Insurance for E-commerce

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Overview

The online retail industry has seen astronomical growth in the past decade, and with that raises unique challenges and risks. According to a study by BigCommerce and Square:

  • 96% of Americans with internet access have made an online purchase in their life.
  • 69% of Americans shop online regularly.
  • E-commerce is growing 23% year-over-year, yet 46% of American small businesses do not have a website.

These stats indicate a clear upward trajectory. The barrier to entry for those businesses who don’t have a website has never been more permeable. User-friendly web design platforms have made it possible to launch an online store in a matter of hours.

Or, if companies don’t want to go through the process of building an online presence, retailers like Amazon and Alibaba provide the marketplace for them (at a cost, of course). These e-commerce behemoths have been dominating the marketplace and there’s no sign of that stopping. Amazon might even claim the majority of all online sales in the near future.

Revenue lost to fraud

3.5

tn

Companies worldwide lose $3.5 trillion to fraudsters every year — and the figures continue to devastate small and large businesses.

Data Breach Costs

$4

m

The average total cost of a data breach in 2020 was $3.86 million and the average cost per individual record that was lost was $150 (IBM).

Why is Insurance for E-commerce Organizations Important?

Think about the risks involved with e-commerce compared to traditional retail. Of course there are claims online retailers have to deal with that would rarely be faced by your average walk-in store, but some things never change.

Both e-commerce and brick-and-mortar retailers have to bear the risk of being a link in the supply chain of a product that could hurt somebody. Both have employees who need to be protected from injury and management who needs to be protected from shareholder lawsuits. But bodily injury claims like slip-and-falls are less likely in e-commerce. Alternatively, the chance of someone stealing customers’ sensitive information is a great deal higher for online stores.

The importance of computers and system integrity for e-commerce companies cannot be overstated, so let’s start with some of the risks insurance addresses. The theft of customers’ personal info — or worse yet, their financial info — is a looming threat for online retailers. Bad actors can wreak havoc by stealing data, encrypting your data and extorting you, or shutting you down with a DDoS attack. These challenges can cause lasting damage to a company who isn’t prepared to face them.

Data Breach

When sensitive information is data is copied, transmitted, viewed, stolen or used by an individual unauthorized to do so. The Equifax Breach in 2017 that leaked 145.5m customers accounts (including social security numbers) was due to a server security patch that was not implemented.

DDoS Attack

A Distributed Denial of Service (DDoS) attack occurs when cybercriminals overwhelm an online service from multiple sources (i.e., UDP or SYN flooding), making it unavailable. E-commerce operations can come to a screeching halt when faced with a DDoS attack. Lost income, server outages, and mounds of IT stress typically follow one of these vicious attacks.

Property Damage

Many e-commerce platforms store their inventory at 3PLs and fulfillment centers, making it critical to protect your business personal property (BPP) while it’s not in your possession. Losing valuable BPP or experiencing severe damages could devastate an e-commerce operation.

Product Defects

No matter how meticulously you design or handle your products, a flaw might slip through the cracks. Whether shipping or a manufacturing issue causes the issue, product defects happen. Sometimes, e-commerce companies need more than a sophisticated return and exchange system to handle specific problems arising from product defects.

Types of Ecommerce Companies that need insurance

  • B2B
  • Direct to Consumer
  • Third-Party Logistics
  • Dropshipping
  • Subscription Ecommerce
  • Wholesaling

E-commerce Insurance Frequently Asked Questions

Food can make people sick, small objects can be swallowed by children, safety equipment can fail, machinery can malfunction and hurt the user…amazingly, baby powder can cause cancer. The list goes on and on. Bottom line, product liability exists regardless of where you are in the supply chain or whether you company has a storefront or not.

The cost of insurance for e-commerce companies will depend on several things, including the company’s size and development stage. Other factors include:

  • Exposures: risks being insured
  • Company practices: views on safety, compliance, and risk management
  • Program structure: the amount of deductible and willingness for a company to assume more risk
  • Claims history: the type and amount of past claims against the company

How it works

Finding insurance coverage doesn’t have to be painful. We aim to make the purchasing experience as streamlined & intuitive as possible.

1
Get a quote

Use our custom built online portal to get quotes fast. We automate clerical tasks that plague the traditional insurance brokerages, giving us more time to be responsive and alert to your company’s needs.

1
Get a quote

Use our custom built online portal to get quotes fast. We automate clerical tasks that plague the traditional insurance brokerages, giving us more time to be responsive and alert to your company’s needs.

2
Pair with a specialist

No two organizations are the same. Our team of coverage experts partners with your team to engineer your risk management strategy, together. We take the time to understand the intricacies of your company to get you the best possible coverage.

2
Pair with a specialist

No two organizations are the same. Our team of coverage experts partners with your team to engineer your risk management strategy, together. We take the time to understand the intricacies of your company to get you the best possible coverage.

3
Stay one step ahead

To do better, you need to know better. With changing political, technological, legal and economic landscapes, staying ahead of the curve is critical.

Our in-house team is tapped into the latest developments of your industry, proactively ensuring you’re covered.

3
Stay one step ahead

To do better, you need to know better. With changing political, technological, legal and economic landscapes, staying ahead of the curve is critical.

Our in-house team is tapped into the latest developments of your industry, proactively ensuring you’re covered.

Rachel Jenkins, Customer Success Manager

Meet your specialist

Rachel is one of the premier leading insurance professionals with almost 10 years of experience in the industry. She has been with the Founder Shield team for several years, focusing on client advising and improving policy language for venture-backed companies including financial institutions, Ecommerce, and SaaS companies.

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