This guest post is contributed by PolicyBee, a specialist professional indemnity and business insurance broker.
What insurance do online retailers need?
Selling online doesn't mean you’re immune from what we call the 'three Rs': Risk, Regulation and the Reality of Retailing (OK that’s four Rs, but you see what we mean).
Although you’re not dealing with customers face to face, your responsibilities as a retailer are no different to those who own and run a high street shop. That’s a problem because we live in a world where the 'blame game' is all too common and your relative anonymity isn’t much of a safety net. Whether we like it or not, we don't always have full control over what happens to our business so it's important to protect both it and your reputation.
OK in theory but where do you start? Well, online retailers' insurance can certainly help take the edge off those sleepless nights.
Here's a quick look at the essentials:
What: Public liability insurance
Why: Even if customers don't visit you, you’ll inevitably come into contact with other human beings at some point. Say you accidentally spill a cup of coffee over a client’s laptop, or the delivery guy collects a parcel from your office, trips on your loose step and breaks a wrist. And if you take part in trade shows, fairs or have an occasional ‘pop-up’ shop somewhere, you need to consider the potential risks to the general public and third-party property.
Public liability insurance covers personal injury and property damage claims against you. It pays to fix what’s broken and, if needs be, the legal costs if solicitors are involved.
What: Product liability insurance
Why: Although you might not make the products you sell, you’re still responsible if something goes wrong. For example, if you sell food or drink that, unfortunately, turns out to have bits of plastic in it (or someone alleges it does), your customer will come back to you, not the manufacturer.
If that happens, it’s likely you’ll have to defend yourself and pay damages. Product liability insurance covers your legal costs and any compensation you’re liable for, even if the fault isn’t solely yours.
What: Employers’ liability insurance
Why: If you have one or more employees – including temps, part-timers, volunteers, and anyone whose health and safety you’re responsible for – the law says you need employers’ liability insurance. It covers claims against you by staff alleging they’ve become ill or been injured as a result of working for you.
If you don't have it when you should, expect a £2,500 fine from the Health and Safety Executive. And another £1,500 fine for every day you don’t show a valid certificate.
What: Property and stock insurance
Why: If everything you sell suddenly went up in flames in a warehouse fire, how would it affect your business? While the obvious answer is “I wouldn’t have anything to sell”, there’s more to it than that. How long and how much would it take to replace everything? How would you placate your irate customers? How might your reputation suffer?
As well as stock, it also covers equipment you need to run your business – computers, phones, promotional items etc. It’s especially important if you work from home, as it's unlikely your home insurance covers business equipment (always check).
What: Business interruption insurance
Why: Insurers love the phrase 'expect the unexpected'. In this case, the unexpected can be a major catastrophe or a minor inconvenience forcing your business to grind to a halt. Be it a flood, that previously mentioned warehouse fire or a careless engineer cutting through a power cable; if you can’t trade it’s going to cost you money and customers’ goodwill.
Business interruption insurance covers your lost profit for the time you’re out of action. It can also cover the cost of temporarily setting up somewhere else if you need to.
What: Personal accident insurance
Why: It’s not a pleasant thought, of course, but could your business survive if you or an employee had a serious accident? Even if it can, it’s likely you’ll still have to make allowances somewhere else – maybe an extra pair of hands to help keep things ticking over.
If that’s the case, personal accident insurance helps. It pays your business a lump sum to keep it going, covers your unexpected recruitment costs, and can even pick up the medical expenses bill.
So there you have it. You’re now firmly 'in the know' when it comes to online retailer insurance.
If you’re shopping around, make sure your policy covers what’s mentioned here – insurance is usually a ‘you get what you pay for’ type thing. Oh, and always read the policy wording, too (or ask a good broker to explain it). There’s no point buying something that won’t actually help when you need it most.