Are you considering starting an online store to sell your wares? Whether you’re slinging hand-poured candles or reselling vintage goods, your online retail business can carry the same risks as a brick-and-mortar store. Injuries related to your products, legal action from competitors, and damage to your equipment are possible scenarios that await you as an online retail entrepreneur.

Ecommerce insurance (also known as online retail business insurance) is one way to protect your growing business against financial risks. When you know you have the right coverage, you can focus on the important things like growing your online store and providing top-notch customer service. In this short guide, we’ll go over the kinds of insurance policies that can benefit online retail business owners.

Why ecommerce stores need insurance

If you’re operating an ecommerce business, you might think you’re already in the clear. After all, you interact with customers via email! There’s no chance of a slip-and-fall incident in an online retail store. But retail insurance isn’t just for brick-and-mortar businesses; it’s for anyone selling a finished product.

But what could go wrong? For some orientation, see below:

  • Advertising injury – Say you compare yourself to a competitor, noting the higher quality of your product. Should they believe this affected their profits, they could sue you for advertising injury. Online reviews are also crucial for businesses like yours, so in another case, someone may allege that your response to a review was defamatory.
  • Customer injury – Even if you don’t meet with customers in-person, there’s the chance they could be injured by your product. Say you’re a soapmaker who works with essential oils. Should your product cause an allergic reaction, your client could sue you for bodily injury.
  • Employee injury – Do you have any full-time employees? You could be held responsible if they sustain an injury or develop a disability as a result of their work for you.
  • Damage to your own equipment – If theft or natural disaster damages the equipment you use to make your goods, it may not be covered by your existing insurance.
  • Car accidents – Do you use a vehicle on your way to the post office as you send out packages to eager customers? There’s always the risk of an auto accident, and if you’re on the job, costs resulting from damages to your vehicle, or the injury or damage you cause to others would be covered by auto insurance.

While some of these possibilities may seem unlikely, keep in mind that a person doesn’t have to have a good case in order to sue you. Even if you’re ultimately cleared of wrongdoing, legal defense to reach that verdict is expensive, in and of itself. With the right insurance from the right insurance agent, you can focus on growing your ecommerce store rather than figuring out how to pay for costly attorney’s fees and settlements.

So what kind of insurance do you need as an ecommerce store owner? Let’s take a look at some popular options.

Essential Insurance for Ecommerce

As you read this list you’ll notice that there are a lot of different kinds of insurance to help mitigate risks associated with running an ecommerce company. With that in mind, let’s cover the most important one first: general liability insurance. If your ecommerce business is in its early stages, getting a general liability insurance policy should be the first thing on your list. After that, we’ll cover some other insurance options to consider as your business expands.

General liability insurance

General liability insurance is designed to provide the investigation, legal defense and settlement for the following kinds of third-party claims:

  • Personal and advertising injury
  • Property damage
  • Bodily injury

In this case, a third party is a customer or bystander (mailman, vendor, etc.) who claims that their interaction with your business has led to their financial loss or pain and suffering (whether thanks to medical bills, libel, or replacing damaged property).

How General Liability Coverage Works

The key benefit of general liability insurance to an online retail business is product liability coverage—that means if you ship it and the customer is hurt or harmed after the product is in their hands, you’re covered in the event of a claim against your business. This helps protect your assets against the risk of loss due to allergic reactions from skincare and food products or injuries from fitness products. Certain restrictions may apply to product liability coverage through Thimble, but general liability insurance is essential to any growing online retail store.

What General Liability Insurance Doesn’t Cover

Keep in mind that general liability insurance usually does not cover damage to customer property temporarily in your care. For example, if you’re a jeweler repairing a customer’s necklace, general liability insurance may not cover any damage, loss or theft of that property while you are working on it. But when you buy general liability insurance via Thimble you can receive coverage for this exact situation as part of our general liability insurance program, known as Customer Property Protection! Just choose this option when you apply for insurance and viola! Your customer’s property under your care is covered up to the stated limit.

Other insurance For Ecommerce

Next, we’ll take a closer look at supplemental insurance coverages that can provide well-rounded online retail coverage.

Cyber liability insurance

As an ecommerce entrepreneur, your core business is likely this: you make a product, process a payment, and ship the goods. So we’ve covered how to get covered for making the product, but what about risk in processing payments?

That’s where cyber insurance comes in.

Cyber insurance can protect your business in the event of a data breach, and in your case, the data you store likely includes sensitive info like credit card information and the addresses of your customers. Should that information be compromised and your business held liable, you’d want cyber liability insurance to intervene.

Now that you know the basics for an online store, let’s talk about what you might need if (and when) your business really starts to grow.

Auto liability insurance

Do you drive a car while doing business? Almost every state requires that drivers take out auto liability insurance before hitting the road. If you have an accident on the job while uninsured, you’ll be responsible for the cost of any repairs—plus any state fines for driving without insurance.

Additionally, if your vehicle is integral to your business operations, then a personal auto liability insurance policy might not always suffice, and you should consider commercial auto insurance.

Workers’ compensation insurance

If your business has employees, nearly every state in the U.S. requires you to buy workers’ compensation insurance. This type of coverage helps protect your business from the costs incurred by an employee experiencing a work-related injury or illness.

When it comes to workers’ comp insurance, it’s always best to check your state guidelines to ensure you’re being compliant. If not, not only could you be on the hook for the expenses that follow a workplace accident, but you could also be fined certain penalties.

Employment practices liability insurance

As your business grows, so does your workforce, and along with it the risk of an employee dispute over situations like wages, termination or harassment. Even if a claim made against you is unfounded, disputes that make their way to civil court are costly and those expenses can be catastrophic to your business.

Employment practices liability insurance (EPLI) exists to protect employers from financial loss that can result from claims and lawsuits brought on by current or former employees related to their employment. It can cover claims related to discrimination, harassment, retailiation, wrongful termination and failure to hire or promote.

Cargo insurance

The products you ship are likely to make quite the journey before reaching your customers. As goods move from factories and warehouses to their final destinations, they embark on potentially dangerous land, air and sea trips.

Cargo insurance could help cover any financial losses from lost or damaged freight. It can cover damages in a variety of events, like natural disasters, transit accidents, abandonment, or even piracy.

Insurance to cover your equipment and property

As we noted, general liability insurance can provide coverage for damage you cause to the property of third parties, but not damage to your own property. But there are several options for making sure your online store can thrive in the face of your damaged equipment.

If you operate from home, there’s a chance that your homeowner’s or renter’s insurance would cover some of your business equipment. However, if you use much more than a laptop, you may want extended coverage.

In that case, options include:

  • Commercial property insurance – Purchase a standalone policy to cover your business property such as equipment and inventory. Commercial property coverage can also protect your place of business and its premises (if you own a commercial space, for example).
  • Business owner’s policy (BOP) – Some insurers bundle general liability insurance with commercial property insurance and other useful coverages into a single policy called BOP insurance.
  • Inland marine insurance – Known at Thimble as Business Equipment Protection, this insurance helps cover your tools and property when it’s away from your premises.

Assess your needs and start selling

As an online retailer, your business model is efficient, streamlined, and affordable.

While insurance may not seem like another cost-cutting measure, it can help save you future headaches in the case of damaged equipment, third-party claims, and other issues, such as related legal expenses. The cost is negligible compared to what insurance is worth to your business. Make sure you’re covered with the policies you need, which may include:

  • General liability insurance
  • Cyber liability insurance
  • Workers’ compensation
  • Employment practices liability insurance
  • Auto liability insurance
  • Cargo insurance
  • Property insurance

At Thimble, we make it easy for companies like yours to get insurance. We offer general liability, professional liability, and Business Equipment Protection insurance. Just click “Get a Quote” or download the Thimble mobile app to get started. In less than 60 seconds, your online retail business can have your customized policy and Certificates of Insurance
 delivered to your inbox, and you can get back to selling with more confidence than ever.