Starting an ecommerce business is complicated enough without the added complexities of insurance. You probably know about some of the insurance policies you need as an online retailer, including general liability and product liability, but other policies, like marine insurance might be new to you. Here’s an overview of the types insurance ecommerce companies should have.
General Liability
General liability insurance is important for businesses of any type because it protects them against claims involving bodily injury, property damage, and perhaps most pertinent to online businesses, copyright infringement. You might think you don’t need this type of insurance if you don’t have an actual brick and mortar location, but you do. Not only will this type of policy protect you if someone is injured on your business property (warehouse or other property), but it will also keep you from losing your company if you accidentally commit copyright infringement.
Product Liability
No matter what product you’re selling, you need product liability insurance just in case someone sues you for an injury due to a defect in product manufacturing or design. This is especially critical if you’re selling a product you make yourself because you will be fully responsible for the safety of that product. This type of insurance also protects you from misleading advertising claims.
Business Property
Business Property insurance protects your company from the loss, theft, damage, or destruction of your inventory and business assets. This is a vital policy to have if you keep any inventory on hand for your ecommerce company. If you’re a dropshipper, you might need as much of this insurance, but you’ll still want some to protect your business equipment like your computer.
Transit or Inland Marine Insurance
When you begin shipping products in bulk or on a frequent basis, you will want transit or inland marine insurance to protect your shipments from theft, fire, water, wind, or hail. If a ship that’s carrying a container full of your products sinks, this type of insurance will reimburse you for your loss. You’ve probably heard of semis overturning on the highway and someone’s shipments spilling out across the road. Hopefully, that shipper had transit insurance to cover that loss.
Worker’s Compensation
Single operator ecommerce companies don’t need this type of insurance, but as soon as you get an employee, you must have a worker’s compensation policy. This insurance provides benefits to employees who are injured or become ill while working on the job. Nearly every state in the U.S. requires businesses with employees to have a worker’s compensation policy.
Cybersecurity
As an ecommerce company, you’re going to be collecting and possibly storing customer payment information and other personal data. Cybersecurity insurance protects your company against data breaches that could result in lawsuits from customers or hacking incidents that could prevent your equipment from operating properly for days or even weeks.
Business Interruption
If your business is shut down temporarily due to a natural disaster, business interruption insurance can pay your employees and keep the lights on until you can get back up and running.
Conclusion
An ecommerce business can be an exciting and lucrative venture. Just make sure you adequately protect the company you build by purchasing the right kinds of insurance policies.
