E-commerce Insurance

Every business is unique, and insurance requirements may vary by what you sell; however, a comprehensive e-commerce insurance package will typically include the following coverages:

• Cyber Liability Insurance: Given that you conduct your business online, Cyber Liability Insurance is the most important coverage for retailers selling products online, especially for anyone storing customer data. Cyber Insurance covers costs associated with electronic incidents, such as a cyber hack involving your technology systems and data. For example, an employee clicks on a malicious link, accidentally providing access to your customer database and compromising their financial data. In this scenario, cyber liability insurance could cover the cost to notify your customers and repair your data systems, as well as any legal expenses that result from the data breach.

• Product Liability Insurance: Product Liability coverage is important coverage for retailers, as it protects against claims alleging third-party property damage or bodily injury caused by a product you manufacture, distribute, or sell. For example, a customer claims the portable phone charger they bought from your Shopify store exploded, causing second-degree burns. Your Product Liability Insurance could cover the legal fees and medical expenses. Different products require different levels of protection, and it is essential to let your broker know anytime you add a new product to your shop.

If you operate a drop-shipping company or are a member of a distribution chain, ensure all suppliers, manufacturers, and distributors are adequately insured. Your broker can help you determine whether or not you need to add them to your policy and if you should be included in theirs, as you can be held responsible for product liability on their end, too.

Damages covered by product liability are usually the result of a defect in the design, manufacturing, or marketing, such as an incorrect label or a lack of safety warnings. If you import or export products outside of North America, check with your broker to ensure that the products meet industry standards.

• Commercial General Liability Insurance (CGL): While you conduct most, if not all, of your business online, you may also have a brick-and-mortar location or store your inventory at home. Commercial General Liability Insurance, also known as slip-and-fall insurance, protects you against the day-to-day risks that can happen when interacting with third parties, such as claims of third-party bodily injury or property damage. For example, a customer visiting your store to pick up an order trips over the door threshold, injures their wrist and sues you for bodily harm. CGL will typically cover legal expenses and medical fees, regardless of the lawsuit’s outcome.

• Commercial Property Insurance: If you store your stock in a location, have a brick-and-mortar shop, or operate your business from a home office, it’s important to have Commercial Property Insurance. Commercial Property Insurance protects your physical location, as well as the contents (including stock and inventory) from insured risks that occur beyond your control, such as a fire, theft, or flood. It’s a common misconception that business-related activities that occur at home can be covered through your homeowner policy, but the coverage is often inadequate or non-existent. Commercial Property Insurance often includes business interruption coverage (also called Business Income Coverage), which provides reimbursement for net income lost following an insured event. It may also cover overhead costs, employee wages, and other costs associated with temporarily closing your business. Please note; business interruption coverage does not cover income lost due to a pandemic, infectious disease, or government-mandated closure.