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Commercial Insurance for Online Stores: What Is It & Do We Need It?

E-commerce businesses should have commercial insurance. Research shows that 40% of online stores file an insurance claim within ten years. It is a great way of protecting your business, being the difference between a bad situation and a total disaster. As an e-commerce store owner, you need to understand the concept of commercial insurance.

Getting an overview of the insurance landscape will help you decide on the best insurance products for your growing business. You will also better understand the process as you speak to a professional. This guide will explain commercial insurance and why you need it for your e-commerce business.


What Is Commercial Insurance and Who Can Get It?

Commercial insurance is a policy or coverage that financially protects businesses and corporations from different risks. This type of insurance is designed to cover your business, its ownership, and your employees.

E-commerce businesses ranging from dropshipping to online retail often have different needs and situations. Therefore, an insurance policy can come in various forms to protect these businesses from lawsuits, property damage or theft, customer injuries, and other unexpected occurrences. Even though you work at home, a home insurance policy won’t cover business products and supplies.

Commercial insurance is critical when you realize you’re getting a lot of profit from your business. However, you might not totally like the conditions of a commercial insurance policy. But it is still better to have it to save your business from unforeseen occurrences.

Here are some of the types of commercial insurance available for your e-commerce business:

1. Liability Insurance

This kind of insurance works only when there is damage or injury. For example, if your employee gets hurt while on the job, liability insurance will protect you just in case your employee decides to file a claim against your business.

2. Property Insurance

Property insurance protects your business office. It protects you from events where someone falsely accuses you that you don’t own the building. You might already have property insurance if you work from home.

3. Transit Insurance

This insurance protects your products as they’re being transferred or shipped. For example, transit insurance will cover the loss if you sell glass products and one breaks while shipping them.

4. Data Breach Insurance

This is also known as cyber security insurance. It covers your business whenever there’s a data breach. However, if your e-commerce business is just starting, it is advisable not to invest in this type of insurance. SMEs don’t experience cyber-attacks, unlike big e-commerce businesses.

5. Business Income Insurance

This is the most underrated type of commercial insurance. This insurance would provide for you financially if your business were to move to a shop for some reason. It can cover utilities, rent, and so on.


Why Do You Need Commercial Business Insurance?

If you’re in the e-commerce business, you need commercial insurance to protect your business legally and financially. Insuring your business protects your employees and inventories from worst-case events. It minimizes your risks and covers any on-site injuries and supply chain issues.

Generally, these are the various reasons why you need commercial insurance for your e-commerce business:

  • To prevent data breaches and assaults that expose customers’ private information.
  • To avoid legal action for violation of the contract with customers or providers.
  • Safeguard your staff and employees if a product causes them harm.
  • To defend your company from supply chain problems.
  • Helps you plan for future business interruptions.
  • Protect your company from damaged or stolen products in your warehouse or while they are in transit.

Some major retailers, like Amazon and fulfillment centers, will also require you to have some kind of property insurance, liability insurance, etc. It is a way of establishing a good business relationship with them.


Final Thoughts

Buying insurance sometimes does not look like a strategic business move. However, remember that there are risks involved in every business. You can eliminate worrying about these risks if you work with an informed e-commerce partner to buy commercial insurance.


(Contributed by Ayotomiwa Omotosho & Hermes Fang)