A warranty is an assurance by a manufacturer or seller that the item purchased will be free of defects for a specific period of time. In the case of technology M&A warranties are an effective tool to reduce risks related to cybersecurity and availability of data.

Security warranties for data are becoming more popular among distributors. With ransomware projected to cost businesses $265 billion by 2031 and an increase to attack every two seconds, it’s not surprising that they provide this new guarantee to their customers. These guarantees reduce economic risks caused by cyberattacks, as they transfer legal liability to the company. They are usually offered as an addition to cybersecurity insurance to fill in the gaps where insurance coverage might not be sufficient.

Security guarantees vary widely in terms of their specifics however, they typically cover the loss of revenue for a business, additional expenses incurred, and reputational damage resulting from the breach. They may also include policies designed these details to protect legal responsibility, which covers the expenses of allowing individuals impacted by an attack know as well as any fines or charges received from lawsuits that could be filed.

While the concept behind a data safety warranty is good, a lot of them have serious shortcomings. Rubrik offers an “Recovery Incident warranty” which covers “Recovery Incident costs.” However it doesn’t mean that your employees will get paid for time spent on recovering. Rubrik will only pay the expenses if they have receipts for the expenses. This is a red signal.