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As an ecommerce startup what type of insurance coverage should I get and what is a well-negotiated rate I should expect to pay for inventory valued at $100-200K What vendors are best for this?
Hello! Thanks for your question about recommended ecommerce insurance plans. The short version is that what insurance you need will vary depending on what exactly your startup will be doing. There are some basic insurance coverage areas that ecommerce businesses should focus on such as general liability, data security or cyber liability, errors and omissions liability, and directors and officers liability. Below you will find a deep dive of my findings.
GENERAL LIABILITY
Also known as Business Liability Insurance, this category, as the name suggests, covers all the general problems that could arise. These include, physical damage, both bodily injury, product damage and physical damage caused by products, costs associated with being sued, and claims such as copyright infringement. For a small business or start up, the average or typical cost you would spend on general liability is approximately $30 per month. According to Top Ten Reviews, the best vendors for general liability insurance are Progressive Commercial, Liberty Mutual, and Nationwide Insurance.
CYBER LIABILITY
Any internet business should be concerned about data security, which includes private customer information and business information. It is becoming more and more common for even small and medium-sized businesses to experience a cyber-breach. Therefore, it is crucial to have cyber liability, which provides financial coverage for expenses related to a data breach. For example, it covers customer loss due to a breach, disruption in doing business, and legal costs to name a few. This type of insurance can vary depending on what type of business you own, the number of transactions per year, the number of devices you own, etc. For small businesses, the cost range could be anywhere from $750 to $8,000 per year. Visit this site to compare insurance company quotes and get recommendations.
ERRORS AND OMISSIONS LIABILITY
Also known as Professional Liability, this type of insurance protects businesses from financial loss based on failure, technically or operationally, to meet contract requirements with vendors and/or customers. For example, it could protect from a mishap when a customer is checking out that results in orders not being sent. Errors and Omissions insurance should be considered by all businesses that provide professional services. E&O insurance can vary depending on, again, the size of your businesses, location, level of training for employees, etc. However, if you're looking to just cover yourself, the average policy will range between $500-$1000 per year (multiply this estimate by number of employees). For sample insurance quotes, visit this site. You can visit this site to get quote comparisons.
DIRECTORS AND OFFICERS
If your company gets funding, has investors, etc, it is important to have directors and officers insurance. This type of insurance covers the personal assets of directors and officers when sued for actions performed in their role as a Director or Officer of a company. Like most insurances, you pay a premium (monthly) and deductible (amount you must pay out-of-pocket before you can be covered); if you find a policy with a higher deductible you can usually get a lower monthly premium. Low-risk businesses could pay from $500 per year (premium) per $1 million in coverage; high- risk businesses could pay as much as $10,000.
CONCLUSION
To wrap it up, as an ecommerce start up you should have these main four types of insurance that seem to be big umbrellas that cover the most common and important liabilities for your company. The pricing was hard to find because a lot of it depends on what size your business is, what industry you are involved in, how many employees you have, etc. A lot of websites recommended finding an independent broker that you can talk to and receive recommendations from. The main vendors that popped up when googling these type of insurances were AIG, Nationwide and Liberty Mutual; however, this is because they are the most well-known — they may not suit your specific needs the best.
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