Unless you are someone who enjoys taking risks, you most likely have insurance for your home, your car and maybe even your jewelry. Especially if you are a business owner, insurance is something you ought to secure for yourself to protect your assets and avoid losses that could significantly jeopardize your finances.
That being said, having insurance is not the case for all business owners, specifically those who own online businesses. In a Google survey, it was found that 40% of small businesses had no insurance at all, and the numbers were even higher amongst online businesses. Apparently there is something about having an internet business that might make one think they are invincible; unfortunately, this is a bad mistake to make.
Online businesses operate differently than in-person businesses in that transactions are made behind computers or mobile phone screens instead of in front of each other, among a myriad of other facets of each business that set them apart (physical location versus not, storing inventory in your building versus at the wholesaler, storage on local drives/on paper versus in the cloud, etc.). Thus, the risks associated with operating an online business are completely different from an in-person business as well. Regardless of these differences, online business owners are encouraged to protect themselves with insurance similar to any other type of business.
Internet business insurance can help to protect against risks such as:
There may be instances that your delivery vehicle breaks and you can't take it to the garage. In this instance, you would need insurance to cover you for a tow truck as well as a rental vehicle in order for you to be able to stay in business. Especially if you do not know how many employees you will need to hire over the year, having insurance will help you to stay competitive in any crisis or while navigating hard times.
For business owners who are moving their business into the digital age and are either primarily operating online or beginning to offer a digital service, there are different ways you will need to protect yourself due to your full-or-partial shift to an online platform. These might include enabling pop-up blockers, disabling remote desktop sharing and managing firewalls.
There may be moments of slip-ups and mistakes where perhaps someone isn’t as careful as they should be and they open up an email that contains a virus or they click on an innocent-looking link, and unless you want to be responsible for a huge lawsuit, you will want to be fully protected with internet insurance aside from your regular business insurance, which may not cover online operations completely.
Everyone who owns a business needs business insurance, and running an online business is no different. You might want to consider investing in internet insurance if you:
There are specifically a few different online businesses that will particularly benefit from having the right insurance in place.
Businesses that teach either classes or certifications online, E-learning Business insurance would help to protect against any Cyber Liability. For example, if your database gets hacked and the criminals demand a ransom in order to safely return your personally-identifying files and information on your customers (as well as your back-up), this type of insurance would cover you. Or, let’s say your website is compromised and one of your students gets a virus on their computer from logging onto your website. This type of insurance will cover any repercussions that may come out of it.
E-commerce insurance would protect businesses that perform services such as local to online reselling. If a child chokes on a small part in a toy that your company had provided, then you would need insurance to cover whatever might come from that possible lawsuit. Another option for protection regarding online sales would be for the loss of income due to theft, damage or misplacement.
This includes those individuals training companies on cybersecurity. If you happen to be sued by someone who claims you did not teach them properly to do their job and they suffer any loss whatsoever, then having IT services consultant insurance would protect you.
There are many forms of online coaching such as nutrition coaching, fitness coaching, life coaching or finance coaching. In these forms of coaching, your business would be run primarily from your home or personal office, and there is always a risk that you could encounter a physical loss. Online coaching insurance would cover you from a fire, flood or other physical damage.
Gaming website insurance is a sound consideration for avoiding risk because with many gaming websites out there today, there is a liability of holding customer information, as well as the risk of loss of income due to hosting failures from paying customers.
Copyright infringement and plagiarism can lead to huge lawsuits. By having copywriting business insurance, your company would be properly protected.
Protection against lost packages may be included in dropshipping business insurance.
Insurance for Saas companies may include security coverage. In the case of hackers stealing your valuable information, the company would not be held liable.
Similar to IT services consultants, having online consultant insurance is imperative, whether it is in finance, stocks, business or in tech. Imagine giving out consulting information and opinions with the result ending in significant loss to the client. This situation could, in turn, result in a lawsuit, and it is crucial that you are protected from paying court fees and lawyer fees at full price out-of-pocket.
Tech support businesses are designed to keep other businesses safe from harm, but also face their own set of risks. In order to stay resilient and be protected, insurance will help to cover paying your employees in any case of crisis.
There are a few main types of insurance that apply to many different types of businesses, such as General Liability insurance. Also, there are those that apply specifically to online businesses, such as cyber liability. It is important to understand the different options available and to recognize what your online business needs specifically.
For online businesses, Cyber Liability insurance is one of the most important forms of insurance you can carry. Cyber Liability protects your company in the event of a data breach, which is when your business has information that is leaked or stolen.
Leaked information is never a good look for a company, and it can result in a financially damaging lawsuit, as well as a huge waste of time negotiating with the other party and putting out fires from a media/PR perspective. Generally, Cyber Liability coverage can help you to stay resilient and should protect you from:
For developers, such as gaming developers or those who work in other forms of media, in addition to Cyber Liability, you will also need Errors & Omissions (E&O) insurance. Under this type of insurance is also Media Liability insurance.
E&O (errors and omissions) insurance for gaming developers might pay for damage or medical problems that your customers experience as a result of the games you develop.
Media liability insurance would cover you in case you used a piece of music in a movie or online video without obtaining the license first from the publisher. If you run an online newspaper, this type of insurance would cover you if you published a negative review that contains untrue facts (i.e. libel or slander).
Another reason Media Liability insurance would come in handy is if your company reveals private information about someone and they happen to sue you. You would be able to cover the costs of your legal fees and avoid losses.
Commercial General Liability is an insurance that is comprehensive. It covers you against injuries or property damages that occur on the premises of your business. Additionally, if you happen to sell a product and someone chokes or is injured by that product, you could be sued.
Another reason to hold Commercial General Liability insurance is if you sell products on e-commerce sites, as they require this type of insurance for some businesses. It is important to look at the requirements for different e-commerce sites to make sure you hold enough coverage under their terms to be operating legally.
If you are an online business that employs staff, you will need to protect that staff on top of your business itself. Having a safe working environment is a must, but there is always a chance that you may have issues with some of your employees.
Most importantly, with an Employment Practices Liability insurance policy, you, as the owner, will be protected along with anyone on your staff.
There are a few instances in which you may want to have Employment Practices Liability insurance:
In most states, Worker’s Compensation is a legal requirement. Worker’s Compensation is a policy that covers your employees for accidents and illnesses that happen while on the job. With online businesses, this includes sickness or if you employ delivery persons that become injured while working, for example.
With Worker’s Comp, all legal expenses related to lawsuits regarding work-related injuries will be covered, with sick leave included. It will help you to promote a safe working environment on top of also being covered for accidents if they do happen.
For those businesses that sell products on e-commerce sites such as Amazon, seller suspension insurance will protect you against angry customers. Sometimes, customers who have an issue with your service will cause your account to be suspended without any true reasoning behind the suspension.
Amazon constantly changes policies, and although you are allowed to appeal to why you were suspended, you will be losing revenue during this “dead period”. Rather than lose business for days, weeks or months, seller suspension insurance will provide the finances you need to continue. These finances may include a specialist to help get your account on track or to continue paying your employees.
Although it may seem that working from home would decrease the risks of running a business, you are still vulnerable to risks even if operating your business from home. It is important to note that your homeowner’s policy may offer little if any protection for your business.
Cases in which you may need a business insurance policy due to working from home may include:
On average, you should expect to pay between $300 and $1500 per year for General Liability insurance for an online business. If you choose to add on or remove additional forms of insurance, your premium will rise or fall.
Creating a successful online business may seem easy from an outside perspective, but it is a lot of work. It takes years to build your business and reputation and mere moments for it all to be taken away because of a lawsuit, error or public mishap.
Business insurance will protect your business and all of your hard work in the event of a crisis. There is an old saying: “it’s better to have it and not need it than need it and not have it”. An insurance salesman must have said this because it fits perfectly.
If you are unsure which policy may be right for your company, speak with an advisor at CoverWallet today. We will help you find a policy that is tailored to your needs as an individual or business. Contact us today.