Cyber insurance. Cyber warranties. Same thing, right?
Wrong!
If you’ve ever watched a client confidently lump those two together in a meeting and then turn to you for confirmation, you know that the correct response is a stern shake of the head while your inner monologue shouts “This is about to become MY problem, isn’t it?!”
Managed Service Providers are increasingly being pulled into cyber insurance conversations. Insurers ask about controls. Clients ask what they need. Vendors talk about warranties. And suddenly you’re expected to explain the difference between regulated insurance products and vendor-backed guarantees without accidentally becoming an unlicensed insurance advisor.
So let’s be clear from the start: just like you, we’re not certified insurance experts, and this blog is not legal or insurance advice. For that, you should always speak to a qualified insurance professional. What we are good at is helping MSPs understand their wants, needs, and requirements. In this case, that includes how cyber insurance and cyber warranties work, how they differ, and the fun job of explaining those intricacies clearly to clients.
Because while cyber insurance and cyber warranties both exist to reduce risk, they do it in very different ways. And choosing the wrong one, or assuming one replaces the other, can leave businesses more exposed than the 2025 Cincinnati Bengals’ defense. (We had to look up worst NFL defense because, “Go sportsball!”)
You might want to sit for this, it’s very exciting. Cyber insurance is a regulated insurance product designed to help businesses recover financially after a cyber incident. It works in the same way as other types of business insurance. You pay a premium, meet certain requirements, and if a covered event occurs, the insurer helps cover the cost. (See? We told you it was exciting.)
Costs associated with cybersecurity breaches can be significant. A serious cyber incident can involve forensic investigations, legal fees, regulatory fines, customer notification costs, downtime, lost revenue, and sometimes ransom payments. Cyber insurance exists to stop a bad day or an errant click from turning into a business-ending disaster.
Cyber insurance policies are typically underwritten by licensed insurance carriers and sold through licensed insurance agents or brokers. That distinction matters, because it means policies are governed by regulation, legal standards, and clearly defined coverage terms. When a claim is approved, payouts are contractual obligations, not goodwill gestures.
For MSPs, this is the part that feels very familiar. Insurance applications often read like a security checklist, and clients regularly turn to their MSP to help answer those questions accurately.
This is also where partners like Beltex, a cyber insurance provider we work with, become valuable. Insurance specialists can help MSPs and their clients understand coverage options, policy limits, and requirements, while MSPs focus on implementing the technical controls that make coverage possible in the first place.
The important thing to understand is this: cyber insurance is designed to transfer financial risk. It doesn’t prevent attacks or replace good security practices. It helps a business survive the aftermath of an incident, not to stop the incident from happening.
And that is where the confusion with cyber warranties often begins.
A cyber warranty sounds a lot like cyber insurance, which is exactly why they get mixed up so often, but they are actually very different beasts under the hood.
A cyber warranty is not an insurance policy, although they’re usually backed by a reinsurance policy. It is a vendor backed guarantee that promises a specific outcome if certain conditions are met. Think of it less like insurance and more like a very specialized service agreement with some limited financial protection attached. Plus, there are stand along warranties available which tie to specific services.
Cyber warranties are typically offered by cybersecurity vendors, not licensed insurers. They are usually tied directly to the use of a specific product or platform. In other words, the warranty only applies if the customer is using the vendor’s tools correctly, continuously, and exactly as required.
If those conditions are met and a covered incident occurs, the warranty provider may reimburse certain costs or provide remediation services up to a defined limit.
What a cyber warranty usually covers depends heavily on the vendor, but often includes things like:
What it doesn’t usually cover is just as important, cyber warranties are often narrow in scope and have much lower limits. They usually only apply to specific attack types, specific systems, or failures directly related to the vendor’s technology. If an incident falls outside those boundaries, the warranty simply does not apply.
They are also conditional. Often very conditional. Miss a configuration requirement. Skip an update. Disable a feature. Fail to deploy the tool everywhere it is required. Any of those can void the warranty entirely.
This is where MSPs need to be especially careful. A cyber warranty can be a useful addition to a security stack, but it is not a safety net for the whole business. It does not replace cyber insurance, and may even conflict with it in very specific situations. It does not protect against every scenario a real world attacker might throw at a client.
Some providers, like Cork, position cyber warranties as a complementary layer. Cork has an integration specifically for Phin, so they must be pretty darn good. In Cork’s case, the warranty is designed to work alongside cyber insurance and strong security controls, not instead of them. That distinction matters and is worth calling out clearly in client conversations.
The simplest way to explain a cyber warranty is this: It is a promise tied to a product or service. Not a broad financial protection tied to the business.
Short answer: Yes, probably. For most businesses, the answer is not either or. You need to understand what each one does well, and how it aligns to your specific circumstances.
Cyber insurance is essential for handling serious incidents with legal, financial, and regulatory consequences. A warranty may help offset specific costs, but it is not designed to replace full coverage.
MSPs should treat warranties as a potential supplement, not a substitute.
The most effective approach is guided conversation, not product pushing. You need to fully understand what data is stored or processed, what the costs of extended downtime might be, any regulatory requirements, and what any existing insurance already covers.
From there, MSPs can explain where insurance fills the biggest gaps, and where a warranty might add value on top. Oftentimes after mapping out risks and calculating the costs of downtime + recovery, the business will realize how much coverage they need.
Every organization is different but some patterns show up consistently.
Smaller businesses often start with cyber insurance because it provides the widest protection for the least effort. Warranties tied to specific tools or services tend to be added as the business, its client base, and its offering grow.
Larger, more regulated businesses almost always require insurance first, with warranties used selectively if they align with existing controls.
Across the board, insurers increasingly expect evidence of good security practices, which is where MSPs and platforms like Phin play a crucial role.
Important note, because obviously we want you to feel extremely well-informed when you Phinish an article - but you’re not actually licensed just from reading this blog.
MSPs are not insurance brokers, and they should not try to be. The right move is always to involve a licensed insurance professional who can assess coverage, exclusions, and legal requirements properly.
At this point, we wanted to link to an article that could help you find the right insurance broker for you. Unfortunately we could only find ones that were obviously pushing a particular company, and/or that started with “In today’s interconnected digital landscape” and ain’t nobody got time fo’ dat. Keep your eyes peeled and we’ll put one together soon that’s worth reading or your money back.
In the meantime, if you’re an MSP and you want to help clients qualify for coverage, reduce premiums, and meet insurer expectations, the next step is understanding cyber insurance requirements and compliance standards in more detail. As luck would have it, that’s exactly what our recent deep dive covers.