Currently, there are about 200 million online consumers aged 14 or older. Out of these, 5 million are yet to celebrate their first anniversary as online shoppers, according to eMarketer. Moreover, Nasdaq projects that around 95% of all purchases in the U.S. will happen online by 2040. Such numbers make e-commerce an attractive proposition for both established and fledgling entrepreneurs alike. However, the e-commerce space can be complicated, especially when it comes to business insurance. Of course, with the right knowledge, this does not necessarily have to be the case.
Here are three key e-commerce business insurance questions and answers to help boost your knowledge base.
Is E-commerce Business Insurance Coverage Essential?
An online business offers myriad benefits including, limited overheads, relatively low startup costs, a wide reach, and the ability to scale quickly. However, similar to a traditional brick-and-mortar store, an online store to comes with its own set of business-related risks, including data breaches, shipping logistics, damaged inventory, and product liability lawsuits. Therefore, getting e-commerce business insurance has become essential for an online store.
What are the Most Important Business Insurance Policies?
Irrespective of your service/product offering, you’ll need to carry some key business insurance coverage. Examples of these much-have policies include:
• Cyber liability – This policy covers the financial losses associated with data breaches, including legal costs, compensation, as well as the costs of replacing or retrieving data lost due to a cyber-attack event. With cybercrimes becoming increasingly common in the recent past, this coverage is vital. To give you an idea, cybercrime is a growth industry that will cost businesses around $6 trillion every year by 2021, as reported by Cybersecurity Ventures.
• General liability – This insurance policy covers third-party property damage, bodily injury, and financial loss. Additionally, if your online company loses a liability lawsuit, it will cover the incurred legal costs.
• Product liability – Product liability describes the responsibility that you, as a seller, may have if you sell a defective product that either injures or kills a customer. It is worth noting that the median compensatory award in product liability lawsuits is around $1.5 million, according to a recent study by the Jury Verdict Research. This means it is a good idea to carry product liability insurance.
• Professional liability – This business insurance policy covers risks such as design errors and copyright infringement
How Do I Determine My Online Business’s Insurance Needs?
One of the strategies you can use to determine your online business’s insurance needs is to work with an insurance agent, especially an experienced agent who specializes in your niche market. Discuss your business model and its specific requirements with your insurance agent. They can help you compare and research multiple types of e-commerce insurance coverage policies, added policy benefits, premiums, etc. from your preferred insurance carriers quickly. As your business expands and flourishes, your agent can help you to update your policy and get suitable coverage.
When choosing business insurance for your online stores, keep these three eCommerce business insurance questions and answers handy. First Insurance Solutions offers unmatched, customized solutions to increase indemnity against personal and business risks. We aim to provide online businesses with the best-rated, reliable insurance policies that match their specific needs and budget. For more information on insurance for eCommerce business, contact us today.