When a business hires a Managed Services Provider (MSP) like Eagle IT, they’re investing in proactive, professional IT services to secure their technology, reduce risk, and keep operations running smoothly. But one question often comes up:
“If my MSP is handling cybersecurity, do I still need my own cyber insurance?”
The answer is yes — absolutely.
Here’s why.
The Role of an MSP in Cybersecurity
MSPs are your front line of defense against cyber threats. Eagle IT, for example, deploys layered security tools, enforces best practices, and monitors systems to help prevent breaches before they happen. Our responsibilities typically include:
- Installing and managing antivirus/endpoint protection
- Maintaining firewalls and secure network configurations
- Managing backups and disaster recovery solutions
- Conducting patch management and system updates
- Monitoring systems for suspicious activity
- Educating users through security awareness training
Our job is to minimize your risk, but even with every safeguard in place, no system is completely immune to cyber incidents.
What Cyber Insurance Does the MSP Carry?
Eagle IT, like many MSPs, carries its own cyber liability insurance. However, this policy is designed to protect the MSP, not your business. Specifically, it helps cover:
- Defense costs and settlements if Eagle IT is sued for a security failure
- Liability for errors or omissions in our services that contribute to a loss
- Breach notification costs Eagle IT may incur if our own systems are compromised
- Regulatory fines or investigations related to our own cyber practices
But here’s the key:
This coverage is not meant to cover losses your business experiences from a breach, attack, or data loss — even if Eagle IT was involved.
What Happens If Your Business Is Hit?
Let’s look at a few real-world examples to illustrate the limits of MSP insurance and when your own policy comes into play:
Scenario 1: Phishing Email Breaches Employee Credentials
An employee clicks a convincing phishing email and unknowingly provides credentials to an attacker. The attacker gains access to sensitive client data.
- MSP Role: Eagle IT investigates and helps remediate the incident.
- MSP Insurance: May cover legal defense if Eagle IT was negligent in security setup.
- Your Insurance: Covers your legal liability for the breach, breach notification costs, credit monitoring, regulatory fines, business interruption, and client lawsuits.
Scenario 2: Ransomware Attack Disrupts Operations
Your systems are locked by ransomware, halting operations for two days. Recovery is possible, but you lose revenue and reputation.
- MSP Role: Eagle IT restores systems and identifies attack vector.
- MSP Insurance: Covers costs if the root cause was gross negligence by Eagle IT.
- Your Insurance: Pays ransom (if legally permissible), covers lost revenue, PR costs, legal support, and post-breach services.
Scenario 3: Data Breach at Third-Party Provider
A cloud platform you use (not managed by the MSP) suffers a breach exposing sensitive data.
- MSP Role: Limited involvement.
- MSP Insurance: Not applicable.
- Your Insurance: Covers your liability for exposed data, even if the breach was at a vendor.
What Client Cyber Insurance Covers
When you carry a cyber liability policy, it typically includes two categories of coverage:
First-Party Coverage
This pays for your own costs after an incident:
- Data restoration
- Business interruption and lost revenue
- Forensics and incident response
- Ransomware/extortion payments
- Breach notification and credit monitoring
- Crisis management and PR
Third-Party Liability Coverage
This protects you from claims by others:
- Lawsuits from affected clients or partners
- Regulatory investigations and fines
- Defense costs and settlements
Why You Can’t Rely on the MSP’s Insurance
Even if your MSP made a mistake, you still need your own coverage. Here’s why:
- You still bear legal responsibility for your data and your clients’ data, even if the breach wasn’t your fault.
- The MSP’s insurer will defend them, not you.
- You can’t guarantee compensation from the MSP’s insurance — claims and lawsuits take time and aren’t always successful.
- Business interruption losses are yours, and they’re often the most expensive part of a cyberattack.
- Breach notification laws make you responsible for telling affected clients and regulators — at your expense.
A Shared Responsibility Model
Think of cybersecurity like fire prevention in a building.
- Eagle IT installs the smoke detectors, maintains the sprinkler system, and checks for risks.
- You, the business owner, carry the fire insurance in case something still burns.
Both are essential.
We work together to prevent problems, but insurance ensures you’re protected if the worst happens.
What to Look for in a Cyber Insurance Policy
If you don’t yet carry cyber insurance, now is the time to explore options. Work with a broker who understands your business type, and look for:
- Minimum coverage of $500,000 to $1 million for small businesses
- Explicit coverage for ransomware and phishing
- Business interruption protection
- Legal and regulatory coverage
- Third-party liability protections
And importantly: Make sure your policy isn’t voided by lack of basic cybersecurity practices — which is another reason to work with an MSP like Eagle IT. We help ensure your systems align with insurance requirements.
Bottom Line: IT Support Is Not a Substitute for Insurance
Eagle IT’s job is to prevent breaches and minimize downtime. But insurance is there to help you recover, legally and financially, if an incident occurs — whether or not it’s anyone’s fault.
Having both an MSP and a cyber insurance policy is the most responsible approach. It protects your business, your clients, and your reputation.
Need help understanding what to look for in a cyber policy?
Eagle IT can coordinate with your insurance broker and help ensure your cybersecurity program meets policy requirements — and more importantly, protects your business from real-world threats.
Let’s Keep IT Simple — and secure.