It can be very exciting to have an ecommerce business, launch it, and watch it grow day by day. However, it can also be a bit scary as every new sale also means increased risk. Many small businesses underestimate the power of insurance and face a huge loss when a cyberattack happens or they must deal with a product liability claim. Here is why you need insurance to protect your ecommerce business.
Cybersecurity Threats Are Real
Cybersecurity threats are very common and are set to cost businesses 15.63 trillion dollars by 2029, and on top of that, e-commerce businesses are at a higher risk of cybercrimes because they hold large amounts of customer data. Furthermore, such platforms rely heavily on technology and third-party apps which makes them even more vulnerable to attacks. Cyber liability insurance covers data breaches, which are costs associated with stolen customer data including notification expenses and credit monitoring services, while in ransomware attacks, the insurance company will cover ransoms and recover any encrypted data. It can also help you cover for lost revenue caused by a cyber incident or help you protect your company in the case of a reputational management crisis and save your public relations.
Product Liability Still Applies
You can be very honest in your work, and work very hard to provide your customers with the very best, but you are only human, and it is very likely that some mistake is made, and an accident happens. And your product may not function as it did as you advertised them. In such a case, an upset customer can sue for your product liability, which is when a customer puts the manufacturer or seller at fault because the product is not working as advertised. As such, you can get involved in a lawsuit and may have to pay a legal fee. If you have insurance through a firm such as Colby Insurance Group, you may be protected from surprise costs such as this.
Legal Requirements
If you have staff working with you, you may need to have some form of insurance as a legal requirement. And you may also need some sort of insurance to comply with supplier contracts or other platform policies like selling on large marketplaces. This is where an insurance company becomes necessary. Your insurance can also help you with legal and regulatory compliance, like supporting you with legal defense, penalties and regulatory fines.
Financial Security
By having an insurance policy, you can feel safe about your finances as many things can go wrong like a product defect or damage to products in the warehouse. There could also be a natural calamity or a theft that causes you losses, but if you have your business insured, you will not have to worry too much and can rely on your insurance provider to cover the damage.
Peace of Mind
Having an insurance policy in place also gives you peace of mind. Running a business is not easy, even if it is an ecommerce business, as you can have a lot of things to worry about. You have to worry about your products, inventory, warehousing as well as the legal processes. You also have to maintain the business reputation while also protecting your business against cybersecurity threats. You obviously cannot look after everything. Having an insurance company at your back can help you relax as you know that if something goes wrong, you have someone protecting you. It also makes you feel confident and take bold decisions and expand your business confidently without having to worry about the what ifs.
Business Reputation
Your business reputation may be at stake when an incident occurs, and you do not react smartly. This could be because of a product that is faulty or a data breach that upsets your customer. With insurance backing you up, you respond promptly and compensate the customers, and let your customers know that you are there for them. You avoid the matter from blowing out of proportion and maintain your reputation.
Conclusion
If you are not insured and an incident occurs, it will completely swallow up your profits as you will have to pay for it from your own pocket. It may even cause you such a huge loss that you have to close your business, and this can be especially harmful to small businesses.