eCommerce Insurance Policy Information
eCommerce Insurance. E-commerce business owners oftentimes feel immune from the litigious atmosphere of brick-and-mortar establishments, but this is far from true. E-commerce sites are just as prone to litigation as other types of businesses, even if precedents are slowly being set.
In one particular case, a woman with a hearing impairment sued eBay because she claimed that the company failed to follow the Americans With Disabilities Act when it required that she receive an automated phone call with a registration access code in order to register as a seller. Since she could not hear the registration code, she claimed eBay violated the mandated of the ADA.
The woman also alleged that eBay is a storefront and was required as such to accommodate people with disabilities. Ebay's legal counsel countered that the entity is not a storefront at all, and thus exempt from ADA regulations that brick-and-mortar businesses must adhere to.
According to eBay, the web is not a place, but instead is a means for remote communication. Still, E-commerce lies in a gray area that is very much open to interpretation in the courts. New legislation is continually on the forefront to address e-commerce related claims such as this one.
And that is why online stores need eCommerce insurance.
ECommerce insurance protects your online store from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked eCommerce insurance questions:
- What Is eCommerce Insurance?
- How Much Does eCommerce Insurance Cost?
- Why Do eCommerce Businesses Need Insurance?
- What Type Of Insurance Do eCommerce Businesses Need?
- What Does eCommerce Insurance Cover & Pay For?
What Is eCommerce Insurance?
eCommerce insurance is a type of insurance coverage specifically designed for businesses that operate online. This insurance protects eCommerce businesses from potential losses and liability claims resulting from their online activities.
The coverage may include protection for the business's website, online transactions, products and customer data, as well as any potential lawsuits or legal disputes arising from the business's online activities. Examples of eCommerce insurance coverage include cyber liability insurance, product liability insurance, errors and omissions insurance, and general liability insurance.
The purpose of eCommerce insurance is to provide financial protection to businesses in the event of a loss or liability claim, allowing them to continue operating their online business with confidence.
How Much Does eCommerce Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small eCommerce businesses ranges from $27 to $49 per month based on location, size, payroll, sales and experience.
Why Do eCommerce Businesses Need Insurance?
Three decades ago, E-commerce was nonexistent. In today's world, there are millions of different businesses selling products and offering services online.
E-commerce businesses face different risks than traditional businesses, but the risks are still there, and mitigating them requires the purchase of eCommerce insurance that is specially designed for the unique needs of the E-commerce genre.
E-commerce is poised for growth. By 2017, spending online is estimated to top $370 billion, with an estimated 10 percent of all retail sales occurring on the web. With this growth comes additional litigation from customers who feel they were wronged in some way by E-commerce sites.
As an operator, you face claims from customers, some of which are covered by a business owner's policy, or BOP. This type of policy covers general liability. However, a standard liability policy on its own is not enough. You must also safeguard your business against potential data security breaches and business interruption with eCommerce insurance.
When conducting business online, there is an exchange of sensitive data belonging to customers, and there is also valuable business information that is generally stored on secure databases. Regardless of safeguards in place, breaches do occur.
While proper risk management can offset some breaches, some are inevitable. Being prepared for the fallout and claims against you is important, no matter what type of E-commerce business you operate. If your customer's information is compromised, you can be held liable.
Business interruption is another risk that E-commerce business owners face. If you are reliant on a third-party provider for shipping, internet service, or other services, then your business can be impacted by problems with that third party.
For example, if they experience a business stoppage, their problem can lead to reduced profits for your business.
What Type Of Insurance Do eCommerce Businesses Need
Speaking with a licensed and knowledgeable insurance agent about your inherent risks is a good start when shopping for the right type of level of protection for your particular business. Some of the eCommerce insurance coverage types you might consider, based on your business' unique structure include:
- Transportation coverage. Shipping errors that result in loss of money for your business are covered by transportation coverage.
- Contents coverage. If you have a warehouse or manufacture the products you sell, then contents coverage gives you comprehensive coverage for your tools and machinery.
- Worker's comp. Worker's compensation coverage is vital for E-commerce businesses with employees. This insurance provides protection for employees who are hurt or become ill due to a work-related peril and is mandatory in.
- Intellectual property insurance. You can be sued for the rights to software, gaming operations or data. Intellectual property insurance covers the cost of defending yourself in court.
- Directors and officers coverage. Liability of directors and officers for your business is mitigated with this type of coverage. It covers operational mistakes that end up costing your company money.
What Does eCommerce Insurance Cover & Pay For?
There are several reasons why eCommerce businesses may face lawsuits, including:
- Product Liability: If a customer claims that a product purchased from an eCommerce business caused them harm or damage, such as a defective product or inadequate product warnings, the business may face a product liability lawsuit. Product liability insurance can help eCommerce businesses cover the costs of legal defense, settlements, or judgments related to such claims.
- Intellectual Property Infringement: eCommerce businesses may be sued for alleged copyright or trademark infringement, such as selling counterfeit goods or using copyrighted images or logos without permission. Intellectual property insurance can help cover the legal costs of defending against such claims and potential damages.
- Privacy and Data Breach: If an eCommerce business collects and stores customer data, they may face lawsuits if there is a data breach or privacy violation, resulting in the exposure of personal information. Cyber liability insurance can provide coverage for legal costs, notification and credit monitoring services for affected customers, and potential damages.
- Contract Disputes: eCommerce businesses may face lawsuits related to contract disputes, such as breach of contract, failure to deliver products as promised, or disputes with suppliers or vendors. General liability insurance or errors and omissions (E&O) insurance can help cover legal costs and damages associated with contract disputes.
- Advertising and Marketing Issues: eCommerce businesses may face lawsuits related to false advertising, deceptive marketing practices, or misleading product claims. Advertising liability insurance can provide coverage for legal defense costs and damages associated with such claims.
- Employment Practices: eCommerce businesses may face lawsuits related to employment practices, such as discrimination, harassment, or wrongful termination. Employment practices liability insurance (EPLI) can help cover the legal costs, settlements, or judgments associated with such claims.
In each of these examples, insurance can help eCommerce businesses by providing coverage for legal defense costs, settlements, or judgments. It can help protect businesses from financial losses that may arise from lawsuits, reducing the impact on their bottom line and helping them to continue operating their business. It's important for eCommerce businesses to carefully review their insurance policies and coverage limits to ensure they have appropriate protection for their specific risks and exposures.
Commercial Insurance And Business Industry Classification
- SIC CODE: 7371 Computer Programming Services
- NAICS CODE: 541511 Custom Computer Programming Services
- Suggested Workers Compensation Code(s): 8803 Auditor, Accountant, or Computer System Designer or Programmer - Traveling, 8810 Clerical Office Employees NOC
Description for 7371: Computer Programming Services
Division I: Services | Major Group 73: Business Services| Industry Group 737: Computer Programming, Data Processing, And Other Computer Related Services
7371 Computer Programming Services Establishments primarily engaged in providing computer programming services on a contract or fee basis. Establishments of this industry perform a variety of additional services, such as computer software design and analysis; modifications of custom software; and training in the use of custom software.
- Applications software programming, custom
- Computer code authors
- Computer programming services
- Computer programs or systems software development, custom
- Computer software systems analysis and design, custom
- Computer software writers, free-lance
- Programming services, computer custom
- Software programming, custom
E-Commerce Insurance - The Bottom Line
Regardless of the type of E-commerce business you own, you must have liability insurance in place. The limits you choose should take all potential scenarios into account. Analyze your business' worth and risk factors when making a buying decision, and then determine the right level of eCommerce insurance coverage based on the deductibles and limits you need to fully protect your business.
Discuss your situation with a licensed agent who has dealt with E-Commerce clients in the past, and work with an agent who can compare rates for eCommerce insurance coverage with multiple companies to find a mix of affordability and protection.
Additional Resources For Information Technology & Internet Insurance
Learn about small business IT technology insurance policies that help protect IT businesses, consultants & subcontractors from the unique risks that small tech businesses face when they work.
- Application Development
- Amazon Seller
- Artificial Intelligence
- Computer Electronic Repair
- Computer Programming
- Computer System / Network Developer
- Cyber Liability
- Data Breach
- eBay Sellers
- Electronic Data Processing
- Electronic Data Processing Equipment
- Internet Business
- Internet Service Provider
- IT Consultant
- Online Store
- Social Media
- Software Developer
- Technology Services
- Website Design
- Specialty Computer
The information technology (IT) industry is constantly evolving and adapting to new technologies and trends. It is a critical component of many businesses and organizations, as it helps them to communicate, store data, and operate efficiently. However, the IT industry also faces unique risks and challenges that can lead to financial losses, legal issues, and damage to reputation. This is why it is essential for IT businesses to have commercial insurance to protect their assets and interests.
One of the main risks that IT businesses face is data breaches and cyber attacks. Hackers can gain access to sensitive information stored on a company's servers or systems, leading to data theft, identity theft, and other crimes. Insurance can provide coverage for these types of events, helping IT companies to mitigate the financial and legal consequences.
Another risk that IT businesses face is the possibility of equipment failure or malfunction. This can result in downtime and lost productivity, which can have a significant impact on a company's bottom line. Commercial insurance can help IT businesses to cover the costs of repairs and replacements, as well as any lost revenue or expenses incurred due to the equipment failure.
IT businesses may also face legal issues, such as intellectual property disputes or contract disputes with clients. Insurance can provide coverage for legal fees and damages, helping IT companies to defend their interests and protect their reputation.
Overall, the IT industry needs business insurance to protect against the many risks and challenges it faces. Without adequate coverage, IT businesses may be vulnerable to financial losses and legal issues that could impact their operations and success.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Computer Fraud, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Errors and Omissions Liability, Professional Liability, Umbrella Liability, Hired and Nonowned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Flood, Real Property Legal Liability, Forgery, Cyber Liability, Employment-related Practices Liability, Directors and Officers Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.