Is e-commerce insurance required by law?

Discover if e-commerce insurance is legally required and learn about the importance of protecting your online business against various risks.

Aditya Raghunath - Writer for NEXT Insurance
By Aditya Raghunath
Kelly Hendrickse - editor for NEXT Insurance
Edited by Kelly Hendrickse
Matt Crawford for NEXT Insurance
Fact-check by Matt Crawford

Published June 20, 2023.

No, e-commerce insurance is not required by law. But there are a few exceptions, depending on your circumstances and which state you operate in.

E-commerce insurance

The following policies typically fall under e-commerce insurance and can be required by law:

  • General liability - If your online store is on Amazon, you will need this policy before you can sell. It can help with advertising injury or claims of reputational harm.
  • Workers' compensation - Most states require this coverage if you have any number of employees. Should an employee get injured while working, this can cover medical fees and lost wages.
  • Commercial auto - If you have a delivery vehicle, many states can require that you have this policy in place. It can cover collision repairs and medical fees.

It's best to look into your specific state requirements before purchasing a policy.

Other useful policies for e-commerce businesses

When selling products or services, especially online, there are a few other policies that are worth considering.

  • Commercial property - This policy is usually included in e-commerce insurance. It can help cover property damage and business interruption.
  • Product liability - If you're accused of causing third-party harm because of a defective product you sold, this can help cover legal defense costs and settlements.
  • Cyber liability - If your business faces a data breach or other cyber attacks, this can provide financial help and other support during information recovery.

Secure your e-commerce business with NEXT

Although e-commerce insurance is not legally required as a standard, it offers numerous benefits for online businesses. These include protection against financial losses resulting from data breaches, liability claims and other potential risks. Plus, it can help build credibility and give you peace of mind.

With NEXT, you can view your e-commerce insurance options and tailor your coverage to your needs and circumstances. Simply apply online and get an instant quote in less than 10 minutes. You can also get your certificate of insurance and share it 24/7 with the NEXT app.

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