Why Would an Online Operation Need Business Insurance?


As business insurance brokers, we have noticed that a number of our new clients have little in the way of a physical presence. When business owners think about business insurance, they might focus purely on mitigating risk for physical building or inventory. However, insurance is vital to cover other less tangible assets, and we will demonstrate this by taking a look at a typical online store operation.

Online Store Risks

If you run an online store, it’s unlikely that you have a physical shopfront to worry about and if you did you wouldn’t hesitate to get business insurance. However, the risks to your online store and your clients may be less obvious in an online operation, but they are still there. Let’s take a look at the four primary risks related to an online store that you need to mitigate with insurance.

1. Products

If you sell a product that harms a person or in extreme circumstance even causes a fatality, your entire business operation is at risk. This is a public relations disaster, but there are even more pressing concerns and serious implications for your business. If you need access to legal services, can you afford to pay for them? How will you handle the relations with your supplier, and will they assume responsibility?

2. Theft or Damage

If you run your online retail business from home or a small storage unit, are you covered for theft or damage to that inventory? If there is a break in and your products are stolen or if there is a fire, storm, or other disaster that damages your goods, how will you cope with the losses? Having adequate business insurance to mitigate these risks is essential if you don’t want to go out of business.

3. Privacy Issues

If you run an online business, you will need to store your carefully collected customer details in a safe place. This will include names, addresses, contact details, and most importantly of all payment information. If the privacy of your customers is compromised, you may find yourself in legal hot water with your customer base.

4. Natural Disasters

We touched on this above, theft is a possibility, but there is also a chance that your equipment and inventory are damaged as a result of a natural disaster. If you have no business insurance coverage in place, you will lose everything, and you may even have to cease trading entirely.

Choosing an Appropriate Product

As we can see, business insurance for an online store is a smart move for a wide variety of reasons. There are different types of business insurance products available to suit many business models, and choosing the correct one is essential. Perhaps you need product liability cover, or you’re concerned about the deterioration of stock with a limited shelf life? There are far too many options to discuss here, and that’s why you need a professional insurance broker to help you select the right business insurance.

If you’re looking for the best insurance brokers in Perth, get in touch with us here at GSK Insurance today.

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