Definition

cloud insurance

Contributor(s): Laura Fitzgibbons

Cloud insurance is any type of financial or data protection obtained by a cloud service provider. As a form of risk management, it is usually a promise of financial compensation in the event of unforeseen problems or failures with a cloud computing service. 

A cloud insurance policy protects the cloud provider who is in turn held responsible for a service that was promised by not delivered. It also protects customers against the full range of damages if they do not receive the promised results. Cloud insurance may be included as part of a service level agreement (SLA) with the provider or it may be purchased separately through a third-party insurance company.

One example of a form of cloud insurance is the Cloud and Managed Services Insurance program from the MSPAlliance, which offers members cyber and contractual liability, as well as errors and omissions insurance.

Cloud insurance can also help compensate for business lost while a cloud service is unavailable and can provide a cloud customer with financial protection in the event of an unintentional data loss or security breach. One reason an organization may be cautious about adopting cloud services is the risk associated with an outage that results in lost business or harm to a company's reputation. Cloud insurance can help mitigate those risks and allow organizations to implement cloud services more comfortably.

In addition to or in replacement of financial compensation, cloud insurance can involve data backup. This usually requires a third party service provider that periodically takes snapshots of the provider's cloud environment, including all data and applications. This extra backup insurance is intended to assure potential customers that their data is safe. It also appeals to customers with valuable but not deeply protected data, like videos and photos.

This was last updated in April 2019

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