At What Point Does an Online Store Need Business Insurance?

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Internet business insurance, commercial insurance for e-commerce business and online store insurance are some of the names used to address the kind of business insurance every e-commerce store needs.

If you already have an online store or you intend to start one, you need to come to terms with the insurance demands of an online store.

2020 Online Store Statistics That Will Amaze You

Online shopping has moved from “never-heard of” to become a billion dollar industry. The art of buying online has become a norm for people all over the world with more individuals embracing it daily.

In 2018 alone, an estimated 1.8 billion people bought something online world over. Sales by online stores crossed the $2 trillion threshold to become one of the highest grossing industries.

Not excited yet?

By 2021, sales from online stores are believed to hit $4.8 trillion.

Statistics shows that the Chinese Taobao which is the biggest online marketplace in the world today has a GMV of $515 billion. Tmall and Amazon follow in 2nd and 3rd place with a GMV of $432 billion and $344 billion in annual third-party GMV respectively.

In July 2020, Amazon’s owner, Jeff Bezos, added $13 billion dollars to his fortune in a single day.

No doubt, the online shopping niche is one profitable and rapidly growing niches. And with the current direction the world is facing the expectancy level of a drop in its scalability is not feasible.

Coupled with the outbreak of Covid-19, buying from online stores has begun to redefine how we will begin to make purchases even as we plunge deeper into a digital age.

The Growth of Online Stores in 2020

The growth of online stores can be largely attributed to the convenience it offers buyers. One of the unique selling propositions of online shopping is improved convenience and customer response.

The stress of in-person shopping is relieved as you do not need to go through traffic or stand in a queue before you can buy something. From the comfort of your home, you can make a purchase and have it sent to your home address.

Also, online stores have an engagement feature that is not seen in our retail stores. This feature allows an intending buyer to see reviews by others who have bought the product he or she wants to buy.

Going through the reviews of a product by other customers will inform a buyer’s decision to go ahead with buying the product or not to.

Furthermore, online shops give users the allowance to choose from a variety of products listed on one platform. Instead of walking up and down a retail store looking for what you intend to buy.

All of these features have largely influenced the growth and revolution of online stores.

So, if you have been considering starting an online store but you have been skeptical about the viability of the market, I believe this is enough motivation for you.

Sadly, as online stores grow, they become prone to cyber attacks. As you build your online store, be sure that it is susceptible to cyber attacks due to the way the internet is designed.

It is therefore important to know the various strategies an online store can take to survive cyber attacks.

Major Insurance Coverages an Online Store Needs

Your online store (e-commerce company) needs to be insured and we have highlighted some of the insurance coverages that are in-demand for online stores.

  • Business Interruption Insurance
  • Cyber Liability Insurance
  • Premise Liability Insurance
  • Product Liability Insurance

1. Business Interruption Insurance

Business Interruption Insurance covers the losses your online store may incur when an event causes your store to go inactive for a while. This inactivity may be the result of a data breach or a downtime by the server hosting your online store.

Also, a damage to an inventory or merchandise or an unintentional damage to any of your store’s property can lead to an interruption in your operations.

The Business Interruption Insurance helps to mitigate the losses you may incur in a situation like this.

2. Cyber Liability Insurance

You may want to think that your online store is not popular and will not come under any form of cyber attack hence you do not need cyber liability insurance.

Truth is, you can not be sure of that. It is your duty to keep the sensitive data submitted on your store because users trusted you enough to place it there.

In lieu of this, it is important to have a cyber liability insurance for your online store no matter its size.

3. Premise Liability Insurance

Your online store will have something like a warehouse where you store the products you sell.

This building needs a premise liability insurance. A premise liability insurance caters for the medical expenses of injuries sustained by clients or anyone who visits your warehouse or retail store.

A government inspector may visit your store and he or she sustains an injury and you do not have insurance coverage for such an occurrence, you may be looking at the insolvency of your online store.

4. Product Liability Insurance

The products you sell on your online store either manufactured by you or other third-party manufacturers should be covered by a product liability insurance. A product liability insurance covers for issues that may arise from the use of any product from your store.

If a person gets injured or contracts an illness while using a product gotten from your store, a lawsuit will be fired against you. Your product liability insurance covers the expenses the lawsuit may cost.


When Do You Need Insurance For Your Online Store?

Should you wait for your online store to become popular before you get it insured?

Do you feel insurance covers are for the big online shops like Amazon, eBay, Target, etc?

You are very mistaken.

You do not need to become a prominent store before you get insured because the risks, unforeseen circumstances, and cyber attacks won’t wait for your online store to grow big before they happen.

An insurance cover for your online store can come at the early stages of your business. Threats and unfavourably circumstances have no regard for size, so does insurance.

Most importantly, your online store needs a data breach insurance coverage. This is because data breaches are among the prevalent threats to every online store.


Why Every Online Store Needs a Data Breach Insurance Coverage

A data breach insurance coverage is an example of a cyber liability insurance. It helps business owners deal with problems arising from the compromisation of their servers.

Since your online store is hosted online by servers, it is prone to attack. And when an attack is carried out on your store’s server, it can lead to the theft of sensitive data. These data can be used to defraud unsuspecting users.

A data breach of this nature will see your online store going against lawsuits and legal claims. The costs of these claims and lawsuits are handled by the data breach insurance coverage.

In your operations as an online store, you may commit copyright infringement crimes or go against stipulated operational practices by regulatory bodies and you may be demanded to pay a certain amount as fines.

It is your data breach insurance that covers the cost of these crimes and regulatory fines. Also, the cost of emergency IT support for your server is taken care of by the data breach insurance coverage.

Most certainly, no online store will thrive successfully without a data breach insurance coverage in place.



  • Even at the startup stage, your online store needs data breach insurance coverage.
  • Along with data breach insurance coverage, you also need business interruption insurance, premise liability insurance, and product liability insurance.
  • An insurance broker can save you the stress of trying to acquire all of these for your business.

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