A lot of eCommerce businesses take the time and money to purchase an insurance plan. It’s a good idea since it protects the business against a number of risks, but just buying insurance is not a magic pill. You have to make sure that you get the right coverage from the right provider. Otherwise, the insurance coverage may be as effective as putting on sun tan oil when you want to keep from burning in the sun. Here are some of the most common pitfalls that eCommerce businesses run into when purchasing insurance.
Assuming that Insurance is a One Size Fits All
One of the best ways to make sure that you spend more money than you need to spend is assuming that a basic insurance plan will work for your business. An eCommerce business has a number of different needs than a traditional brick and mortar store. In some cases, you might wind up with coverage that is not quite enough. It’s more likely though that you will pay significantly more for coverage that you don’t need. Often times, a basic business insurance plan contains coverage for property insurance, liability insurance, business vehicle insurance, and employee or worker’s compensation insurance. Depending on how your eCommerce business is structured, you may not need equal amounts for each part of the business insurance plan.
Assuming Coverage is Present
Sometimes as an eCommerce business owner, you may assume that accidents during delivery or anything else related to transit will be covered by the provider all the way through order fulfillment. Another common assumption that home based eCommerce workers hold is that their homeowner’s policy will cover them. Both of these beliefs are quite dangerous since most of the time, the answer is no. Remember that the statute of limitations for business claims can business claims can be as long as 25 years, depending on the kind of harm suffered. For actual damage that your business suffers, you yourself might wind up being liable for the whole thing.
Assuming No Coverage is Necessary
Another tremendous mistake is to assume that you won’t need insurance. Even if you have never been sued and never run into any problems with your eCommerce business, you could find that everything changes the next day. You need to make sure that you have protected your business. Standard business insurance may not be enough. Bear in mind that in the event of a natural disaster or a tragedy, you may also need business interruption insurance to keep your business going. While getting business interruption insurance can be tricky until you are established, you can get basic starting plans in many traditional business insurance plans to help cover you until your business is stable enough for a separate policy.
At the very least, make sure that you carry liability insurance. In most states, the courts and legislatures have not set caps on the amount that civil claims can request against a business or corporation. With the extended statute of limitations, you could very easily find your business bankrupted with a single claim of liability.