\n Cost-effective policies do not generally cover every type of security event. Your policy should cover the types of events your organization is most likely to face. It may not cover less likely scenarios. You should be aware of those scenarios and be prepared to detect them if they occur.<\/p>\n\n\n\n Insurance providers may refuse to cover organizations that fail to meet their security requirements. These requirements are often taken from industry-wide cybersecurity frameworks like NIST<\/a> and SANS<\/a>. Meeting these requirements might involve changing workflows or implementing new technologies.<\/p>\n\n\n\n Cybersecurity incidents are complex and unpredictable. When one occurs, you may not know whether it is covered until after you conduct an investigation. Pay close attention to how your provider resolves coverage disputes when they occur.<\/p>\n\n\n\nUnderstanding MSP Cyber Liability Insurance<\/h2>\n\n\n\n
What Is MSP Cyber Liability Insurance?<\/h3>\n\n\n\n
Why Do MSPs Need Cyber Insurance?<\/h3>\n\n\n\n
The Importance of Cyber Insurance for MSPs<\/h3>\n\n\n\n
Types of Cyber Insurance for MSPs<\/h2>\n\n\n\n
First-Party Cyber Insurance<\/h3>\n\n\n\n
Third-Party Cyber Insurance<\/h3>\n\n\n\n
Specialized Policies for MSPs<\/h3>\n\n\n\n
Key Coverage Areas of Cyber Insurance<\/h2>\n\n\n\n
Data Breach and Privacy Liability<\/h3>\n\n\n\n
Network Security Coverage<\/h3>\n\n\n\n
Business Interruption Coverage<\/h3>\n\n\n\n
Errors and Omissions Insurance<\/h3>\n\n\n\n
How to Select the Best Cyber Insurance Policy<\/h2>\n\n\n\n
Assessing Your Risks and Needs<\/h3>\n\n\n\n
Comparing Policy Features and Limits<\/h3>\n\n\n\n
Choosing the Right Insurance Provider<\/h3>\n\n\n\n
Cost Considerations<\/h3>\n\n\n\n
Common Challenges MSPs Face with Cyber Insurance<\/h2>\n\n\n\n
1. Understanding Policy Exclusions<\/h3>\n\n\n\n
2. Meeting Security Requirements<\/h3>\n\n\n\n
3. Managing Claims and Coverage Disputes<\/h3>\n\n\n\n