How Cyber Coverage is Evolving as Vendor Disruptions Increase   

• By: AnneMarie McPherson Spears
• March 15, 2026

Amazon Web Services, Cloudflare, Microsoft Azure. All three are popular connectivity vendors relied upon by businesses across the world—and all three made headlines last year for outages that disrupted service.

The disruptions underscored a fast-evolving cyber exposure that many businesses still overlook: the risk posed not by malicious actors but by vendor technology failures.

As businesses rely more heavily on outside platforms for day-to-day operations, independent insurance agents play a critical role in helping clients understand where they are most vulnerable and how their insurance coverage should respond.

Ultimately, agents and clients alike must treat vendor outages as a core cyber risk, says Michael Phillips, head of global cyber portfolio underwriting at Coalition. “The outages really highlight the interdependencies of the global internet,” he says. “When one thing doesn’t work, it might mean other things don’t work as well. If your tech stack isn’t working, your income goes out the door and your clients are unhappy.”

Most cyber policies offer business interruption protection that can extend to system failures, but the details vary across carriers.

“Business interruption coverage is designed to cover lost income and extra expenses in a shutdown of a client’s computer systems,” Phillips said. “Extra expenses are all the things to keep the business running until the problem is fixed, like employee overtime or additional IT resources.”

Phillips notes that coverage for business interruption events is often subject to a waiting period before coverage kicks in. Agents should also pay attention to how cyber policies treat failures in third-party systems.

“An insurance agent should be ready to recommend to their client a policy that can offer them coverage if their own computer systems don’t work, or if a computer system at a third party they rely upon doesn’t work,” he says.

As businesses grow more dependent on a handful of large vendors, carriers are rethinking systemic exposure.

“Many cyber insurance policies do contain limitations around coverage for particular types of system outages or widespread failures that could result in a large systemic aggregation event,” Phillips explains. “As carrier views are evolving around the level of third-party tech reliance, it’s important for an insurance agent to look for wording related to that third-party trigger.”

As their cyber liability clients conduct business in an increasingly interdependent digital ecosystem, “too often I hear that insurance agents might feel intimidated to talk about this kind of risk,” Phillips said.

However, Phillips notes the recent outages create a natural conversation starter: “If your most important software vendor were to go down,

what would that mean for your business?” he asks.

From there, Phillips recommends leading the conversation toward business continuity and disaster recovery planning, as well as helping clients identify tech stack resiliency.

“For example, many major cloud providers have multiregional setups so a business can make sure they have multiple backups,” Phillips adds. “An insurance agent asking about tech stack resilience makes all the difference to turn this peril into a real preparedness conversation.”

AnneMarie McPherson Spears is IA news editor.