Opening an electronics store online can be a very lucrative business. This is especially true considering the world we live in and the fact that electronics are in the top three categories of what consumers purchase. When opening any kind of small business, there will be a number of things to take care of before you can open. Some of them include:
Additionally, if you open a physical electronics store, you likely know that you need insurance in case the shop catches fire, or someone is injured on the premises. So, what about if you have an online shop? There are still some very important insurance policies that you will need to properly protect your business.
Just because you don’t have the physical aspect in terms of a brick-and-mortar building, that does not mean you have no risks. If anything, you might have more risks due to conducting your business in the cyber world. Whether you are selling video games, consoles, movies, computers, tablets, or other electronic devices, you will require business insurance for online retailers in order to properly operate your online electronics store.
Online business insurance can protect your electronics online business from lawsuits relating to your business operations. In just a bit, we will go over the types of insurance you need and what they cover. This will give you a great idea as to the types of events that can occur. There will be two main categories where you will be covered by your insurance and that is Liability and Property Damage.
1. Property Damage: If you are storing inventory somewhere like a warehouse, you will need to have Commercial Property coverage to replace the items if they are damaged by fire or if they are stolen or even vandalized. Business Personal Property coverage will include your stock. Also, if you own the building that it is stored in, you can cover that as well.
2. Liability: Lawsuits can be pesky, and businesses can often be a target. You have a lot of liability risk, even as an online business, so you should have an array of policies to cover them all. From General Liability to Product Liability to even Cyber Liability, there is an insurance policy available for almost every situation you can think of. Thus, having insurance is crucial to your bottom line. The last thing you want is an unexpected financial blow.
When putting together your insurance portfolio, you should consider what you need protection from. Keeping your business, employees, and customers safe while you operate an online business is the ultimate goal. You can do this easily with the right policies for your online electronics shop. For these reasons, you can consider the following insurance policies when you begin to assemble the best insurance protection.
Cyber Liability](https://www.coverwallet.com/insurance/cyber-liability-data-breach): Cybercrimes are a genuine danger for a wide range of organizations, particularly fruitful and profitable ones that digital lawbreakers may target. If you need to shield your online store from the harm that digital lawbreakers can do when they take information or assets from your business, Cyber Liability is one of the most important insurance policies you will have when running an eCommerce store. When a cybercriminal hacks into your website or computer to obtain credit card information, or if they lock down your information for a ransom with a large dollar figure, there is unfortunately not much you can do about it. That’s what makes it so important to carry Cyber Liability insurance. Many fees can accumulate if your online business falls prey to a data breach including notification and defense costs. You don’t want to have to dip into your pockets to pay for this, especially if you have hundreds or thousands of customers.
Commercial Property: If you have any property owned by your business, Business Personal Property is a major aspect of your online hardware store protection strategy. For instance, if your office or distribution center burns to the ground (harsh, but it happens), Business Personal Property will pay to replace the stock and items inside that your business owns, including your items, furniture, and computers. If you own the building, Commercial Property coverage will pay to replace that as well. Regardless of whether you don't have a structure that serves your online store, Business Personal Property is still valuable, since it can pay for the items you use to run your business, such as a computer and office supplies.
Product Liability: Product Liability Insurance is business protection for manufacturers, distributors, shippers, retailers, and so forth when they happen to sell a flawed or defective item that brings about a substantial injury or property damage to a customer or other individual. An example of a flawed or defective item in the electronics world is a choking hazard with one of the pieces of your product if a child gets a hold of it. Product Liability can be purchased as its own policy, or often in addition to your General Liability policy. A big part of Product Liability that can come in handy should you be the victim of one of these unforeseen events is defense costs. Court costs and attorney fees can bankrupt any business — even the most successful ones. Also, if you are selling any of your electronics to a retailer, they are likely going to have Product Liability as a requirement in your contract or agreement.
Worker's Compensation: If your business is fortunate enough to be so large as to require the hiring of employees then that is excellent for your revenue streams and longevity, but that opens you up to a whole new set of risks that you must keep in mind. Whether you have people managing your website and sales, stocking and shipping in a warehouse, or even performing admin work, you will still be held responsible if they are injured at work or suffer a work-related illness. A strained back, a broken ankle, or carpal tunnel are just a few of the issues that could pop up within your operations. Worker’s Compensation is the best way to handle this. By providing them with their lost wages and medical expenses, it shows that you care about your employees and your online business. Plus, if for any reason you are found negligent, there is Employers’ Liability insurance coverage as well. And again, this coverage will likely be a requirement for any contracts you have with buyers and suppliers, not to mention most states require it the minute you hire an employee.
Employment Practices Liability: Even for small, family-owned businesses, the number of employment-related lawsuits are continuously rising, alleging that an employee’s legal rights have been somehow violated. Usually, these are for things that could have been prevented with the right risk management techniques, one of which is Employment Practices Liability insurance. This critical insurance policy will provide coverage for a lot of employment-related occurrences, to include wrongful infliction of emotional distress, breach of employment contract, failure to employ or promote, wrongful discipline, discrimination, mismanagement of employee benefit plans, negligent evaluation, wrongful termination, sexual harassment, or deprivation of career opportunity. As you can see, there are a lot of things that an employee can allege, so it is essential that you have Employment Practices Liability to protect yourself and your business. Some of these policies will even include third party liability. This is another coverage that can sometimes be added to your existing General Liability policy or purchase on its own. The best thing you can do to prevent a lawsuit related to these things is to document everything and provide a lot of training to anyone in a supervisory or management position.
Umbrella Liability: As we mentioned, Liability risk is huge for any online business. Because of this, it would be a good idea to purchase and maintain an Umbrella Liability insurance policy. This is an extra limit of Liability, often up to $10,000,000, that will sit on top of your existing liability policies. If your electronics business is involved in a lawsuit and there ends up being a judgment or settlement for over $1,000,000 (which is the average limit on a Liability policy), how would you pay the balance? The answer is out-of-pocket, and that can potentially bankrupt your operations. Let’s avoid that. This is where Umbrella Liability comes in. Plus, sometimes you can find coverage here that may not be in one of the underlying policies. Keep in mind that sometimes Umbrella Liability can have what is called self-insured retention, which is essentially equivalent to a deductible. That means that whatever limit is paid out by the policy will be less than the self-insured retention.
The price of insurance is always a factor for many businesses, but should be a small consideration since this is truly an investment in the protection of you, your business, your employees, and your customers. It is important to keep in mind that each policy is going to have certain factors that affect the price.
Some aspects that will influence the price for your electronics online business is the type of electronics or services you are offering, the location of your warehouse or where you store your stock, your annual sales or revenues and number of employees, coverage limits, and any deductibles that may apply.
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