Business Interruption for MSPs…who cares?
One coverage area that is frequently limited for Technology Errors & Omissions (Tech E&O - professional liability for managed services providers) is business interruption (BI) coverage. There are a few key coverages to watch out for. Although BI claims tend to be smaller for most MSPs, a large attack such as the 2021 Kaseya attack can result in a large claim.
What is BI coverage? This coverage takes effect during an event that prevents your MSP from conducting business as normal, such as a successful ransomware attack on your MSP. BI coverage is critical for lost income replacement - you cannot conduct business while your systems are down.
What about “system failure”? One gap in BI was identified during the Crowdstrike outage. Many policies required a malicious act to be involved for coverage. As of 2025, many (but not all!) policies now explicitly include system failure as well which would cover a Crowdstrike type event.
What is the waiting period? BI coverage does not kick in immediately, otherwise every 15 minute cloud outage could result in a claim. Most policies will have a waiting period of six to twelve hours, although some can be 48 hours or longer. During this period, you are not able to make a claim, the BI coverage is only intended for longer disruptions. Additionally, there is typically a limit to coverage of 180 days from the start of the incident.
What about contingent/network/dependent interruption coverage? This simply refers to third party platforms, but is a key coverage due to the nature of our industry. A simple example is using an on-premise versus a cloud RMM. The on-premise server going down would fall under standard business interruption due to it being inside your MSP, while the cloud outage would be a dependent business interruption claim.
How much do I need? How much your MSP needs is a complicated question, but you can do some simple math. Consider a worse case scenario where an RMM compromise takes down your entire MSP and clients. How many days would it take to recover, and how much MRR/NRR would that impact?
How much can I get? The majority of carriers will write BI/Contingent BI to the “full limit”, i.e. if you have a $2mm policy you can get $2mm BI coverage. Be aware of policies with lower limits such as $100k. While that may be sufficient, that is typically a flag that there may be other coverage limits as well.