When you buy a new car, you want to ensure you can get one with a warranty in case you need emergency repairs throughout the first few years of ownership. It's the same with software — a cyber warranty ensures clients can recover from security incidents without suffering heavy financial losses. And that's crucial today when sophisticated cybercrimes are happening more frequently.
Here's why your MSP should strongly consider implementing a cyber warranty program.
Understanding Cyber Warranties
A cyber warranty is a financial product that provides a guaranteed payout if a client experiences a security incident. It's typically attached to a specific tech product or service, like any other type of warranty.
For example, many cyber warranties come as part of a cybersecurity software package. If this product fails to protect the client against a data breach or other cybersecurity incident, the provider will cover part or all of the recovery costs, protecting the client's bottom line.
Your clients need to ensure they get the best coverage possible. The following are key warranty considerations:
- Compensation limit: Many cyber warranties cap potential compensation based on how much a customer spends on products from that vendor. For example, if you purchase a software suite for $1,500 but lose $300,000 in damages, you would only be eligible to receive up to $1,500.
- Underwriter: Your cyber warranty should have an underwriter who will ensure you have enough funds to pay out if your business or a client experiences an incident.
- Restrictions: Vendors sometimes advertise a high warranty but place strict requirements and sub-limits that prevent businesses from receiving the money they thought they were entitled to.
Cyber warranties are especially important for MSPs because they help your operation mitigate potential financial risks and foster greater client trust.
What's the Difference Between Cyber Warranties and Cyber Insurance?
Although they may seem similar on the surface, a cyber warranty is a different type of financial product than a cyber insurance policy. Cyber insurance is not attached to a product. While you can name the product as part of a policy, insurance coverage is much broader than a warranty. It usually requires organizations to present evidence of their risk management efforts to qualify for coverage — however, specific eligibility requirements vary between insurers.
Cyber insurance essentially takes more of an external approach to risk management, whereas a warranty evaluates risk from the inside out. Rather than requiring the client to present qualifications or pay ongoing premiums, a warranty comes with the product, and its coverage applies solely to that product.
A cyber warranty should not replace a traditional cyber insurance policy — instead, it's best to combine the two to optimize risk mitigation. For example, a cyber warranty will cover issues relating to a software product or service, and a cyber insurance policy will provide robust, universal coverage. You could offer a cyber insurance policy as part of a service agreement or refer clients to an external insurance company that offers compatible policies with your service and product offerings.
Addressing Security Gaps With Cyber Warranties
Understanding the specific risks companies face can help you design a warranty program that works for your clients' budgets and risk profiles.
Some of the most common security threats MSPs and their clients experience include:
- Ransomware attacks: Attackers can use an exploit or phishing attack to trick employees into opening ransomware on their computers, which results in locked devices and lost revenue.
- Supply chain and IoT attacks: The Internet of Things (IoT) opens up a vast network of endpoints outside the company's protection.
- Social engineering: Phishing, scareware and other types of social engineering attacks take advantage of human weaknesses, which can cause significant losses in a company.
Obtaining a Cyber Warranty
Typically, customers should be able to get a cyber warranty when they purchase a new software platform or SaaS solution. Most tech vendors will not require an application or additional payment, as the warranty comes included with the investment.
In some cases, the warranty provider will assess the client's digital infrastructure, identify potential vulnerabilities and offer tailored protection measures before extending warranty coverage. The best way to take advantage of cyber warranties is to work with an experienced provider who can walk you through the policy terms and coverage.
Cyber insurance, on the other hand, often has a long list of requirements for eligibility. These include essential cybersecurity measures MSPs and their clients should be taking:
- Multi-factor authentication (MFA): MFA requires users to present two or more credentials to log in to a system, providing a more secure login experience than a username and password alone.
- Access control: An access control framework helps protect against unauthorized access to sensitive information and mission-critical applications, reducing the risk of a detrimental attack.
- Regular risk assessments: Conducting and documenting routine vulnerability assessments is essential for identifying and mitigating risks, which many insurers require to provide coverage.
- Incident response plan: A well-defined incident response plan outlines how a company will respond to a cyberattack and mitigate damages. This plan is essential for minimizing risk and keeping the overall impact low.
- Security awareness training: Did you know 88% of data breaches involve employee mistakes? A comprehensive employee cybersecurity training program helps prevent these errors and accidents from causing serious damage.
Advantages of Having Cyber Warranty Coverage
A cyber warranty benefits any party looking to enhance their cybersecurity coverage and protect their bottom line. Offering a cyber warranty benefits both your MSP and your clients by:
- Reducing financial risk: Unlike insurance, a cyber warranty provides immediate financial relief without requiring the client to meet a deductible or pay monthly premiums.
- Providing access to experts: A cyber warranty program that enables clients to get in touch with in-house legal, IT and financial experts helps clients navigate incident recovery easier so they can get back on their feet faster.
- Building trust and confidence: Offering a cyber warranty demonstrates your MSP's faith in your products and services. And your clients can rest easy knowing they have protection in case of an emergency.
Give Your Clients Peace of Mind With Phin Security
Looking for another great way to reduce your clients' cybersecurity risk? Phin Security's comprehensive security awareness training software is here to help.
Our platform offers engaging, memorable security awareness training sessions and phishing simulations that adapt to meet users where they are. Advanced data analytics also helps supervisors monitor learning progress for specific employees to keep everyone on track.
See how Phin can help push your MSP to the next level. Contact us for more information about our robust training solutions, or try Phin for free today!
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