It is vital for a managed service provider to ensure that their liability for client damages is as limited as possible. Most managed services make sure their clients’ data is always safe and delivered in time. However, there can be times where avoiding damage might seem impossible, and that can be bad for both the business and the reputation. Many clients would not take it lightly and wouldn’t hesitate to sue you for the data loss or any other inconveniences they have experienced. A client can litigate if they have suffered data loss, legislation non-compliance, or a security breach. That is why it is crucial for a managed service provider to limit their liability and have some cybersecurity insurance.
Keep in mind that even if you end up winning the case in the court, eventually, it would still set you back quite a lot. Your company’s time and resources are valuable, and you cannot waste it just because you have a poor liability strategy. Most managed services already know what things they need to focus on in order to limit the liability, but they are not certain how to approach it. You have to deal with things depending on the kind of services you are providing. Also, there are several universal guidelines that can help you go about it the right way. The world is unpredictable, but you can take certain measures to minimize damage. Below I have mentioned a few important tips that can help a managed service provider with liability. You can also visit this website to learn more about risk management and limiting liability.
The Right Way to Limit Liability
If you want to go about limiting liability the correct way, here are a few things you must follow:
Devise Your Contract Wisely
As a managed service provider, you can improve your risk management dramatically by devising your contract wisely. Many managed service providers don’t pay much attention to it, but your contract matters a lot; it can help you save a lot of hassle down the line. You should define your liabilities clearly in your service agreements and client’s contracts. You should also explain the extent of the services you are providing precisely. It is also recommended that you tailor your contracts according to the client and avoid using one contract for all the clients. This might take a little bit of effort, but it can save you from a lot of hassle in the longer run.
Be Careful With Disclaimers and Clauses
Another thing you need to take care of is the disclaimers and clauses of the hardware and third-party software applications you are using. You have to mention the risks associated with them in your contracts so that a client cannot blame you for the failure of something you have no control over. These disclaimers or clauses are not something that you need to define yourself. You will be able to find them in the disclaimer that comes with the product or service itself. Also, you need to define your backup procedure and potential failures to be on the safe side.
Let Your Client Know About Ransomware
It is very important for you to address ransomware in your service agreements. If you don’t, you will end up paying a lot for it. Ransomware is one of the most dangerous malware out there, and once it has infected a PC or server, it can damage all the data on it. That is why it is highly recommended that you let your client know about it and how you will handle it in case of an attack. You must also create refusal waivers and make your clients sign them for your company’s safety. If these methods appear complicated, you must not hesitate to hire an attorney. A lawyer who has decent experience with managed service providers will show you the right direction to avoid any liability claims.
Identify Extra Risks and Address Them
Another crucial thing you need to do is to identify extra risks and confront them. Not all managed service providers are offering the same kind of services, so it is crucial for you to assess your services and address industry-related extra risks. These are the risks that are not included in general disclaimers and clauses, so it is vital for you to address them separately. Also, if your clientele is diverse, you will have to address risks for all of them separately, as it will help you limit liability.
When to Consult a Managed Service Provider Lawyer?
If you want to be more cautious with your services, you must consider hiring a managed service provider lawyer to help you throughout the process. You might need the services of a managed service provider in the following instances
- Writing the initial contract for your managed services company
- When you are planning to edit or change any of the details of the existing contract
- If you are thinking about offering your services outside of your region. (This include both states and overseas)
Keep in mind that the wording of your contract matters a lot, so it is always better to have a lawyer look over it before you take any steps.
Address Insurance
There are plenty of insurance companies out there that are offering coverage for cyber liability. To protect your clients and limit your liability, you can make insurance part of your contracts and deem it mandatory for your clients. You should add in the contracts how much insurance premium clients will be paying and what percentage of the amount they will have to pay to recover damages.
You can also protect your company and client by going for professional liability insurance directly. With the help of this insurance, you can forget about the contracts and other small security risks and can focus more on the services you provide. This is best for those to manage service providers who are dealing with situations and risks that they cannot minimize or control. A managed services provider attorney can also help you through this process. An experienced lawyer will ensure that you get the right kind of insurance for your company without wasting extra money.
