Online retail business insurance

Online retail businesses risks

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, general liability could protect you if someone alleges that your response to an 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 soap maker 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, the damages to your vehicle, or the injury or damage you cause to others may not be covered by your personal auto policy.

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 meet your business liability needs and protect yourself.

In contrast, taking out insurance means you’ll have coverage if (and when) you need it. That way, you can focus on growing your digital 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 online retail store owner?

Some popular types of business insurance to consider include: 

  • General liability insurance
  • Cyber insurance
  • Workers’ compensation
  • Auto liability insurance
  • Property insurance
Let’s take a look into each of these to help you protect your online business. 

General liability insurance

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

  • Personal and advertising injury
  • Property damage
  • Bodily injury

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, you’re covered in the event of a claim against your business. This hedges your assets against the risk of allergic reactions, a faulty wick causing a fire hazard, and any other risk exposures that come along with selling and shipping a retail product. Certain restrictions may apply to product liability coverage from Thimble, put general liability insurance is essential to any growing online retail store.

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 (whether thanks to medical bills, libel, or replacing damaged property).

Keep in mind that general liability insurance does not usually cover damage to customer property temporarily in your care. For example, if you’re a jewelry smith repairing a customer’s necklace, general liability insurance may not cover any loss or theft of that property while you are working on it. Where available, Thimble offers coverage for this exact situation as part of our general liability insurance, known as Customer Property Protection!

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

Cyber insurance

As an online retailer, 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 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 car 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.

Typical requirements include

  • Bodily injury liability – A certain minimum coverage for injuries to people in another vehicle in an accident where you’re at fault
  • Property damage liability – Minimum coverage for damage you do to another driver’s vehicle in an at-fault accident

Some states may require other kinds of coverage, including:

  • Uninsured motorist coverage
  • Personal injury protection

And beyond the bare minimum, collision coverage and comprehensive coverage can help ensure that you’re able to repair or replace your vehicle no matter the cause of the damage (i.e., flooding or fallen tree branches).

Additionally, if your vehicle is integral to your business operations, then a personal auto insurance policy might not suffice. In this case, you’d need a commercial auto insurance policy. To that end, if your business owns a vehicle, you will almost always need commercial auto coverage. We recommend talking to an insurance broker if you are unsure of your liability needs regarding vehicles.

Workers’ compensation insurance

If your business has employees, nearly every state in the U.S. requires you to take out workers’ compensation insurance. This type of coverage helps protect your business from the costs incurred by an employee experiencing a workplace injury or illness. With that being said, certain industries (in certain states) are exempt. Depending on your state, you may also be exempt if you have just one employee (or if your employees fall within a specific category).

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.

Insurance to cover your property

As we noted, general liability insurance can provide coverage for damage to the property of third parties, but not to your own. But there are several options for making sure your online store can thrive in the face of 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. A business owner’s policy typically includes commercial insurance when a home office or manufacturing equipment is involved in commercial operations.

In that case, options include:

Commercial property insurance – Take out a standalone policy to cover your equipment. Commercial property coverage can also protect your place of business and its premises (if you lease a commercial space, for example).

Business owner’s policy (BOP) – Some insurers bundle general liability insurance with commercial property insurance and other helpful coverages.

Inland marine insurance – Known at Thimble as Business Equipment Protection helps cover your tools no matter where you’re using them.

Assess your needs & 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. 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 insurance
  • Workers’ compensation
  • Auto liability 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 coverage details and get back to selling with more confidence than ever.

The content on this page has been verified by
Terri Hitchcock, JD
Chief Insurance Officer, Thimble
Terri has 38 years of industry experience and knows a thing or two about insurance, so she reviewed and approved everything on this page.

Finding CCC insurance

If your professional responsibilities include taking care of your clients’ possessions, it’s important that you have CCC insurance. Here are some ways you could make sure you’re covered with care custody and control insurance:

Find a general liability policy that does not exclude CCC coverage

If you’re a professional whose main job entails caring for other people’s property, make sure your insurance has your back. For example, Thimble’s Cleaners Janitors and Pets Insurance policies automatically come with CCC coverage.

Add on CCC coverage to your general liability policy

If your insurer’s liability policy excludes CCC coverage by default, there may still be a way to add-on CCC coverage to a basic policy. CCC is an optional add-on for many Thimble policies.

Consider inland marine insurance

Inland marine insurance is a specific kind of policy that can protect your own business equipment or property.

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