According to Statistics Canada, 82 per cent of Canadians participated in online shopping in 2020, spending a total of $84.4 billion. With many benefits to online selling, including decreased overhead and the opportunity to connect with more customers, businesses see the advantages to moving their operations to this platform.
However, e-commerce businesses can face a number of risks, such as selling a product that causes bodily injury or property damage, cybercrime, or supply chain interruptions. Having the right coverage tailored to meet the unique needs of your online business can provide you with peace of mind so you can focus on providing exceptional customer service to your customers.
Keep reading to prepare for the questions a broker may ask to ensure you have the right insurance for your online business.
Six questions brokers ask to help protect online businesses
1. What product are you selling?
The type of product a business sells will determine specific risks for the business owner. For example, a business owner who sells slippers will have different risks than a business owner who sells silverware. A broker will take these risks into consideration when finding insurance coverage.
2. Where are you selling your products?
This is important, as some insurance companies will only cover domestic sales. To determine which insurance coverages are available for your online business, contact a BrokerLink broker.
3. Is your brand or label on the product you’re selling?
If a business owner puts their brand or label on a product, they can be held responsible for the operation of the product and for damages a customer receives because of the product. This information will help the broker assess the level of risk the business owner could face.
4. How are you storing your customer’s information?
This question pertains to cyber security. If an online business stores customer information on a server or cloud-based technology, cyber insurance should be considered. It’s also beneficial to ask an online store how payments are processed and if their software (which collects credit card information) is insured.
5. Do you have commercial general liability insurance?
Commercial general liability insurance provides coverage to business owners in the event of a situation in which they are sued. In particular, coverage for products liability and completed operations are an important aspect of the coverage for online businesses:
- Products liability: if a product purchased online causes bodily injury or property damage, the customer could sue. You are responsible for the items you manufacture, sell or distribute, and products liability could cover the costs if there is a lawsuit.
- Completed operations: if a customer decides to sue for damages after the warranty is expired, this coverage could cover legal expenses which may occur.
6. Do you have business interruption insurance?
Business interruption insurance covers financial losses to the business if there is an interruption (such as a delay or damages caused to the product) from a supplier. For example, if a business purchases supplies for their product from a manufacturer who can no longer operate because of an unexpected incident (such as a fire in the warehouse), this is an interruption for the online business. This interruption will cause a financial loss, which could be covered by Business Interruption insurance.
Contact BrokerLink to learn more about insurance for online businesses
Whether you’re an owner of an online business, or you are interested in launching one, our brokers have extensive business insurance expertise and can help you get the coverage you need.
Contact us today by completing an online quote, by phone or visit your local branch.
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