Cyber Insurance Coverage for MSPs and Their Clients

Name: Cyber Insurance Coverage for MSPs and Their Clients
Uploaded: 2026-07-15T17:39:27-04:00
Duration: 3 min 57 s
Description: https://www.n-able.com Connect with N-able: Facebook – https://www.facebook.com/NableMSP/ LinkedIn – https://www.linkedin.com/company/n-able Twitter - https://twitter.com/Nable

N-able

07/15/2026

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Transcript

So the process of deciding what types of coverage you need and what amount of coverage you need are two different exercises. While it's easy to understand that as an MSP you need first and third party cyber liability insurance. The specifics of what coverage and what amount of coverage you need will require performing a risk assessment of your business and the risk exposure that your clients represent to you. And the same is true for your clients. They too need to perform a risk assessment of their business and the risk exposure that you the MSP represent to them when determining the types and amount of cyber liability insurance that they need. A very important thing here and I've got it in the MSP later on we'll be covering it but I always like to mention it early for anybody that might miss the rest of the session. This is where you get into this is where you get into your first concerns of legality licensure and your ability to operate and do certain things in different states. You can tell a client that their insurance policy does not cover enough. You cannot tell your client what that amount of insurance should be getting into practicing a regulated profession and unless you have a license in your state you should not do that but you can look over a policy with a client or ask them for what their coverage is and voice your opinion that that's not enough because here's what it's going to cost for us to respond. Can't tell them what they actually should buy but you can tell them whenever it's obviously not enough to cover what you will need to do in response to certain types of incidents that they are buying that insurance for. Insurance underwriters and insurance brokers assessments and applications the risk assessments are performed by the insurance companies as well but they will typically rely on information provided to them by the business to be insured and now there are some insurers who are now using tools to collect information about a business to be insured by installing applications on endpoints or doing external scans of networks to retrieve and verify the information that's provided to the insurer or they may even in larger engagements hire third-party assessors to perform the assessment. The risk assessment will evaluate not just technology that is used but also the type of the business, the type and sensitivity of data processed by the business, data workflows of employees and any other risk the business represents. The information will help that underwriter in determining what types and amounts of coverage are needed or if the business presents just too many risks to provide coverage to.

TL;DR

MSPs and their clients both need first-party and third-party cyber liability insurance, with coverage types and amounts determined through separate risk assessments of their respective businesses and mutual risk exposure.
MSPs can inform clients when coverage appears insufficient based on incident response costs, but cannot legally prescribe specific coverage amounts without state insurance licensure, as this constitutes practicing a regulated profession.
Insurance underwriters increasingly use automated tools, external network scans, and third-party assessors to verify business information and evaluate technology, data sensitivity, and workflows when determining coverage eligibility and appropriate policy limits.

Summary

This brief educational segment addresses the critical distinction between determining types of cyber insurance coverage versus coverage amounts for managed service providers and their clients. The speaker emphasizes that both MSPs and their customers must conduct independent risk assessments to identify appropriate first-party and third-party cyber liability insurance needs. A key compliance warning is provided regarding the legal boundaries MSPs face when advising clients on insurance — while MSPs can identify inadequate coverage based on incident response costs, they cannot prescribe specific coverage amounts without proper state licensure, as doing so constitutes practicing a regulated profession. The discussion concludes with an overview of how insurance underwriters perform their own risk assessments, increasingly using automated tools and third-party assessors to verify business information, evaluate technology infrastructure, assess data sensitivity, and determine insurability based on the overall risk profile presented by the business seeking coverage.

Chapters

0:00 - Coverage Types vs. Amounts
0:57 - Legal Boundaries for MSPs
2:24 - Insurance Underwriter Assessment Methods
3:15 - Risk Evaluation Factors

Key Quotes

0:25 "The specifics of what coverage and what amount of coverage you need will require performing a risk assessment of your business and the risk exposure that your clients represent to you."
1:27 "You can tell a client that their insurance policy does not cover enough. You cannot tell your client what that amount of insurance should be getting into practicing a regulated profession and unless you have a license in your state you should not do that."
2:43 "There are some insurers who are now using tools to collect information about a business to be insured by installing applications on endpoints or doing external scans of networks to retrieve and verify the information that's provided to the insurer."

FAQ

Can MSPs legally advise their clients on how much cyber insurance coverage to purchase?

No. MSPs can review a client's policy and express concern that coverage appears insufficient based on potential incident response costs, but they cannot prescribe specific coverage amounts without holding an insurance license in their state. Doing so constitutes practicing a regulated profession and could result in legal consequences.

What methods do insurance underwriters use to assess a business's cyber risk profile?

Underwriters traditionally rely on information provided by the business seeking insurance, but increasingly use automated tools including endpoint applications, external network scans, and third-party assessors to independently verify security controls, evaluate technology infrastructure, assess data sensitivity and workflows, and determine overall insurability.

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