Even with no physical store, even with no employees, business insurance is still a must—here’s why.
As the owner of an online business, you may be wondering if business insurance is a necessity. After all, you don’t have a physical store front, you may or may not have employees and you don’t have any stock holders (yet).
If you’re like many internet business owners, you may believe that your risks are slim to none and therefore opt not to get business insurance. But in reality, even ecommerce businesses can be held liable and suffer losses at the hands of a third party.
If you’ve been operating your business without insurance or are concerned about whether or not you need coverage, this guide will help you determine what kind of coverage you need and why. Read on for more information.
What are your risks?
While ecommerce businesses don’t face some of the same challenges that traditional shops are up against, there are still risks involved when running your business. Here are some common risks that are associated with online businesses:
- • Injuries caused by your products: Whether you’re selling technical devices, jewelry or organic snacks, you could be liable if a customer is injured or made sick when using your product.
- • Breach or data loss: If your business is providing technical services or any kind of design, creative or marketing services, a breach in confidential client data or loss of a client’s information could be reason for a lawsuit.
- • Interruption of business: Ecommerce businesses depend on the web to operate and function properly; if your site goes down or there’s a glitch that causes business to stall, you could be sued or lose business because of the interruption.
- • Copyright violations: Whether intentional or not, if you infringe upon someone else’s material online, you could be held liable and sued for a copyright violation. Because the web makes communication so open, easily accessible and available, it’s not uncommon for these types of mistakes to be made.
How to protect yourself and your business
General liability insurance
A good place to start is with a general liability business policy. This coverage will protect you against myriad risks, including:
- • Bodily injury: someone falls or gets hurt on your property while visiting you for business purposes,
- • Property damage: your computer gets destroyed in a fire or as a result of a storm, etc.
- • Advertising injury claims: copyright infringement, libel, slander or any non-physical harm caused
Internet liability insurance
As an addition to general liability, this policy is specialized just for online businesses and offers protection against various risks associated with operating an ecommerce company including:
- • Plagiarism
- • Unauthorized use of a person’s image or endorsement
- • Defamation of character or slander
- • Failure to protect your client’s confidential information
- • Sharing private or confidential information online
- • Failure to properly prevent transmission of a virus
Also known as errors and omissions coverage, this is a common policy of choice for online businesses. Coverage under professional liability includes things like:
- • Negligence, whether intentional or unintentional
- • Errors and omissions that result in financial losses to a third party
Other reasons you may need coverage
As an ecommerce business, if you are actively engaging with customers or advertising on social media, you need to make sure you are covered against any risks. Some of these include:
- • Posting inaccurate information (by you or your employees)
- • Posting without permission (songs, lyrics, photographs)
- • Displaying images, logos or content from someone else’s site without permission
- • Lack of adequate security protocols that guard against outside parties hacking your customers’ information
While the risks associated with your online business differ from a traditional brick and mortar company, there are still many risks that could cost you a substantial amount in losses if you’re not protected. Ideally, you will have a policy in place that will cover you in the event that you are faced with damages or a lawsuit. Discover which business insurance option is best suited to your needs by contacting Avante Insurance today.