The online retail industry has experienced astronomical growth in the last decade or so.
In fact, more than a whopping 90 percent of Americans with internet access have made a purchase online.
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This surge in eCommerce businesses also means more challenges and risks, hence it becomes absolutely crucial to safeguard your eCommerce business.
But since all e-commerce businesses are not the same, you may be wondering what type of e-commerce business insurance is right for your business.
Ecommerce Business Insurance vs. Standard Business Insurance
Ecommerce business insurance is often confused with standard business insurance, but they are two completely different types of insurances.
Standard business insurance should cover most risks for many small businesses including property coverage with general liability.
For example, if one of your customers slips and falls in your store, or a flood caused property damage, small business insurance will cover the medical costs or and costs to fix the property and its contents.
With eCommerce business insurance, you need added coverage, much more than what small business insurance provides.
As an example, since you will be collecting sensitive customer data, you will need insurance coverage to protect against data breaches.
If your e-commerce business is facing any downtime and experiences losses as a result, then business interruption insurance will help you recuperate any losses.
Choosing the Right eCommerce Business Insurance
General liability insurance comes standard with any eCommerce business insurance policy and is somewhat broad protection that covers any damage or injury to third parties.
For example, if you sold a luxurious dog kennel, and it malfunctions and injures the pet, general liability insurance will cover any vet bills.
Similarly, product liability insurance will cover defense fees and settlements arising from claims or third-party injury caused by one or more of your products.
If you have a vehicle used for your eCommerce business operations, then commercial vehicle insurance – a component of e-commerce insurance will cover costs related to accidents or property stolen from that vehicle.
However, commercial vehicle insurance does come with most e-commerce insurance policies, so you will have to opt for it if you have a business vehicle you would like to insure.
Even though you may be operating your eCommerce business online, you should look into property insurance coverage even you operate out of a home office.
Commercial property insurance covers you if anything is damaged or stolen from your property.
You may have home insurance, but most only offer a limited amount of coverage for property used to operate a business.
Workers’ compensation insurance is similar to general liability insurance, except that it covers bodily injuries sustained by your employees.
While laws and regulations vary across states, most states do require you by law to have workers’ compensation insurance.
This type of insurance covers healthcare, medical bills, prescriptions, and loss of wages due to time off.
How Much Ecommerce Coverage Do I Need?
This is a difficult question to answer because as mentioned earlier each eCommerce business is different from the other.
You also do not want to buy more insurance coverage than you need or inadequate insurance.
For this reason, it is best to make a list of your company’s assets including any properties and vehicles you would like to insure.
If you own or operate an online business, buying e-commerce business insurance should not be an option.
The cost of your e-commerce business insurance depends on the level of coverage you opt for, which is another big reason it is important to make a note of your assets and things you would like to insure to avoid paying high premiums each month.