Insurance for E-commerce Business

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Frequently Asked Questions

Why do E-Commerce businesses need insurance?

You are selling products online. This means that you are exposed to product liability. When your store sells defective products and injures someone the manufacturer, the distributor, and you, the seller, are all legally responsible. Your business is legally liable within the entire process. Without insurance, your business is at risk of this liability. You’ll be paying for court and legal fees and the settlements to be made.

What risks do E-Commerce Companies face?

Opening an e-commerce business comes with inherent risks. Here are some of those:

  • The product you sold could be defective and have caused your customer to suffer personal injury or property damage. You're at risk of being sued.
  • Your website can be the target of hackers. Even the most prominent businesses with the money for the best security for their websites can get hacked. Loss of client information can be expensive to repair without insurance.

These are just some of the many risks your e-commerce sites could face.

How much does E-Commerce Business Insurance cost?

There are a lot of factors that contribute to insurance for e-commerce sites. This includes the type of business you have, the employees you have and how much inventory you have. Without taking into account that criteria, here’s an average median cost of insurance policies:

  • General Liability insurance costs around $400 annually.
  • Cyber Liability insurance costs around $500 annually.
  • Business Interruption insurance costs around $800 annually.

Do I need Cyber Liability for my E-Commerce sporting goods store?

You have probably heard when some big named companies have had a data breach and had either credit card information stolen or personally identifiable information of customers’ stolen. Because you are in the e-commerce sporting goods store business, you have the same risks as these other stores for this type of loss. Because customers are using the internet to purchase items from your apparel shop, there is a Cyber Liability risk and your company is going to be held responsible if this type of event should occur. Cyber Liability insurance can help prevent your business and similar businesses, as athletic equipment stores, from going bankrupt in the event that you are hacked or there is a data breach.

A huge expense associated with a cyber liability loss is notifying your customers when it happens and saving your public reputation. Cyber Liability insurance will provide coverage for these expenses. Your public persona is important to your e-commerce sporting good store and in order to keep turning a profit, it is critical that you get ahead of any situation that may impact it negatively. Plus, you will have a better chance of keeping good, loyal customers if they see how well you are able to handle a data breach.

Do you need a BOP for your E-Commerce store?

A Businessowners Policy, or BOP, is usually one of the first types of insurance policies that any small business purchases. An e-commerce store has unique risks since you are dealing with the public through the internet. A BOP is great because it packages together General Liability and Property insurance so your bodily injury and property damage claims will be covered, as well as Property if you own any buildings or keep any inventory on hand.

Additionally, there are some extra coverages that are usually included that are essential to your e-commerce store insurance portfolio. Business Interruption is one very important coverage that will come in handy if one of your vendors has an unforeseen incident and cannot fulfill your orders. It will allow you to keep your business up and running so you can keep your customers happy, as well as keep your profits growing.

Often, a BOP will contain a small amount of coverage for Data Breach which is vital to an e-commerce store. Since you are taking payments over the internet, a cyber attack is a risk you will always have to face. Be sure to discuss this risk with an advisor, as you may need to increase the limit of coverage, or purchase a separate Cyber Liability insurance policy.

Are You Ready to Get Covered?

Prefer to speak with a CoverWallet consultant? Call(646) 844-9933