Most online business owners don’t think about insurance. After all, insurance is a part of brick-and-mortar businesses, right? Wrong! Whether you are a small business owner or have a large one that operates virtually or physically, you need insurance to protect against losses.
Concerned? You should be! However, after reading this article, you will know which policies to purchase for your business, why, and when. We will discuss the types of business insurance that will benefit your online business the most.
1. Cyber Liability
This one is a no-brainer, right? Having an online business but not being protected against cyber liability? Unfortunately, data breaches, hacks, and cyber theft are all too common. Unfortunately, businesses often underestimate the importance of cyber liability because they fail to see the dangers of data breaches.
This breach can compromise your data, security, as well as the safety of your customers. It can also hijack your payments resulting in financial damage. Therefore, it’s essential to have a proper risk management plan with insurance to protect yourself.
First-party coverage includes damage to your data, including the restoration costs, any loss of income as well as expenses to notify your customer base. It also covers cyber extortion and PR expenses. Third-party expenses cover slander and defamation.
2. General Liability
All businesses should have general liability insurance. This is especially important if you allow pickups from your place or are an e-commerce marketplace that will enable listings. This business liability insurance covers the following:
Bodily Injury
This is useful if you have client pickups or deliver from your house.
Personal and Advertising Injury
This can help protect you against angry customers as well as against defamation.
Property Damage
This is more useful for online businesses that rent out their assets or businesses that allow customers to lease or rent equipment. General liability insurance covers third-party property damage and so your property will be protected.
3. Commercial Property Insurance
If you are a manufacturer, a reseller, or anyone that stores physical inventory, this insurance is a must for you. It will protect you against damages, including fire, theft, weather, or even vandalism.
The inventory location could be anything, even if it is your house. This is different from property damage insurance, as those exclude any business-related operations. Therefore, to protect any inventory lying at home, you will need a specific commercial property insurance policy.
4. Business Income Insurance/ Business Interruption Insurance
This business insurance is there to support your business in case of any covered property damage to assist you in regaining your lost income. It can be in the form of provision of working capital to allow you to operate your business as per its usual routine. This can help you pay expenses such as utility, wages, or rent.
The above three policies together make what is known as BOP or business owners policy. It is usually adopted by small business owners, whether they operate physically or virtually.
There are, however, other kinds of business insurance that can be suitable for online businesses.
5. Worker’s Compensation
If your business is expanding and hiring, you will need to get this type of insurance. This is in case any accidents happen at the workplace. This can be because of work activities to ensure that your employees receive financial coverage. It is also helpful in protecting businesses from lawsuits.
6. Unemployment Insurance
In the same vein, for the protection of employees, businesses often opt for unemployment insurance as well. Again, this provides an incentive and can be a competitive edge to attract talent if your business focuses on expanding.
7. Commercial Umbrella Insurance
This is a type of insurance that extends the limits of your existing insurance coverages. So, if you ever extend the limit, you are covered to pay the difference via this insurance. This is a good insurance policy if you:
- Run a risky business
- Have a history of mishaps
- If the chances of damages are greater in terms of valuation
8. Data Breach Insurance
This insurance is similar to cyber policy insurance. However, it differs by also notifying your customer base of the breach. Moreover, it also offers an identity theft monitoring option for the protection of your business. Cyber liability coverage also provides legal help; however, data breach insurance does not.
FAQs
Do Online Businesses Need Insurance?
Yes. Insurance is helpful for all kinds of business. The only question to ask yourself is if your business is ready for insurance. Has your business reached that stage in its life cycle yet? Or is your business risky enough to consider one?
Why Do Online Businesses Need Insurance?
If you are inexperienced or have a new business, it is wise to take out business insurance. This is in case your business bank account gets hacked. You will need protection and guidance against such instances, and insurance can be the best way to save you.
When to Get Online Business Insurance?
The perfect time to get online business insurance can vary based on the industry you are operating in and the life cycle stage of your business. However, the following are some instances when getting insurance can be helpful.
- When you are relocating your business
- If you are hiring or firing your employees
- If you are trying out or purchasing new equipment
- If you have started offering a new product in your product portfolio
Recommendations
Below are three top business insurance providers that specializer in the best types of business insurance for online, so we recommend you contact any of these three to see what options they can offer you for your business.
Hiscox is a US-based insurance company that excels in providing small businesses with suitable insurance plans. Hiscox covers various liability factors and provides a safety net to business owners who are just starting or have a small-scale setup.
Why We Like It
The various options to choose an insurance plan are suitable for online businesses.
State Farm insurance company is an excellent choice for online businesses. State Farm specializes in providing the best deals to small business owners based on their needs and requirements. Their coverage spreads on general liability, professional liability, and commercial liability. This helps the business to grow and flourish without the fear of loss and damage.
Why We Like It
They allow a myriad of liabilities that can help online businesses to flourish.
Tivly provides you with specially trained customer service rep's who source the best insurance agents or agencies for your situation to ensure that the offer is customized to you and your situation. Their fast and efficient process gets you a free quote quickly and simply.
Why We Like It
It allows busy business owners to be able to get a quote which is completely aligned to their business situation.
Conclusion
If you plan to have your online business running for the long term, you will need to protect yourself from business losses through insurance policies. First, determine the types of business insurance and coverage that work best for your industry. Then get coverage to not only protect yourself but help your customers feel safe as well!
We strongly recommend that you contact the insurance providers above and make a comparison with what each one offers and charges before choosing what insurance to take out. These insurance provider will be able to provide you with advice on what policies and insurance types are suitable and recommended for your business type and growth stage.
