Online retailer insurance

If you sell goods online, it’s important to have the right online retail insurance, sometimes called ecommerce insurance, in place. Even if you don’t have a physical ‘bricks-and-mortar’ shop, things can still go wrong.

What if, for example:

• Your stock is damaged or stolen?

• One of your products is faulty and harms a member of the public?

• A buyer makes a compensation claim against your business?

• Your website is targeted in a cyber-attack?

• You lose profits because your online business is unable to operate for a period of time?

These are common scenarios that could easily happen to any ecommerce business. Having the right online retail insurance in place could help protect you against these and other potential risks of running an online shop.

Whether you have a high street shop, a virtual one or both, ecommerce insurance can be tailored to meet your specific business needs.

By selecting the online business insurance that best suits your business, you can rest easy knowing that your digital shop is protected.

If you sell any type of goods online, it makes sense to consider online retail insurance. Ecommerce insurance protects your UK-based business – even if you sell globally. And no matter how small your virtual shop is, you can benefit from cover should the worst happen.

Here are some examples of ecommerce businesses that might need online retail insurance:

• Amazon, Etsy or eBay sellers

• Those with their own online shop

• Those who make their own products

• Those who sell items from third-party suppliers.

Online business insurance can be tailored so it best suits the individual needs of your ecommerce business.

Typical cover includes:

Product liability insurance

Product liability insurance protects you if a faulty product you sell injures someone or damages their property. It can cover legal fees and compensation costs if someone makes a claim against you.

For example:

• A customer has a severe allergic reaction to a beauty product you sold them

• A plug-in product you sell has an electrical fault that causes a fire in a customer’s home

• A person gets food poisoning from one of the products in a gift hamper you produced.

Be aware that even if you didn’t manufacture the items you sell online, you could still be liable for compensation costs if something goes wrong.

Public liability insurance

Public liability insurance covers claims against you if someone is injured or their property is damaged because of your business activities.

For example:

• A courier collecting goods from you slips on a wet floor and breaks their leg.

• You sell your goods at a local farmers’ market and the display counter collapses, injuring a customer.

Employers’ liability insurance

Employers’ liability insurance could cover you if one of your employees becomes ill or is injured as a result of working for you. If you employ one or more people or are a limited company with multiple directors, it's a legal requirement to have this cover.

Say, for example, you employ a part-time kitchen assistant for your online cake delivery business who gets badly burned while making caramel sauce. You could be covered if they decide to take legal action.

If you're not a limited company and the employees are immediate family members, you don’t legally need employers' liability insurance. But cover would of course extend to family members working for you if a policy was in place.

Contents insurance

Contents insurance covers your essential business equipment and furniture against fire, theft or flood. This could be things like computers, printers, shelving and office furniture.

Stock insurance

This covers your stock if it’s damaged or stolen – if, for example:

• There’s a break-in at the warehouse where your stock is stored and it’s vandalised or stolen

• Your goods are damaged while being loaded into a van

• You store your stock at home and a burst pipe leaves your entire inventory water-damaged.

If you keep your stock at home, it’s unlikely that it will be covered by your home insurance. Most home policies exclude business use. In this case, it makes sense to take out ecommerce insurance with stock cover to make sure your goods are protected.

Some policies will also cover your goods when they’re in transit, provided you’re delivering them yourself. When comparing stock cover with ecommerce insurance, check what’s included as standard. It may be that you need to pay more for the extra cover.

Cyber insurance

If your website has been hacked, cyber insurance can help cover the costs of technical assistance. This could help you retrieve your data and restore your systems to get your website back up and running.

It can also cover compensation and regulator investigation costs if a customer’s personal data is stolen. Unfortunately, you can’t currently compare cyber insurance with Compare the Market.

Business interruption insurance

If your online business is forced to close for a period of time, you’ll lose precious profits and revenue.

Business interruption cover is a type of online business insurance that can protect you against lost sales. It can also help with the costs of getting your ecommerce business up and running again.

Electronic and portable equipment insurance

If you rely on equipment such as laptops, cameras and phones to get the job done, portable equipment insurance could cover them against loss, theft or damage.

Cover limits and single-item payouts will vary. So, check the policy details carefully before adding this to your online business insurance.

Accident and sickness insurance

If you employ a worker – or team – to run your online business, you’d be heavily impacted by any of them taking long-term sick leave.

Accident and sickness protection can be added to your online retail insurance to cover workers aged 16-69 in the event of an illness. It can also cover you if you need to take time off to be hospitalised.

Policy lengths and terms vary, so be sure to check the details.

Pop-up shop insurance

Though most of your business will be done online, it’s possible to add pop-up shop cover to your ecommerce insurance. This could protect your property while its being used in a temporary shop or trade fair.

Policy limits and exclusions will depend on the cover level you choose. You can’t currently compare pop-up shop insurance with Compare the Market.

The cost of online retail insurance depends on a number of factors, including:

• What you want to cover

• The size of your business – i.e. how many people you employ

• What type of online business you have

• Your company's turnover.

For example, if you’re a sole trader you won’t need employers’ liability insurance. This means your premiums could be cheaper than a limited company owner with two or three members of staff.

How much you pay for your ecommerce insurance might also depend on the value of your stock. For example, expensive, hand-crafted jewellery will need a higher cover limit than costume jewellery and accessories. So this will typically cost more to insure.

You could lower the cost of your online retail business insurance by paying a higher voluntary excess. This is the amount you’ll have to pay towards an insurance claim.

So, if your excess is £250 and you make a claim for £1,000, you’d have to pay the first £250 and your insurance payout would be £750.

To get the best deal on your online business insurance, only take out the cover you need. And make sure you shop around and compare a range of quotes from different providers.

The excess is the amount you agree to pay toward any claim. There are two types of excess to consider when comparing ecommerce insurance:

• Compulsory excess – this is set by your insurance provider, and the amount can vary between providers and types of cover. Excesses can also vary depending on the different types of cover you take out.

• Voluntary excess – this is agreed by you and your provider at the beginning of your policy.

For example, the excess for public liability may be higher than the excess for stock cover. Employers’ liability insurance, meanwhile, doesn’t have any excess at all.

To compare ecommerce insurance, just give us a few details about you and your online business, including:

• Your business name, address and postcode

• How many years your online store has been active

• How much you expect to earn in the next 12 months

• How many, if any, employees you have

• The type of cover you want

• Your claims history.

Once we’ve got what we need, we’ll send you a list of competitive online retail insurance quotes to compare.