Your online company might have more exposures than you realize. Do you have the right ecommerce business insurance? From cyberattacks to slander, the risks are numerous – and without the right insurance, costly claims can drive an entrepreneur out of business.
Homeowners insurance won’t cut it, either, even if you’re working from home. The standard homeowners insurance policy excludes many commercial activities. Even if coverage is available, the liability limits that come with homeowners insurance may be too low to meet the needs of a business.
You’ve worked hard to build your e-commerce company. To protect your investment, you need the right insurance coverage. Here are five key protections to consider:
#1: Errors and Omissions Coverage
Do you provide professional services? Then you could be hit with an errors and omissions lawsuit for any alleged mistakes or negligence. For example, if you miss a deadline, breach a contract, or fail to disclose something, the client may sue for financial losses.
Errors and omissions insurance provides important coverage for a wide range of professionals, from software developers to financial advisors. This coverage is also called professional liability insurance.
#2: Product Liability Insurance
Don’t think you’re off the hook just because you sell products instead of services. If you sell a defective product that results in property damage or bodily injury, you could be sued.
Any type of product, from a simple necklace to expensive machinery, has the potential to trigger a product liability lawsuit. In one tragic example, both Etsy and the seller of a teething necklace were sued after a boy was strangled to death by the necklace, according to eCommerce Bytes. More recently, Peloton has been sued over its treadmill, which has been recalled after being linked to multiple injuries and the death of one child, according to Law Street Media.
#3: Advertising Injury Coverage
You probably engage in some sort of advertising for your business, whether it’s in the form of a blog, a social media feed or paid advertisement. While this is important if you want to find new customers and grow your business, it can also expose you to a variety of liabilities.
For example, you could be hit with a lawsuit over copyright violations if you accidentally use any text, images, songs or other materials you don’t have the rights to. If you say anything negative about your competition, you could also be accused of libel or slander.
#4: Commercial Auto Insurance
Do you use your car to make deliveries, transport clients, or engage in other business activities?
If you use your personal vehicle for commercial purposes, you may need commercial auto insurance coverage it. Otherwise, if you get into a crash, you might find you don’t have the correct coverage or adequate limits.
#5: Cyber Insurance
If you access or store confidential personal information, you need coverage to protect against the risk of a data breach. However, even if you don’t store personal information, you still have cyber exposures. For example, ransomware and business email compromise (BEC) incidents have skyrocketed since the pandemic. Can you imagine having all your business files held hostage until you pay a million-dollar ransom? This scenario is becoming increasingly common in a variety of industries. Cyber insurance can help you navigate and recover if it ever happens to your business.
Protect Your Business
E-retail sales accounted for 18% of all global retail sales in 2020, according to Statista, and this figure is expected to reach 21.8% by 2024.
The risks listed above are just some of the most common threats. Depending on the type of business you operate, you may face other exposures as well. As e-commerce grows, and remote work increases, the associated risks will also grow. Talk to a FICOH agent to make sure your business is protected.