Most people think of commercial insurance as a product needed by physical businesses. However, e-commerce companies are just as at risk for product liability claims as brick and mortar stores. If you sell a physical product online, you really should consider getting commercial insurance for your business. A commercial insurance plan can protect your e-commerce business from the worst-case scenario. Here is what every e-commerce business should know about commercial insurance.
What Is Commercial Insurance?
Commercial insurance protects a business, business owners, and the employees of the business. Commercial insurance packages can contain a variety of coverages from property/premises, liability, crime, and even commercial auto insurance. For e-commerce businesses, the type of commercial insurance package you get depends entirely on your unique operations. For example, you may not have a physical store, but if you have inventory storage, you should get property insurance to protect your inventory in case of an emergency. While if you sell a physical product, you definitely want to have product liability insurance.
What Does Commercial Product Liability Insurance Cover?
Commercial product liability insurance covers the costs of all damages from a physical product including:
- Manufacturing Defects: Manufacturing defects are defects in the product caused by manufacturing processes or the materials used. Manufacturing defects are most often covered by the manufacturer, however, you can be liable for selling the product as well.
- Design Defects: Design defects are defects that cause injury because the product was poorly designed. Design defects are most often covered by the product manufacturer but like manufacturing defects, you can also be liable.
- Failures To Disclose: Failures to disclose means that you didn’t adequately warn your customers about the risks of a product. This can be your liability or the manufacturer’s liability.
If you design and manufacture your own goods, you absolutely need commercial product liability. However, it’s a smart idea to stay protected even if you are selling as an intermediary.
E-Commerce Businesses Faces Unique Risks
E-commerce may not share the same risks as physical businesses, but they still have a share of risks all their own. The first is through cyber risks. Ecommerce sites are often targeted by hackers to obtain sensitive information about people such as your customer’s credit card information. If there is a data breach as a result of inadequate security, you may be liable for what your customers lost. The same goes for any personal identifying information. E-commerce businesses are expected to protect the privacy of their customers and you could be liable if that information is breached. Finally, even if you don’t sell physical products, you still have intellectual property that can be stolen by hackers. Losing your intellectual property can be a huge cost for your business, so you need a layer of protection in the worst-case scenario.
At Panorama Insurance Agency, we understand the unique insurance needs of e-commerce businesses. We can review your business operations and come up with a strategy to protect you. Whether you need product liability, professional liability, or even premises liability, we’ll design an affordable policy that meets your needs.