Best E-commerce Insurance of 2022

Bryan Keith

E-commerce businesses and online retailers are exposed to various liabilities from defective products to allegations against your business. E-commerce insurance can protect your business against lawsuits, accidents, and financial losses. We’ve evaluated the best e-commerce insurance providers based on coverage, financial stability, customer satisfaction, and overall quality.

Affordable plans and coverage provided within minutes

$2,000,000

Coverage Up To

$0 - $2,000

Deductibles

Overview

Next Insurance leverages AI technology to streamline the process to purchase insurance, track claims, and manage policies at no additional cost.

What we like

  • Affordable insurance plans
  • Customized coverage to fit your business
  • Get covered within minutes
  • Near instant access to proof of insurance
  • Quick and easy to process claims

What we don't

  • Not available in New York

Covers a wide range of industries

$2,000,000

Coverage Up To

$1,000+

Deductibles

Overview

Coverwallet began its journey in New York City in 2015 operating under the Aon Insurance banner. At Coverwallet, you can access everything you need to keep your company well-protected at an unbeatable price.

What we like

  • A skilled advisor to assist you
  • Free quotes from multiple insurance carriers
  • Covers low risk to even some high risk industries
  • Online account management

What we don't

  • No brick-and-mortar offices
  • Deductible costs

Customized solution to fit your business needs

$2,000,000

Coverage Up To

$0 - $10,000

Deductibles

Overview

With a 100-year history of insuring businesses, Hiscox is well-known across America and globally. With more than 500,000 small business customers, Hiscox is fully aware and trained in the unique risks a business can face.

What we like

  • Established insurance company
  • Dual auto insurance
  • Customizable insurance for over 180 industries
  • Deductibles starting at $0
  • Affordable rates

What we don't

  • Limited US offices
  • Coverage limited to $2 million online

Flexible coverage by the year, month, day, or by the job

$2,000,000

Coverage Up To

$0 - $10,000

Deductibles

Overview

Thimble provides business insurance that can be tailored to your business by the year, month, day, or even the job. At Thimble, the process to getting the right business insurance is simple, scalable, and flexible.

What we like

  • Scheduled coverage options
  • Coverage by the job available
  • Buy a policy online within minutes
  • No hidden fees
  • Affordable plans
  • Drone insurance

What we don't

  • Not available in New York

What is e-commerce insurance?  

While e-commerce stores do not have the same risks as a traditional brick-and-mortar business, there are multiple risks to consider while operating an online business. For example, hackers could steal customer data, defective products could cause injury, and deliveries could get lost in transit. 

E-commerce insurance can provide coverage for financial losses that emerge due to legal action, property damage, and reputational harm.

Who needs e-commerce insurance?

Businesses selling online through a website or via a platform like Amazon should consider e-commerce insurance. In some cases, third-party platforms require proof of insurance before you can start selling your products. 

Service-based businesses such as tutoring, copywriting, transcription, and website design could also benefit from having standard e-commerce insurance policies in place. 

What insurance do e-commerce businesses need?  

When taking out e-commerce insurance, it’s important to consider different types of coverage and policies to adequately cover your business for liabilities. 

The most common types of coverage for e-commerce businesses are:

General liability insurance

Unexpected events can happen and general liability insurance can protect your e-commerce business against basic risk factors. For instance, a delivery driver could fall over while collecting packages or claims could be made against your business for copyright infringement. Plus, platforms such as Amazon can require a general liability insurance policy to be in place before you can start selling. 

Coverage for general liability insurance can include third-party property damage, personal and advertising injury, medical costs, reputational harm, settlement, and legal defense costs.

Exclusions for general liability insurance can include employee injuries and illnesses, commercial auto accidents, tools, and equipment.

Cyber liability insurance

As an online store, your business could come under attack from hackers trying to steal proprietary information and customer data. If, for example, customer credit card information is compromised, cyber liability insurance can help cover the cost of informing customers and investigating the breach. This could help save the public reputation of your business and retain customer loyalty. 

Cyber liability insurance for e-commerce businesses can include coverage for data breaches, cyberattacks, phishing, and incidents that cause business disruption.  

Exclusions for cyber liability insurance can include patent, software, and copyright infringement. In addition, if an insurer finds that a lack of security measures had not been put in place to safeguard customer information, claims could be rejected. 

Product liability insurance

A product you sell could be defective in the way it was manufactured, designed, or sold. You may need to recall one of your products or pay for medical expenses if the product causes personal injury to a consumer. Product liability insurance can help cover legal fees, damages, and medical costs.

Many insurers include coverage for product liability as part of the general liability insurance policy while other insurers may require you to purchase a separate policy.

Common exclusions for product liability insurance include employee injuries, accidents on business property, lost inventory, and professional negligence. 

Workers’ compensation insurance

In many states, it is a requirement to have workers’ compensation insurance in place to provide employee benefits in case of workplace accidents and injuries. An employee could injure their back while lifting boxes in a warehouse or suffer from neck pain due to working on a computer. 

Workers’ compensation insurance coverage can protect your e-commerce business and employees for medical expenses, lost wages, employer liability, legal costs, retraining, permanent injury, and survivor benefits.  

Exclusions can include pre-existing medical conditions for employees, and coverage for executive officers and owners of the business.   

Professional liability insurance

When you make a sale, both your e-commerce business and the buyer are bound by the terms and conditions agreed during the transaction. If your business breaches its contract or fails to meet delivery expectations resulting in a financial loss for the customer, you could be held liable for damages. 

Professional liability insurance coverage can protect you against professional mistakes, accusations of negligence, legal defense costs, breach of contract, and missed deadlines. 

Exclusions for professional liability insurance can include workplace accidents, intentional wrongdoing, and illegal activity.   

What are the limits of e-commerce insurance?

When you take out an e-commerce insurance policy, the limits will determine the maximum amount you can claim during a policy period. Limits will differ depending on the type of insurance policy you take out and your business revenue. Some insurers can start with limits of $500,000 going up to $1 million for general liability insurance.   

Certain insurance policies will have a per-occurrence limit and others will have an aggregate limit. Policies with a per-occurrence limit cover you for a maximum amount per claim. An aggregate limit covers you for a maximum amount per policy period no matter how many claims you file.

How much does e-commerce insurance cost?

Several factors go into the calculation of e-commerce insurance, and policy premiums can vary between insurers. On average e-commerce businesses can expect to pay $45 per month for general liability insurance and $140 per month for cyber liability insurance. 

Here are some factors that insurers will consider when providing a quote:

  • Products and services: Certain products with safety hazards are considered riskier. This could impact your product liability insurance premium as insurers will need to consider the risk of a consumer getting injured if a product is defective. 
  • The number of employees: If you have multiple employees in a warehouse, insurance costs are likely to be a lot higher than an e-commerce business based at home with no employees.
  • Claims history: A high number of claims is likely to increase your insurance premium upon the renewal of your policy.  
  • Revenue: As your business grows, the number of transactions increases. With more customers, there is a higher risk of an incident occurring. 
  • Deductibles: The higher your deductibles, the lower the insurance premium. Deductibles are generally adjustable to suit your needs.
  • Coverage and policy limits: The more extensive your insurance coverage, the higher the premium of your policy. 
  • The number of years in business: Businesses with more experienced owners and employees are likely to have lower premiums as they are less likely to make mistakes compared to new business owners.  

How to choose the best e-commerce insurance

When looking for the best e-commerce insurance policy, here are some key factors to consider before you make a purchase:

  • Umbrella policies: Larger e-commerce businesses could benefit from umbrella policies where the insurer provides liability coverage exceeding the original policy limits. This can boost coverage limits and provide added protection for your business. 
  • Decide on policies needed: Most e-commerce businesses start with general liability and product liability insurance. As your business grows, it’s a good idea to re-evaluate your business and the services offered to ensure that you have adequate policies in place to provide sufficient coverage in the event of a lawsuit. 
  • Compare providers: When looking for an insurer, it’s a good idea to compare multiple policies to find the best e-commerce insurance plan for your business needs. Some insurers can bundle policies that can provide added savings and discounts.