There are thousands of Internet-based businesses operating successfully around the world. In the USA there are numerous online businesses, many of them are operated from home by entrepreneurs using websites as a platform for interacting with customers.
However, as with all other businesses, e-commerce businesses can suffer losses, some of which can be prevented while others simply cannot be avoided. Where losses can be prevented, then you should take all necessary steps to prevent this. However, all other losses should be insured to prevent the business from suffering heavy losses and possibly going under.
Types of unpreventable losses in e-commerce
There are quite some losses that can occur when operating online that you simply have no control over. Everything possible should, therefore, be done to mitigate against these types of losses.
Fraud and identity theft
One of the common problem that causes online traders to incur losses. Fraudsters use different methods to penetrate e-commerce sites and steal customer information such as credit card details, phone numbers and addresses then use this to commit forgery and fraud.
Losses and damage during delivery
Anything can happen to goods during delivery. They can be stolen, damaged or switched. Such losses can be blamed on third parties, but your customers will look to you for a solution. Your insurance can come in handy even as you wait for the delivery firm to meet its obligations.
It is said that hundreds of online firms experience revenue losses due to counterfeit sales. Customers always want to receive genuine product and merchandise, and many will reject counterfeit goods. This can result in huge losses.
E-Commerce insurance compared to standard business insurance
Many small business owners often take out a BOP, a standard business owner’s policy. This type of policy covers most risks and includes both general liability and property coverage. It is, therefore, suitable for regular small businesses. When it comes to e-commerce, small businesses have unique needs that the BOP does not cover. The most important of these are business interruptions and data security. Insurance specialists such as Akron, OH insurance agents can advise you on the most appropriate cover for your business.
Data security is essential in securing sensitive customer data such as phone numbers, addresses and credit card information. While risk management is important, an insurance policy would be great. Online businesses rely on third parties to provide services such as Internet provision, website hosting, and even deliveries. These should be covered by appropriate insurance as prolonged delays could result in losses.
Steps to insure your e-commerce business
- The first step in insuring your e-commerce website is to identify the most vulnerable areas within the business. These could be the areas of merchandise distribution, online fraud, transport and delivery and so on.
- Once the vulnerable areas are identified, the next step is to identify suitable companies offering e-commerce insurance coverage. If you are a small online shop from Phoenix, AZ you should first research your local agents’ offers, compare them with the national ones and then make the most convenient decision based on your own needs.
- Different companies have different insurance products so it will be up to you to find out which is the most suitable policy out there for you.
Types of e-commerce insurance policies available
- Contents coverage: this is suitable for you if you produce your goods and have a warehouse. You will need comprehensive insurance cover that protects everything including your tools of trade.
- Intellectual property insurance: companies that work with intangible products such as computer games, software programs, data and so on. If these are original works, then intellectual property insurance is the best option.
- Transport coverage: many e-commerce companies need to deliver goods and products to their customers. To mitigate against accidents, pilferage and other mishaps, a type of transport coverage is essential.
- Workers compensation: as an online business owner, you may not be aware, but you should think about workers compensation. It helps cover medical bills, loss of income and other costs should your workers suffer losses at work.
Michael Rogers- is experienced manager and educator from USInsuranceAgents.com. Having more than 5 years of professional experience in insurance industry, Michael successfully fulfills Director of Operations’ position.