Online Business Insurance – Which Does My Online Business Need?
If you have an online business and still not sure what kind of Insurance to give to it. On this article we explained different kind of online business Insurance, and provide full guides to enable you decide which you should go for.
The term “Insurance” came to being as a result of “Risk“. On our everyday activities we are faced with risk, some of these risk are avoidable or controllable while some are totally unavoidable or uncontrollable.
Take a look at insuring your life! aka Life Assurance, it is totally unavoidable because death must occur.
Going to sleep at night is a risk because one is not certain if he will make it till the next day.
Risk is all about uncertainty – not being 100% certain of a possible outcome.
The risk we speak about exists in our day to day business, as we are not very sure of uncertainties that may occur.
Online business is also not left behind. Although, most people neglect online business to be a risky business, but if care is not taken one can wake up seeing his online business “disappearing from the surface of the earth”.
Never say never, I will backup all my statements with facts.
Insurance came to play as an option to control the effect of risk on an individual, Institution or company.
Before going further let first understand the concept of Insurance.
What Is Insurance
Insurance is a legal contract which is represented by a policy, in which an individual or entity will receive a full financial protection, repairs, replacement or reimbursement against certain losses from an insurance company if the insured event occurs.
Although, a certain sum of money known as “Premium” will be paid on a regular interval by the Individual or Entity before being fully Indemnify, or being in position to make claims for insured damages.
Insurance For Online Business
In Online Business Insurance, there will be an agreement between the online business managements and the Insurance Company.
This agreement will enable the insurance company to protect the online business against the agreed possible risk.
If the insured risk occurs, then the Insurance Company (Insurer) will Indemnify the Online business (Insured) on all insured losses either by paying the equivalent sum of damage, by replacement or by repair as the case may be.
Now you may be asking “what kind of risk do you need to insure your online business against”?
Risks An Online Business May Face
Risk do not only affect physical businesses nowadays, even virtual businesses are even more prone to risk.
An online business now are involved in several risks by harming its customers via digital means, risk such as spreading viruses or malware in marketing emails sent or even compromising customers’ privacy and customers’ personal details through an online security breach.
It is unfortunate that these new exposures are not only normal risks but as well, it means that the online business must not only insure itself against online risks but also put into consideration it customers and site visitors and users who the effect of a risk may fall upon.
The risk here may include product liability insurance if they sells goods online, as well as professional indemnity insurance if they offer professional online services.
Risks Online Business Should Insure Against
1. Customer Privacy Protection
This will covers all legal costs and indemnification for all privacy breaches and loss of customer data or information.
2. Hacker Damage
The Hacker damage insurance will covers the cost of repairing replacing all damage caused by a hacker to a site, network or database.
3. Breach Costs
The breach cost covers any data recovery and repair costs, which is caused by a breach be it both physical and reputational.
4. Cyber Business Interruption
This insurance will compensate the online business for all lost profits while it is unable to trade due to a breach.
5. Cyber Liability
The Cyber Liability covers all legal costs and compensation for the third parties which suffer a loss as a result of the online business operations.
6. Cyber Extortion
This will covers for the cost of ransoms or forensic investigation if an online business data is hijacked or threatened.
Online Businesses Prone to Most Risk
Not all online business are so much prone to risk, an online business such as blogging has very less risk compared to eCommerce or online store, although they can be hacked or hijacked, but for such it is better to have a daily onsite and offsite backup, so if such happens you can restore site to the previous state and change your login credentials making them stronger. Learn how to create bulletproof password.
Below we listed the type on online business that are more prone to online risk.
It is very necessary to have an cyber insurance cover if you manage any of the listed businesses.
- Online Retailers stores and e-commerce,
- Hospitality Providers such as Hotels & Restaurants,
- Professional Services such as; Accountants, Lawyers, Media & Technology companies,
- Travel Providers and travels agencies and Tour Operators,
- Healthcare Providers such as; Doctors and Dentists plus other Private Healthcare Providers
How Online Business Insurance Works
With insurance, you are at the position to choose what you want to protect your online business against.
After making you choice or choices your insurer (the insurance company) will then calculate the risk that the events to be insured against will occur.
Base on the calculations, insurance company will then determine the price you will need to pay as your premium on regular intervals.
Finally, once any of the insured event occurs – you can then make your claims, if affirmative, the your online business will be fully compensated.
The indemnity by the insurance company will depend on the kind of damage. Some damages are settled by financial reimbursement, some by replacement, while some are by repairs. All these will all be stated in the insurance policy.