---
title: "Cyber Insurance vs. Cyber Warranties: What dealers Need to Know"
description: Understand the differences between cyber liability insurance and cyber warranties to protect your dealership from financial losses due to cyber incidents.
image: https://pages.sedonatek.com/hubfs/Newsletter%20%26%20Blog%20Artwork-43-Warranty-1.png
---

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# Cyber Insurance vs. Cyber Warranties: What dealers Need to Know

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In today’s rapidly evolving digital landscape, dealers are increasingly confronted with a multitude of cybersecurity threats. These threats pose significant risks to their operations, data integrity, and overall business continuity. To effectively manage and mitigate these risks, many dealers are turning to cyber liability insurance as a primary line of defense. This type of insurance provides a financial safety net, helping businesses recover from the financial repercussions of cyber incidents.

However, there exists a complementary solution that can work alongside insurance to provide a more comprehensive and robust layer of protection — cyber warranties. Cyber warranties serve as a supplement to traditional CLI. Together, they deliver a one - two punch to financially protect dealers while reducing overall costs of cyber-financial protection.

**What Is a Cyber Warranty?**

A cyber warranty is a specific type of assurance, which promises to cover certain expenses if a customer encounters a breach or incident directly associated with a cyber technology product or service. For example, Sentinal one offers a Warranty for its EDR product. Cyber warranties are typically tailored to focus on particular products or services, offering a targeted layer of financial protection. Cyber Warranties often:

- **Defined Payouts:** They often offer predetermined payouts for specific types of cyber incidents, like data breaches or ransomware attacks, related to the covered product or service.
- **Focus on Specific Solutions:** Cyber warranties are typically tied to a specific technology, and cover losses caused by breaches of that technology is designed to protect against.
- **Incentivizes Best Practices:** Cyber warranties incentivize businesses to adopt specific security practices as a condition of coverage.
- **Financial Coverage:** They can provide financial coverage for costs associated with specific cyber incidents for example ransomware.

In conclusion, a cyber warranty covers expenses from breaches linked to a specific cyber product, service or technology, offering financial protection in case of incidents.

**What Is Cyber Insurance?**

Cyber insurance, also known as cyber liability insurance, protects businesses from financial losses resulting from cyberattacks, data breaches, and other cyber incidents. It's similar to car insurance, but for the digital world, covering costs like damaged computer systems, lost revenue, and legal expenses. Cyber insurance can also cover costs associated with customer notification, data recovery, business interruption and crisis management.

Policies typically cover:

- **First-party costs:** These are expenses directly incurred by the business after a cyber incident, such as forensic investigation, legal fees, data recovery, and lost revenue.
- **Third-party liability:** This covers the business's liability for damages caused to others due to a cyber incident, such as customer lawsuits for data breach.
- **Cyber extortion and fraud:** This can include paying ransomware demands or covering costs associated with cyber extortion.
- **Network security failures: **This protects against various cyber threats, including malware, ransomware, and denial-of-service attacks.

Cyber insurance shields businesses from financial losses due to cyberattacks, data breaches, and other incidents, covering costs like system damage, lost revenue, and legal fees. It also includes customer notification, data recovery, business interruption, and crisis management.

What does this mean for dealers?

While cyber warranties may offer a degree of financial protection by covering specific expenses related to breaches associated with particular cyber products or services, they do not provide the extensive coverage that cyber insurance offers. Cyber warranties are designed to complement, not replace, the broader scope of protection that cyber insurance delivers. But cyber warranties can offer a cost-effective way to supplement your cyber liability insurance.

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## MORE INSIGHT

[Microsoft](https://pages.sedonatek.com/insights/tag/microsoft), [Zero Trust](https://pages.sedonatek.com/insights/tag/zero-trust)

## [Why Zero Trust Network Access (ZTNA) Prevents Cyberattacks in Microsoft 365](https://pages.sedonatek.com/insights/why-zero-trust-network-access-ztna-prevents-cyberattacks-in-microsoft-365)

[Read more](https://pages.sedonatek.com/insights/why-zero-trust-network-access-ztna-prevents-cyberattacks-in-microsoft-365)

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## [The Role of Dealer Principals in Ensuring Cybersecurity Excellence](https://pages.sedonatek.com/insights/the-role-of-dealer-principals-in-ensuring-cybersecurity-excellence)

[Read more](https://pages.sedonatek.com/insights/the-role-of-dealer-principals-in-ensuring-cybersecurity-excellence)

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## [Effective Strategies for Communicating Cybersecurity to Non-IT Leaders](https://pages.sedonatek.com/insights/effective-strategies-for-communicating-cybersecurity-to-non-it-leaders)

[Read more](https://pages.sedonatek.com/insights/effective-strategies-for-communicating-cybersecurity-to-non-it-leaders)

## Why Sedona

Sedona Technologies provides dealers with best-of-breed managed IT services and solutions. From cybersecurity to infrastructure management to user support, our solutions are specifically designed to overcome the challenges of managing a dealership’s IT environment effectively. For decades, we have collaborated with leading dealers across the US and Canada to deliver unprecedented IT excellence.

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