COMMENTARY: In the ever-evolving world of cybersecurity, the rise of standalone cyber warranties has sparked both curiosity and debate. While some hail them as a streamlined alternative to traditional cyber insurance, Dustin Bolander, founder of Beltex, isn’t sold on the hype.
Bolander, a two-time MSP owner-turned-insurance expert, has a nuanced and skeptical view of these warranties. During a recent Channel E2E webcast on the future of cyber insurance, he dissected their strengths, weaknesses, and the ways they often fall short of their promises. His verdict?
A cyber warranty is designed to provide limited financial coverage in the event of a data breach, ransomware attack, or system compromise. Unlike traditional cyber insurance, which provides broad coverage, a cyber warranty is tied to a specific product or service. It offers narrower, predefined payouts. Warranties are often marketed as a simpler alternative to insurance and are typically marketed to small businesses or users of specific cybersecurity tools.
Warranties may have their place, but for most businesses, they’re an incomplete and often overpriced solution, Bolander argues.
The Hype Vs. The Reality
For Bolander, the hype surrounding standalone cyber warranties lies in their marketing. “Some companies wave them around as a fast, simple solution,” he said. “But when you look at the fine print, they’re more like pseudo-insurance. They might look good on paper, but they’re no substitute for the real thing.”
The allure of quick payouts is one of the key selling points of these warranties, but Bolander argues this benefit is often overstated. While warranties might promise an immediate payout within 24 hours after a breach, the amounts are usually limited to $5,000–$10,000—barely enough to cover the costs of even a minor incident. For businesses with more complex needs, these quick payouts feel more like a token gesture than a real solution.
“When you compare warranties to traditional cyber insurance, it’s not even close,” Bolander said. “Insurance provides comprehensive protection, covering things like business interruption, financial crimes, and other major losses. Warranties just can’t compete.”
Warranties for Micro-Businesses: A Rare Use Case
That’s not to say Bolander believes warranties are entirely without merit. He acknowledges they might make sense for certain very small businesses, like a retail shop with a single point-of-sale terminal. In these cases, the simplicity and lower cost of a standalone warranty could be sufficient to cover their limited cyber risk.
“It’s like micro-insurance,” Bolander explained. “If you’re running a tiny operation, spending a couple hundred dollars on a warranty might be enough. But for anything more complex, you’re better off investing in a proper cyber insurance policy.”
Even here, Bolander sees room for improvement. The price gap between warranties and full-fledged cyber insurance policies is narrower than many realize. “I’ve seen warranties priced at $2,000 to $4,000, which is comparable to a small business insurance policy that offers a million dollars in coverage,” he said. “When you put them side by side, the value just isn’t there.”
The Misleading Echo Chamber
Perhaps the most frustrating aspect of cyber warranties for Bolander is their marketing. He points to companies that tout the fact they’ve rarely, if ever, paid out claims as proof of their product’s effectiveness.
“It’s such a bizarre way to measure success,” Bolander said. “Insurance exists to pay claims and make businesses whole after a breach. If you’re bragging about not paying claims, it raises serious questions about the value you’re actually providing.”
He also criticized the way warranties are often framed as easier or faster alternatives to insurance. In reality, many standalone warranties are backed by insurance companies themselves, creating what Bolander calls “insurance-ish” products that blur the lines and confuse buyers.
The complexity doesn’t stop there. For MSPs managing multiple clients, juggling warranties, and cyber insurance policies can create messy legal entanglements. Without a deep understanding of the policy language, MSPs risk stepping into a minefield of overlapping coverage and unresolved claims.
The Bottom Line
Bolander is clear: Cyber warranties are not the future of risk management. While they might serve as a supplemental product or a first line of defense for micro-businesses, they’re no replacement for comprehensive cyber insurance.
“My advice to businesses is simple,” he said. “Start with insurance. It’s still the gold standard for managing risk. Warranties might work in niche cases, but for most businesses, they’re not worth the hype—or the price.”
For MSPs, Bolander offers another piece of advice: Educate yourself and your clients. “Understand the differences between warranties and insurance, and don’t let flashy marketing distract you from what actually protects your clients,” he said.
As the cybersecurity landscape continues to evolve, Bolander’s contrarian take on cyber warranties is a refreshing reminder to look beyond the buzzwords and focus on what truly matters—comprehensive protection that delivers when it counts.
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