Why do online retailers need insurance?

category Insurance know-how

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Creative Commons shopping baskets by Kris Wilson_Flickr

Not on the high street

Online shops are, literally, everywhere.

You’d be forgiven for thinking this virtual ubiquity and relative anonymity affords internet traders some protection. There’s safety in numbers, right?

Also, most of the rules and regs that apply to high street shops don’t apply to online retailers, either. That’s true isn’t it?

Well, is it? Just how safe is your online shop?


Reality check

Not having a ‘traditional’ shop does liberate you from certain onerous obligations and costly overheads, it’s true.

You’re not dealing with people face to face so that’s a weight off. No health and safety boxes to tick, no sky-high monthly business rates to find, no complex infrastructure and maintenance to take care of.

But it’s not all good news.

The fact you’re online doesn’t change your responsibilities in terms of what you sell. It doesn’t necessarily reduce your business’s liabilities either – in fact in some cases it actually increases them.


The bad with the goods

Let’s look at the things you sell.

If you’ve supplied something, it’s faulty and it damages a customer’s property, injures them or makes them ill, you could be held liable. This is especially so if you make what you sell – clothes, jewellery, certain foods etc.

It’s likely the disgruntled person/people will claim against you for damages. This will include a compensation figure, probably for many thousands of pounds depending on the extent of the damage/illness/injury.

Rightly or wrongly, you’ll have to defend yourself. That means an expensive solicitor and time away from running your business, neither of which you can likely afford. Worse, you could be looking at a big compensation bill on top.

As always, the answer to this potentially business-crippling problem is insurance. Specifically, online retailers’ product liability insurance. It pays those legal bills for you, and picks up the compensation tab if you’re at fault.


People power

No man’s an island. No internet retailer is either.

Despite the fact you’re online, every now and then you’ll need to ‘engage’ with other people. That could be a courier picking up a parcel or three, or a supplier coming for a meeting. You might even venture into the real world at some point and temporarily set up shop at a market or trade fair.

That’s no problem, except it tends to attract our old chum ‘where’s there’s blame there’s a claim’ (although he’s no chum of ours it has to be said).

Coming into contact with the general public automatically puts your business at risk: that courier might trip on your loose front step, you might spill tea on your supplier’s laptop, your pop-up shop might topple on to a customer. Any of these unfortunate things could mean a negligence claim against you, accompanied by a sizeable compensation hit.

If you’re in the line of fire, public liability insurance for online shops helps. It pays for your legal defence, regardless of whether you’re liable, and compensates the person claiming if you have done something wrong.


Bad job

OK, so, people not connected with your business could cause potential problems. Fair enough.

But what about the people in your business? You’re all on the same side, right?

Well, yes. But also no.

If you employ staff – permanent or temporary, paid or unpaid – you’re responsible for their working environment, including their safety and welfare. So much so that the Health and Safety Executive (HSE) has made doing so a legal requirement.

That legal requirement comes in the form of employers’ liability insurance. In simple terms, if you have staff, you need it. Even if your staff is just one person (other than you) and even if that person is just helping out from time to time.

Claims can be made against you if people get injured or ill as a result of working for you. Especially if you haven’t given them proper training (like how to lift a box, for example) or the right equipment (like gloves for getting hot stuff out an oven, for example).

As it’s a legal thing, you’d better be sure of your position. If you don’t have it when you should, you can expect a £2,500 fine for every day you’re without cover, and a further £1,500 fine for not displaying your insurance certificate. The best way to check you’re OK is to read the HSE’s guide for employers.


Stock answer

If you have nothing to sell, you don’t have a business.

But you know that already. That’s why you have a contingency plan if something terrible and unexpected happens to your stock. A contingency plan that includes the unlucky-but-equally-crippling scenario of having your business equipment stolen or damaged too.

You do have a contingency plan, don’t you?

If you do, it better not be something like ‘it’s OK I’ve got home insurance’.

If it is, you might want to look at it again. Because many standard home insurance policies specifically exclude claims for business-related equipment and property. That could leave you high and dry, with orders to fulfil, overheads to pay and a reputation to protect.

Fret not. There’s a straightforward solution that doesn’t involve turning your house into Fort Knox.

Property insurance covers the things you need to run your business, for fire, flood, theft, and accidental damage. That includes both your stock and what you need to sell it. Team it with business interruption insurance and you’ve got total protection if an unexpected disaster stops you trading, including cover for lost profits too.


Shop assistant

Don’t get us wrong, running an online shop isn’t a particularly risky undertaking. But, as always in business, you have to make sure you’re doing all you can to protect yourself and your investment.

Thankfully, online retailers’ insurance does just that, and it’s incredibly easy to get cover. Click here to find out more and get a quote.


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