Question 1

What is a common misconception about Professional Liability (E&O) for Managed Service Providers (MSPs)?

Accepted Answer

MSPs think their service-level agreements protect them. Plaintiffs argue gross negligence to bypass SLA limitations.

Question 2

What happens if managed service providers (msps) don't have Professional Liability (E&O)?

Accepted Answer

An MSP fails to patch a known vulnerability; ransomware hits a client and 4 of their customers. MSP is sued for negligence — multi-party suit settles for $480K. Tech E&O pays.

Question 3

What is a common misconception about Cyber Liability for Managed Service Providers (MSPs)?

Accepted Answer

MSPs hold the keys to dozens of client networks. A single MSP RMM compromise can ripple — see the Kaseya REvil ransomware event of 2021. Insurance limits should reflect this multiplier.

Question 4

What happens if managed service providers (msps) don't have Cyber Liability?

Accepted Answer

MSP's RMM platform is compromised; ransomware spreads to 14 clients. Total damages, BI, client lawsuits: $2.8M. Cyber + E&O combined pays.

Question 5

What is a common misconception about General Liability for Managed Service Providers (MSPs)?

Accepted Answer

Tech firms think GL is unnecessary; client contracts require it.

Question 6

What happens if managed service providers (msps) don't have General Liability?

Accepted Answer

Tech trips at client site — $9K. GL pays.

Question 7

What is a common misconception about Employment Practices Liability (EPLI) for Managed Service Providers (MSPs)?

Accepted Answer

Tech firms with high-turnover engineering teams face routine EEOC.

Question 8

What happens if managed service providers (msps) don't have Employment Practices Liability (EPLI)?

Accepted Answer

Engineer alleges discrimination — $50K. EPLI pays.

Question 9

What is a common misconception about Directors & Officers (D&O) for Managed Service Providers (MSPs)?

Accepted Answer

PE-backed MSPs face investor disputes routinely.

Question 10

What happens if managed service providers (msps) don't have Directors & Officers (D&O)?

Accepted Answer

PE firm sues principals over financial reporting — D&O defends $120K.

Question 11

What is a common misconception about Commercial Umbrella for Managed Service Providers (MSPs)?

Accepted Answer

Cyber events regularly exceed primary limits.

Question 12

What happens if managed service providers (msps) don't have Commercial Umbrella?

Accepted Answer

Multi-client cyber event hits $5M — umbrella pays excess.

Managed Service Providers (MSPs) Coverage Guide | RISKX