Why Do Online Retailers Need Insurance?

Why Do Online Retailers Need Insurance?


Why Do Online Retailers Need Insurance?

Like any business, online retailers need insurance to cover their contents, stock, employees and more. While online businesses often don't have the same risks as customer-facing retail stores or offices, your business activities will open op a whole new set of risks. Business insurance will give you the peace of mind you need.

Why do you need insurance for online retail/eCommerce?

Throughout your e-commerce journey, there will be starting from getting your stock all the way to years after purchase. Threats include:

  • Loss of money through cyber breaches
  • Breaches of customer data
  • Damage to stock
  • Long periods of interruption
  • Injuries to customers caused by products that you have supplied
  • Injuries to employees as part of their work for you

Any of these threats can be costly to resolve, whether it is paying for replacements and restorations or legal fees and compensation costs.

GET A QUOTE

Do you need insurance to sell on e-commerce platforms?

Most of the popular online marketplaces will specify that they will not respond to any product liability claims that occur following the sale of faulty products on their site. When picking a platform, be sure to study their seller agreement to make sure you have what you need.

For example, Amazon specifies that you must have liability insurance if you are using their fulfilment services and are making more than £4,000 PCM.

FIND OUT MORE ABOUT AMAZON SELLER INSURANCE REQUIREMENTS HERE

What Insurance do Online Retailers Need? / What is the most important insurance for online retailers?

As an online retailer, here are some of the most highly recommended insurance policies:

1.Employers Liability-if you have any employees, this is really important as not having the right cover can result in hefty fines. Find out what cover you need as an employer here!

2.Contents & Stock-to avoid the cost of replacing your stock in the event of flood, fire, theft etc. Here are some tips on choosing an appropriate Stock Sum Insured.

3.Products Liability-provides financial support if someone makes a claim of injury, property damage, or accidental death caused by a defective product you have provided. This cover is suitable for suppliers at all points of the production and distribution chain.

4.Public Liability-for injuries, property damage to members of the public. - - Covers you for slips, trips and falls.

FIND OUT MORE HERE: HOW MUCH PUBLIC & PRODUCT LIABILITY INSURANCE DO I NEED? | INDEMNITY LIMITS 101

5. Business Interruption-Will cover your lost profits following an insured loss. For example, if your stock is destroyed in a flood, your contents policy would cover the cost of your stock but not the retail value.

Does Home Insurance cover Online Retail?

Many online retailers assume that their standard home insurance covers them under contents. However, this is often not the case. Unless you have specifically arranged it with your insurer, your stock is most likely not insured under your standard home insurance policy and you should arrange commercial insurance.

Naturally, this would be problematic if you run your e-commerce business out of your house and a pipe was to burst all over your stock. While your home insurance might payout on the carpets, walls, furnishings etc., it is doubtful that your insurer would reimburse you for the £10k worth of stock you had stored in there too.

It's almost certain that you would not be able to claim the lost profits on those items without Business Insurance (specifically, Business Interruption.)Do I need insurance as a small online retailer?

If you are running a small online store through Facebook Marketplace or Etsy, you may want to consider business insurance. This is particularly important if you are selling handmade or homemade products.

FIND OUT MORE ABOUT SELLING ON ETSY HERE IN OUR BLOG POST: IS SELLING ON ETSY WORTH IT? DO YOU NEED BUSINESS INSURANCE TO SELL ON ETSY?

How Do I Buy Online Retailer Insurance?

Online Retailers insurance is easily available by calling up your preferred business insurance broker. At Insync, our team will be on hand to set up your business insurance over the phone. You can have cover arranged on the same day.

GET A QUOTE

How much does Online Retailer Insurance Cost?

The cost of your online business insurance will naturally depend on your business's size and value. With a specialist business insurance broker like Insync, you can pick and choose which cover you take out.

You can also select the level of indemnity that is right for your business.

For example, if you take out Business Interruption cover, you will need to ensure that your indemnity limit will cover you for your worst-case scenario.

Online Retail Insurance for Amazon Sellers If you are running an Amazon store and are utilising their fulfilment services, your insurance requirements may be different to a seller doing end-to-end fulfilment.

FIND OUT MORE IN OUR BLOG POST: WHAT BUSINESS INSURANCE DO I NEED AS AN AMAZON SELLER?

What is Product Liability for Online Retailers?

Products Liability Insurance cover will protect you if a claim is made against your company for either bodily injury, death or property damage caused by a product that you have supplied, manufactured or designed.

If you are the seller, you will be the first port of call for any claimants.

While the fault may not lie directly with you, the claimant's lawyers will look to you in the first instance. Where you have purchased products liability protection, your insurers will help you manage the claim and then seek to reclaim their losses from your supplier or manufacturer. This process is known as subrogation.

In most cases, the manufacturer will ultimately be found liable for damages in the event of a claim. However, there are some cases where it may be deemed as your fault:•You are the supplier AND manufacturer/designer.

  • The manufacturer cannot be traced, and the trail ends with you.
  • You have rebranded some white label products.
  • There was an issue with the instructions you provided or published on your product page.

What is Business Interruption Insurance for Online Retailers?

Business Interruption covers your financial losses following an insured event. For example, a fire breaks out in your storage facility destroying £20k worth of stock. If you have contents insurance, you will usually only be able to claim the cost of the stock to you. However, with a Business Interruption add on, you can also claim your lost profits to your indemnity limit.

FIND OUT MORE ABOUT THE THREE KEY TYPES OF BUSINESS INTERRUPTION HERE ON OUR BLOG POST: THREE TYPES OF BUSINESS INTERRUPTION AND THE DIFFERENCE BETWEEN THEM

Public Liability Insurance & Employers Liability Insurance for Online Retailers If you are running your business on your own, you will not need to buy Employers Liability.

However, if you have any employees and:

  • You are a limited company
  • You are not a limited company but NOT immediately related to your employee

You are legally required to take out Employers Liability cover or face fines of up to £2,500 for every day that you are not insured.

FIND OUT MORE IN OUR BLOG POST: WHAT INSURANCE DO I NEED AS AN EMPLOYER?

Public Liability might be suitable for your online retail business even if you are not always public-facing. Public Liability often goes hand in hand with Product Liability cover. At Insync, the two are purchased together due to crossover.

GET A QUOTE

Stock and Contents cover for Online Retailers

If you are storing your equipment in your own space, you should consider insurance. You can protect your stock and equipment from perils such as fire, flood and theft.

If you pair your Contents Insurance with Business Interruption, should you suffer a material loss, you can recover both the stock's cost and the lost profits on those items until you can start-up your business again.

FIND OUT MORE ABOUT SUM INSURED HERE IN OUR BLOG POST: DEALING WITH STOCK | TIPS WHEN CHOOSING AN APPROPRIATE STOCK SUM INSUREDFREE INSURANCE REVIEW

Need specialist Online Retailers Insurance advice? Request your quote here or contact our team today on 0330 124 0730 for more expert guidance. We will be on hand to talk you through what cover is appropriate for your business.