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eCommerce

A comprehensive guide to internet business insurance

Matt Crawford image
By Matt Crawford
Apr 6, 2021 min read

The internet has made it easier than ever to start online businesses — just create a website and you can begin selling.

In theory, it sounds great. It’s fast, easy and often less expensive than setting up shop at a brick-and-mortar location.

But it’s also easy to skip the steps that will help protect your business, like buying e-commerce business insurance.

Whether you’re an online retailer, selling products on Amazon and eBay or a web designer creating websites for entrepreneurs, internet business insurance can help protect you from financial damage if something goes wrong.

In this article, we’ll look at:

  • The types of coverage online businesses should consider
  • How much business insurance costs
  • How to find the best insurance for your business
  • How Next can help you get the internet business insurance you need.


What types of coverage should be included in a business insurance package?

It would be nice if one policy could provide all the protection you need. But there’s no single type of insurance that covers all the risks you face as an online business owner.

You’ll likely need to purchase multiple policies to get adequate coverage. Here are five common types of e-commerce business insurance to consider.

1. General Liability

General liability insurance helps cover the costs related to the most common injuries and property damage risks businesses encounter.

For example, let’s say you develop a line of personal care products, which you sell through your online retail store. A customer buys a bottle of your shampoo, but it’s not labeled properly.

Instead of getting thick, healthy hair, she has an allergic reaction that requires a trip to the doctor and prescription medication.

If she sues you to pay her medical bills, general liability insurance will help cover the costs to defend yourself in a lawsuit and any settlement that might be awarded.
 

2. Professional Liability

Professional liability insurance (also known as E&O insurance) helps protect you if someone accuses you of making a mistake that hurts their business.

So, let’s assume you’re a web designer, and you agree to create a website for a product launch for one of your clients. It takes longer than expected, and the site doesn’t go live until six weeks after the deadline in your contract.

Your client claims the delay caused a 20% decrease in sales, and they sue you because of the profit they lost. Professional liability insurance kicks in to help cover legal fees and judgments or settlements if one is awarded.

3. Commercial property

Commercial property insurance protects all the stuff you need to operate your e-commerce company. It helps with repair or replacement costs if property is stolen or damaged due to a covered event.

It may also help replace your income if you need to pause your operations temporarily due to a covered event, such as a fire or wind storm.

Here’s how it works in real life. Let’s pretend you sell collectibles online, and there’s a fire where you store your inventory. 

Commercial property insurance covers the cost of replacing your inventory and other items lost in the fire. Plus, it’ll pay to replace your income until it’s safe to start using your studio and you have enough inventory to begin fulfilling orders again.

4. Workers’ compensation

Most states require businesses with one or more employees to have workers’ comp insurance. It helps pay for medical bills and lost wages if one of your employees experiences a workplace injury or illness.

Let’s say you have an Etsy shop where you sell handmade jewelry. You can’t keep up with the demand, so you hire an employee to help you.

One of them develops carpal tunnel syndrome from spending hours using wire cutters and needle-nose pliers to create earrings, bracelets and necklaces.

Workers’ comp will help cover the medical bills for her treatment plus lost wages until she can return to work.

5. Commercial auto

Commercial auto insurance is like your personal auto policy, but it protects you when you’re driving company vehicles or when you’re driving your personal vehicle for business.

Let’s use a local delivery service as an example. Customers can go to your website and place orders for anything from dry cleaning to grocery delivery.

If you’re in an accident while driving to pick up a customer’s order or take it to their home, commercial auto will cover you. In most cases, your personal auto policy won’t.

How much does business insurance cost?

By now, you might be wondering how much all this business insurance costs. It’s hard to give an exact number because premiums are based on a variety of factors, including:

  • The type of policy you buy
  • The type of work you do
  • The number of employees (if any) you have
  • The value of the property you want to insure
  • The location of your business
  • Your past insurance history
  • How many and what type of vehicles you use for your business

As a general rule of thumb, businesses in higher-risk industries pay more for coverage than companies in lower-risk industries.

At Next, we use AI and machine learning backed by a team of insurance pros to find the right amount of coverage for your business at an affordable price. Our premiums are often 30% less than what other insurers charge.

How to find the best online business insurance

Finding the right insurance for your online business may take a little time, but it doesn’t have to be difficult. In a few simple steps, you can get the coverage you need.

  1. Evaluate your needs. Before you start shopping, decide what areas of your business need protection and how much coverage you need.

  2. Get quotes from multiple providers. Different companies use different criteria to determine premiums. So, it’s a good idea to get quotes from a few to make sure you’re not paying more than you need to. Many companies allow you to get a free quote online or over the phone.

  3. Review your policy options. Make sure the quotes you received have the coverage you need. Be sure to check for exclusions so there aren’t any surprises if you need to file a claim. 

When comparing quotes from different insurance companies, check that each policy has the same coverage, exclusions and policy limits. You want to compare apples to apples.

  1. Choose the policies that are right for you. Select the ones that will provide the protection your business needs and make your purchase.

How Next can help you get the internet business insurance you need

At Next, our online application streamlines the insurance buying process. You can review your policy options, buy coverage and get your certificate of insurance in less than 10 minutes.

We specialize in providing customized insurance packages to small businesses, so you get the right amount of coverage without paying for anything you don’t need. 

When you buy more than one policy with us, you can save up to 10% off your premium.

Get your free online quote today.

If you have questions, our licensed, U.S.-based insurance professionals are ready to help.

Matt Crawford image
By Matt Crawford
Matt Crawford is Associate Content Director at Next Insurance and a small business insurance specialist.
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