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With 15 years of immersion in the world of personal finance, Ashley Kilroy simplifies financial concepts for individuals striving toward financial security. Her expertise has been showcased in reputable publications including Rolling Stone, SmartAsset and Money Talks News. She's committed to equipping readers with the knowledge needed to achieve their financial goals.
Ashley Kilroy
With 15 years of immersion in the world of personal finance, Ashley Kilroy simplifies financial concepts for individuals striving toward financial security. Her expertise has been showcased in reputable publications including Rolling Stone, SmartAsset and Money Talks News. She's committed to equipping readers with the knowledge needed to achieve their financial goals.
As a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others make well-informed decisions.
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Jason Metz
As a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others make well-informed decisions.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
E-commerce businesses that sell products online generally need two primary types of business insurance: Commercial liability insurance and product liability insurance, which is a form of liability insurance for the products you sell and distribute.
We analyzed complaints about liability insurance for the biggest sellers of general liability insurance to find the best e-commerce insurance.
Read more
Show Summary
- Best E-Commerce Insurance 2024
- Comparison: Best E-Commerce Insurance
- Types of E-Commerce Insurance
- How Much Does E-Commerce Insurance Cost?
- How to Get E-Commerce Insurance
- Examples of E-Commerce Insurance Requirements
- Methodology
- Best E-Commerce Insurance Frequently Asked Questions (FAQs)
- Next Up In Business Insurance
Best E-Commerce Insurance 2024
Comparison: Best E-Commerce Insurance
Types of E-Commerce Insurance
Like any business owner, online sellers face challenges such as data breaches, inventory theft and lost income if you can’t open your business for a reason such as a fire. E-commerce insurance is a type of small business insurance that covers the kinds of problems your industry faces.
Here are some types of e-commerce insurance to consider.
Business Interruption Insurance
Business interruption insurance—also known as business income insurance—covers your e-commerce business when it can’t open due to an event covered by the policy, such as a fire or storm damage. This coverage reimburses the business for lost income and also pays for relocation costs if you need to temporarily move your e-commerce business to a new location.
Business Property Insurance
Business property insurance covers your business property if it is stolen, damaged or destroyed due to a problem covered by your policy, such as a fire. This includes assets like your business premises, machinery, tools, inventory, computers, office furnishings and essential documents.
Business property insurance is also known as commercial property insurance.
Commercial Auto Insurance
If you use a vehicle such as a car, truck or van for business, you likely need a commercial auto insurance policy. For example, driving your products to the post office for delivery is considered business use. Your personal car insurance policy won’t cover accidents that happen while you’re using your car for work purposes.
Cyber Liability Insurance
Cyber liability insurance typically covers a business for cyber threats and data breaches. It covers costs such as data recovery, identity recovery and investigative services. This coverage is also known as “cyber risk insurance.” It’s a good choice if your e-commerce business collects sensitive information such as Social Security numbers, credit card numbers, bank account numbers and driver’s license information.
General Liability Insurance
General liability insurance covers your e-commerce business for accidental injuries and property damage to others. It also covers lawsuits for reputational harm, copyright infringement and advertising injury.
For example, if another business sues your business for defaming it in an ad, the general liability portion of a business insurance policy will cover your legal costs.
Professional Liability Insurance
Professional liability insurance covers claims of mistakes and errors made by your e-commerce business, even if the claim has no merit. For example, if a customer claims that your e-commerce business failed to deliver a product on time and led to a financial loss, your professional liability insurance will cover your legal costs.
Professional liability insurance is also known as errors and omissions insurance.
Product Liability Insurance
Product liability insurance covers your e-commerce business if a product you created, manufactured or sold doesn’t work properly and causes property damage or bodily injury to someone else, even if the customer uses a product incorrectly.
For example, if your e-commerce business sells a defective product that results in an injury to a customer, your product liability insurance will cover their medical bills and your legal costs.
Workers’ Compensation Insurance
Workers compensation insurance covers employees who are hurt or become sick because of their jobs. It pays for expenses such as lost income, medical bills and physical therapy. Most states require businesses to have this insurance, even if they only have one employee.
How Much Does E-Commerce Insurance Cost?
The cost of general liability insurance for e-commerce companies is between $23 to $31 per month, according to Next Insurance.
Your own e-commerce insurance cost will depend on factors such as:
- Type of e-commerce store
- Business revenue amount
- Number of employees
- Location
- Claim history
- Type of coverages
- Policy details, limits and deductibles
How to Get E-Commerce Insurance
You can get e-commerce insurance by speaking to an agent or going online to get quotes and buy a policy that matches your requirements. Here are some tips to help you determine your needs and get e-commerce insurance.
- Bundle your policies. A good way to save on your e-commerce insurance is by purchasing a business owners policy (BOP). A BOP includes general liability insurance, business income insurance and commercial property insurance. A BOP is generally cheaper than buying each coverage type separately.
- Evaluate your business’s exposure to risk. Every e-commerce business faces distinctive risks inherent to its industry. The coverage types you choose should address these risks. For instance, you need product liability insurance to cover injury and property damage lawsuits stemming from defective products.
- Regularly review your risk factors. As your e-commerce business expands, your liabilities may change. Hiring more employees or diversifying your range of services can create new risks. It’s wise to re-evaluate your risk profile annually and talk with your insurance agent to find out if you require additional coverage.
- Explore your options. Insurance carriers have unique formulas for calculating your insurance costs. This means that not all policies are priced the same. Comparing quotes for small business insurance from various insurers is essential. You can gather free quotes online or by consulting an independent insurance agent.
Examples of E-Commerce Insurance Requirements
Some online retailers (such as Amazon) require sellers to have small business insurance, but others (such as Etsy) do not. Here are examples of e-commerce insurance requirements.
Amazon
Amazon requires its Pro Merchants and sellers with more than $10,000 in sales per month to have general liability insurance and commercial umbrella insurance. Each policy must have a minimum of $1 million per occurrence and in aggregate limit.
You must comply with Amazon’s insurance requirements within 30 days and provide Amazon with the certificate of insurance, full insurance policy and other documents upon their request.
Etsy
Etsy does not require its sellers to have small business insurance. But you may want to consider coverage such as general liability insurance and product liability insurance to cover problems such as accidental injuries to others and defective products.
Shopify
Shopify does not require its sellers to have small business insurance. But coverage types such as general liability insurance and product liability insurance are still a good idea. For example, if a product you sell is defective and causes an injury to someone else, your product liability insurance will cover your legal costs.
Walmart
Walmart requires businesses that sell its products online or in stores to have the following types of small business insurance:
- General liability insurance (minimum $1 million per occurrence, $2 million aggregate)
- Commercial umbrella insurance
- Product liability insurance
- Commercial auto insurance (minimum $1 million per occurrence)
- Workers compensation insurance (statutory limits or $1 million if no statutory requirements, and $1 million in employer’s liability coverage)
You are required to provide a certificate of insurance to Walmart.
Methodology
We scored the largest business insurance companies based on complaint data for commercial liability insurance. Complaint data is based on complaints upheld by state insurance departments across the country and collected by the National Association of Insurance Commissioners.
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Best E-Commerce Insurance Frequently Asked Questions (FAQs)
What is e-commerce insurance?
E-commerce insurance is a form of small business insurance that’s customized to meet the risks associated with the e-commerce industry. For example, if your e-commerce stores its inventory in a rented storage space, you’ll want coverage for problems like theft, fire and severe weather.
Do I need insurance for an e-commerce store?
If your e-commerce store has any employees, most states will require you to carry workers compensation insurance. Other types of insurance might be optional.
But even if you’re not required to get small business insurance, it’s a good choice because it covers your e-commerce business for multiple types of problems. For example, product liability insurance covers your e-commerce business for problems like defective merchandise that causes injuries or property damage to others.
What insurance should I get for my e-commerce business?
A business owners policy (BOP) is a good initial step. This type of policy typically includes three key types of insurance: general liability, commercial property and business interruption.
With a BOP as your foundation, you can assess your business’s risks and enhance your coverage accordingly. For instance, if you employ workers, it’s typically a legal requirement in most states to have workers compensation insurance. Or if you store sensitive customer data on your servers, buying cyber liability insurance covers your e-commerce business for cyber threats and data breaches.
