Online retailer insurance guide

The obvious advantage to selling online is that you don't need a shop. Well, not a bricks and mortar one anyway.

But even if your shop is virtual, that doesn't mean your responsibilities are. You still have real risks and liabilities - which is why you need online retailer insurance.

But what's the reality of those risks? What can you do to reduce them? And how can online retailer insurance help?

Here's everything you need to know.

Quick guide to what online retailer insurance you need:

Product liability

Product liability insurance covers property damage and bodily injury caused by the things you sell.

If something you've sold is defective, and it damages a customer's property or injures someone, you could be liable.

For example?

Let's say you sell electrical goods. A faulty plug on a clock radio sparks an electrical fire in a customer's home.

Or maybe you make and sell jewellery. A customer alleges an antique bracelet they bought from you caused an allergic reaction.

In both cases, you've supplied the things at fault and the buck stops with you.

Even if you don't make the things you sell, tracing the manufacturer who did can be tricky. More so if they've gone out of business.

In those cases, as you're the last link in the chain, it's likely you'll be held responsible. Product liability insurance helps pay for the damages you're liable for, even if you don't think you are.

Public liability

Public liability insurance covers property damage and bodily injury caused by your business.

For obvious reasons, selling online instantly reduces some of the public liability risk you face. A customer can't twist an ankle on your shop's loose front step if such a thing doesn't actually exist...

But, you can have suppliers visit you. And couriers. You might deliver things to people every now and then, too. All these things increase the chances of someone getting hurt or something getting damaged.

And you can't take any chances if you have a pop-up shop in the local market or a stand at a trade fair, for example. (It's likely you'll be asked to have public liability insurance as a condition of being at either of these things.)

In simple terms, if your business is in contact with members of the public, wherever and however that might be, you need public liability insurance.

Property

Property insurance covers your stock and the things you need to run your business against loss, theft and accidental damage. It's an essential part of online retailer insurance.

That's because having thousands of pounds worth of stock sitting around is fine – until something happens to it. Like it's stolen. Or ruined by water damage.

Suddenly being without anything to sell could cripple your business. It won't be cheap to replace, either.

Likewise, how will you keep track of and fulfil orders if your computer's stolen?

It's best not to rely on your home insurance for help, either. Many standard home insurance policies exclude cover for items used for, or related to, your business.

Online retailers' property insurance is designed specifically for business, whether it's home-based or not.

Employers' liability

Employers' liability insurance covers claims against you if staff are injured or fall ill while working for you, and it's your business's fault.

For example, someone puts their back out lifting a box of your stock. If you haven't given them proper training, they could (and probably will) claim against you for damages.

If you employ someone – even just one person – the law says you need employers' liability insurance. Importantly, that's the case even if that person is part-time, a temp, a volunteer, on work experience, or just an extra pair of hands helping out.

There are exceptions to this, however, and your best bet is to read the HSE's guide for employers.

Other kinds of online retailer insurance to consider:

Business interruption

Business interruption insurance pays to help keep your online retailer business running if an unexpected event or circumstance does its best to scupper it.

Out-and-out catastrophes are, thankfully, pretty rare. The likelihood of you not being able to trade due to, say, an asteroid strike is slim to put it mildly.

But, more mundane problems happen every day. Imagine some clumsy workmen chopping through a data cable and knocking out your internet for a week. That's not going to help your bottom line.

What if your garage floods, ruining your stock. Your property insurance will pay to replace what's damaged but how long will that take? How do you make any money in the meantime?

Business interruption insurance covers lost profit for the time you're out of action.

Cyber and data

The clue's in the name here. As an online retailer you're reliant on the internet and all the data that goes with it. If your website's down or your computer's crippled by hackers, you can't trade.

Our 21st-century reality makes cybercriminals an ever-present threat. Adept at holding businesses to ransom by infecting their computers with ransomware or stealing customer's personal data, they can easily wreak havoc.

Without the technical know-how, it can be difficult to recover quickly from a cyber-attack. And if you've lost sensitive data like customers' addresses or financial info, that can put you in trouble with the regulator, as well as with the people affected.

Cyber and data insurance helps you get back on your feet as quickly as possible. It provides technical expertise to restore your network and website and covers legal costs and compensation if you're sued for losing people's personal data.

There's also help with dealing with the regulator.

Buy for now

So there we go. Plenty to think about.

Even if your online shop isn't much more than a part-time sideline, it's easy to run into problems. Expensive problems, too.

Insurance might not be top of your shopping list but it's definitely something you won't regret buying.

Visit our online retailer insurance page to see how little it can cost to protect your business.

When you're ready to buy, everything can be sorted out easily online (where else?).

Image used under license from Shutterstock