Does My eCommerce Business Need An Insurance Cover?
After reading this article you will be to take a stand – to decide if your eCommerce actually needs an Insurance cover or not.
Insurance is a provision for replacement, repairs or financial reimbursement by an insurance company if a particular event occurs.
We are very familiar most insurance policies such as the; Vehicle insurance, Life assurance, Fire insurance and Insurance against theft, but am sure Insuring eCommerce business will sound strange to some people.
On one of our previous article which we title “Online Business Insurance – Which Does My Online Business Need?” We took our time to explain viable an insurance is for an online business.
We later decided to write specifically on “Insurance for eCommerce“. While most online businesses are limited to only online activities, an eCommerce deal with both online and offline business execution.
In an eCommerce settings, customers logins to the website and order or make purchases for products online. After the order, the ordered product(s) with be delivered offline with a stipulated number days, or even in minutes – as the case may be.
Now you can see there are more risk to an eCommerce business and online shops than most other online businesses.
- Online Insurance for eCommerce business
- 1. Insurance against credit card theft
- 2. Insurance of customers’ privacy
- 3. Insurance against hackers effect
- 4. Insurance against software error
- 5. Effects of typographical errors
- Offline Insurance for eCommerce
- 1. Professional Liability Insurance
- 2. Property Insurance
- 3. Product Liability Insurance
- 4. Vehicle insurance
- 5. Business interruption Insurance
Online Insurance for eCommerce business
1. Insurance against credit card theft
Credit card theft has been a very big issue for most eCommerce that integrated an online payment system into their store.
When a customer credit card information is stolen, the information gotten can easily be used to steal from the card owner account.
An eCommerce may want to protect its customers by insuring such risk. Therefore if such risk occurs there will be indemnity base of the policy.
2. Insurance of customers’ privacy
It is the duty of every eCommerce setting to protect its customers information. All customers details which is entrusted to online store is meant to be a guided secret.
If a customer information by get exposed to the public by whatever means. Such customer will surly sue the eCommerce business and demand compensation for damages caused.
In this case, if the eCommerce had an insurance policy over such risk, the insurance company will stand in to pay for all damages.
3. Insurance against hackers effect
There are lots of black hat hackers everywhere, these people work day and night looking for porous eCommerce to hack in and steal valuable information, or hijack the site or defraud them.
An insurance policy covering this type of risk with pay full compensation that is equivalent to whatever the eCommerce may loss if such incident occurs.
4. Insurance against software error
Every online business runs on some kind of codes known as software. These codes are humanly programmed. Therefore, there is tendency of it not running according to what time it is programmed to do.
This error are actually linked and most time the programmer fault, but the effect can be so devastating.
If an insurance policy can cover an eCommerce against software error, they will indemnify them if such happens.
5. Effects of typographical errors
Error of this nature has been experienced by some online store in the past and it has caused them great loss. Imagine when a product which cost $999.99 is mistakenly tagged $99.999 and its purchases had been made.
If an insurance of such loss exists the insurance company will pay for all the loss.
Offline Insurance for eCommerce
1. Professional Liability Insurance
The Professional liability insurance is a type of insurance policy which insures against negligence claims which results from mistakes or failure to perform.
2. Property Insurance
Property insurance covers equipment, inventory and furniture in events such as; fire, storm or theft. However, it does not cover mass destruction events like floods and earthquakes.
3. Product Liability Insurance
Product liability insurance is very important for all eCommerce. An online store can find itself in a lawsuit due to damages caused by the products they sell. The Product liability insurance policy will protects a business in such cases.
4. Vehicle insurance
Every eCommerce business has vehicles which they use to deliver goods to their customers. All vehicles they make used of should be fully insured.
It is also very important that the businesses should insure against third-party effect, but comprehensive insurance will cover the vehicle against accident.
5. Business interruption Insurance
The Business interruption insurance will compensate an eCommerce business for its lost income during any event that cause a disruption to their normal course of business.