Insurance for online retailers – the top five insurance policies

Many of our readers are artists, makers and retailers who sell online.

Whether you already sell online or are thinking of doing so, you’ll like this helpful sponsored post from PolicyBee on the different kinds of insurance for online retailers:

Virtual risk?

Starting an online retail business is a great way to make money from the comfort of your home. All you need is some quality stock and a quality internet connection. What could possibly go wrong?

Quite a few things, actually. Just because you’re sheltered by your online shopfront doesn’t mean trouble won’t come your way. Selling virtually might reduce your risk in some areas, but it doesn’t eliminate it. In fact, there are times when it could increase it.

So, if you’re feeling like your business could do with a bit of cover, here are our top five recommended insurance policies for online retailers.

1. Property insurance.
Property insurance covers your stock, and/or the things you use to run your business.

For example, if your products are stolen or damaged by things like fire, flood or vandalism, your insurance will pay for replacements. All policies are different – check if there’s a minimum security standard your insurer wants your house or storage facility to meet.

More importantly, don’t assume your home insurance covers business-related items and equipment you keep at home. Many don’t.

Policies vary when it comes to covering your stock when it’s in transit or in storage too, so check the specifics of your wording. And don’t forget about insuring things like computers and printers.

2. Public liability insurance.
This insurance covers you for third party injuries and/or property damage caused by your business.

It’s easy to assume that because you’re selling online and not face to face, your business couldn’t damage something or injure someone.

Not so, unfortunately. Let’s say a courier trips on a loose step when he’s collecting a delivery, injuring himself. Your public liability insurance helps by paying any legal fees associated with defending the claim. And if you’re at fault, it’ll cover any compensation too.

Many trade shows and fairs insist you have public liability insurance before you exhibit. Always check with your insurer and make sure your policy covers you for doing this.

3. Product liability.
Similar to public liability, but with one key difference. It protects you if one of your products causes bodily injury or property damage to a third party.

For example, a fault in an electrical product could spark a fire in your customer’s home. Or a batch of jewellery you sell could cause allergic reactions. These are extreme examples, but they do happen.

In either example, product liability helps by paying for legal fees and compensation. In cases where someone’s hurt, these can be expensive.

Even if you don’t make the things you sell, you can still be responsible. More often than not, when a customer’s paid you for a product, they’ll expect you to resolve the problem – particularly if the original manufacturer can’t be traced or has gone bust.

4. Business interruption insurance.
This insurance protects your business if for any reason you can’t use your usual office. Whether it’s fire, flood, access, loss of electricity or meteor strike, business interruption helps make sure an unusual event doesn’t put your online store out of action.

The policy has two parts: cover for increased costs of working and cover for lost income. Both are as simple as they sound.

If a problem with your workplace means you have to pay to set up a temporary office elsewhere, business interruption covers it. If your income is lower than expected because of what’s happened, your policy pays the difference between your actual and expected income.

5. Employers’ liability insurance.
In our experience, most online retailers running their businesses from home tend to be sole traders. However, this one’s worth mentioning because if you have just one employee, employers’ liability insurance is a legal requirement.

If an employee suffers a work-related injury or illness, employers’ liability insurance can compensate them if you’re liable. It also pays any legal fees to help fight your corner.

The Health and Safety Executive can fine you £2,500 a day if you have employees but no employers’ liability insurance. That’s as well as a £1,000 fine for not displaying your insurance certificate.

There are some exceptions. Businesses where all members are closely related to the employer (ie as partner, parent, child, or sibling, or grandparent) may not need employers’ liability insurance. However, this doesn’t apply to family businesses incorporated as limited companies. If in doubt, ask a specialist insurer or broker for advice.

Anything else?
Just a few more pearls of wisdom to share with you before we go.

If you ever sell your products at fairs, markets, or pop-up shops, make sure to tell your insurer. It isn’t usually a problem, but if they’re not aware of it and something goes wrong, they could refuse to cover you if there’s a claim.

Since the internet and data are pretty much a fundamental part of your business, you might want to consider some sort of cyber insurance. This covers you for things like loss of data, virus transmission, cyber-attacks, and the cost of fixing damage to your website.

If you have any more questions about insurance for online retailers, feel free to get in touch.

PolicyBee is a specialist professional indemnity and business insurance broker born in CEO Iain’s shed because he was so frustrated at how confusing and difficult it was to get business insurance. PolicyBee is independent, digital, and understand the problems a young, modern business has because it is one. Although it’s no longer run from the shed.

Useful? We have plenty more straightforward advice from PolicyBee on the insurance needs of home business, from office equipment and garden offices to professional indemnity insurance.