Managed Service Provider (MSP) Insurance

Business insurance requirements can come from your state, your clients, commercial landlords, and lenders.

Here are several situations where MSPs must have insurance:

• You rent an office or apply for a loan. You might need general liability insurance to sign a lease or get a business loan.
• Your clients require coverage. Clients may include tech E&O, general liability, or a fidelity bond in their contractual requirements to gain protection against financial losses related to your professional services.
• You have employees. Most states require workers' compensation for businesses that have employees.
• You have a company car. Similarly, you'll need commercial auto insurance to comply with state laws if your business owns a vehicle.

Even when it's not required, being bonded and insured can help your company win contracts and give you an edge over the competition. It also helps to be Cybersecurity Maturity Model Certification (CMMC) compliant, which may be necessary if you work with Department of Defense (DoD) contractors.

Cyber insurance provides coverage if your business or your clients are affected by a data breach, ransomware attack, phishing, or other cyber threat. Specifically, there are two kinds of cyber coverage you should consider for your MSP business:

• First-party cyber insurance protects your MSP business against data breaches and cyberattacks that affect you directly, such as a DDoS attack that overwhelms your network. This is crucial coverage if you handle personally identifiable information (PII) or other sensitive information.
• Third-party cyber insurance provides legal protection if a client blames your MSP company for failing to prevent a data breach or cyberattack that harms their business.

MSPs typically need both cyber insurance policies, as they're responsible for clients' systems along with their own.

As part of a strong risk management strategy, MSP business owners should consider these additional types of insurance:

• Intellectual property (IP) insurance covers legal costs related to IP issues, such as a dispute over ownership of tech support software developed by a contractor.
• Business owner's policy (BOP) combines general liability coverage with commercial property insurance at a lower cost than purchasing the policies separately. It protects against common third-party claims and helps with disaster recovery after a fire or storm.
• Business interruption insurance protects against financial losses from a temporary forced closure due to a fire or other covered property claim. It's also called business income insurance.
• Employment practices liability insurance (EPLI) pays for legal costs related to violations of employee rights, such as unfair hiring practices or wrongful termination.
• Directors and officers (D&O) insurance protects your board members and officers from lawsuits related to the decisions they make on behalf of your firm.
• Hired and non-owned auto (HNOA) insurance covers auto accidents involving personal, rented, or leased vehicles used by your business.
• Equipment breakdown coverage provides funds to repair or replace damaged equipment that your MSP relies on.
• Electronic data processing insurance (EDP) covers electronic devices such as computers, storage devices, and the data they contain. Also known as computer coverage or data processing coverage, EDP insurance can help protect against data loss during a power surge, fire, natural disaster, or similar event.
• Commercial umbrella insurance provides additional coverage for liability claims made on general liability, commercial auto, or employer’s liability insurance, once the underlying policy's limit has been reached.

It's easy to find affordable insurance with Insureon. Our easy online application lets you compare quotes from trusted providers to find policies that fit your budget and your business risks.

Other ways to save money on business insurance include:

• Bundle policies. You can often save money when you purchase two or more types of coverage in one package, such as a business owner's policy or tech E&O.
• Customize your coverage. Choose lower limits or higher deductibles to reduce your premium, but make sure your policy can still cover a potential claim.
• Focus on cyber risks. Cybersecurity controls, such as multi-factor authentication, protect your company from data breaches and other cyber incidents. Insurance companies often provide discounts for approved security measures.
• Avoid accidents and claims. Policyholders can prevent employee injuries and customer accidents that lead to claims by eliminating loose power cords and other tripping hazards in the office, and by providing ergonomic setups for employees.

Our agents can help you find the right insurance solutions for your budget and your needs, whether you provide IT support, handle cybersecurity for clients, or remotely monitor client systems.