Why do e-commerce retailers need business insurance?
Even though you don't run a brick-and-mortar shop, you share many risks with traditional businesses. A customer could sue over harm from a product, or a fire could destroy your inventory. Business insurance helps your online store recover from lawsuits, theft, injuries, medical bills, and accidents.
Find affordable coverage
E-commerce shops and online resellers can save money on the right coverage by comparing quotes from top-rated insurance companies.
Fill out Insureon's easy online application to get free business insurance quotes and advice from a licensed agent.
What types of insurance do e-commerce and online retailers need?
These insurance policies cover the most common risks of online retail.
Business owner’s policy
A BOP bundles commercial property insurance and general liability coverage at a discount. It protects against theft, fires, and third-party claims.
- Customer injuries
- Stolen or damaged inventory
- Business interruption insurance
General liability insurance
This policy covers some third-party risks of running an e-shop, such as a delivery person who suffers a slip-and-fall accident at your physical location. It also covers libel and copyright infringement.
- Customer bodily injuries
- Libel and other advertising injuries
- Product liability insurance
Workers’ compensation insurance
Most states require workers' comp for e-commerce stores with employees. It also protects sole proprietors from work-related injury medical costs health insurance might deny.
- Employee medical expenses
- Disability benefits
- Legal fees from employee injuries
Cyber insurance
Cyber liability insurance helps online stores survive data breaches and cyberattacks. It's recommended for any small business that handles credit card numbers or other sensitive information.
- Customer notification expenses
- Fraud monitoring services
- Cyber extortion demands
Commercial umbrella insurance
Umbrella insurance provides additional coverage when an online business reaches the limit on its general liability, commercial auto, or employer's liability insurance policy.
- Customer injury lawsuits
- Customer property damage lawsuits
- Employee injury lawsuits
Commercial auto insurance
Most states require commercial auto insurance for vehicles owned by retailers. This policy covers accidents involving a small business owner’s delivery van or other vehicle.
- Damage to another vehicle
- Injuries caused to another person
- Repairs due to vandalism or weather
How much does insurance cost for retail businesses?
A small e-commerce shop will pay less for insurance than a larger business.
Factors that affect e-commerce business insurance costs include:
- Retail products and services offered
- Business income
- Business operations
- Claims history
- Types of insurance coverage
- Policy limits and deductibles
Top e-commerce businesses we insure
How do I get e-commerce business insurance?
It's easy to get e-commerce and online retailer business insurance if you have your company information on hand. Our application will ask for basic facts about your business, such as revenue and number of employees. You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:
- Complete a free online application.
- Compare free quotes and choose policies.
- Pay for your policy and download a certificate.
Insureon's licensed insurance agents work with top-rated U.S. providers to find the types of right coverage options for your unique risks and business needs, whether you work independently selling crafts on Etsy, or hire employees to help manage your online clothing store.
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FAQs about insurance for e-commerce and online retailers
Review answers to frequently asked questions about online retail insurance and more.
Do e-commerce retailers need product liability insurance coverage?
Yes. Product liability insurance is a key coverage for online sellers. It protects your business if a product you sell causes injury or property damage because of a design defect, manufacturing flaw, or marketing error—such as missing safety instructions or incorrect labeling.
Even if you aren’t the manufacturer, strict liability laws in many states mean you can still be held responsible for damages simply because you sold the product.
For online retailers, this risk is especially high. You might never physically handle the item, yet you can still be sued if it’s defective. Lawsuits can be costly, covering attorney fees, settlements, and court judgments—which can reach hundreds of thousands of dollars or more.
Product liability coverage is usually included in a general liability policy or business owner’s policy (BOP). In some states, product liability insurance is legally required, and certain online marketplaces have their own rules. For example, Amazon requires qualifying sellers to carry at least $1 million in liability coverage. While Etsy and eBay don’t have insurance requirements, they also don’t protect sellers if something goes wrong, making insurance an important safeguard.
Having product liability insurance not only helps you comply with state or platform requirements, but also protects your financial stability and reputation if a customer files a claim.
Does online retailer insurance protect against theft?
Yes, e-commerce retailers face theft risks from both outside criminals and insider fraud. There are two types of business insurance policies to include in your retail risk management plan:
- Commercial property insurance covers stolen or damaged inventory, equipment, and other business property. Whether you're operating from a rented space or working from home, this coverage helps replace burglarized or damaged business property. Property insurance is often bundled into a BOP with general liability coverage.
- Fidelity bonds, also called employee dishonesty coverage, reimburse losses if an employee or contractor steals money, inventory, or other assets. For example, an employee might forge a customer's signature or commit embezzlement.
Combined, these policies help safeguard your inventory from burglary, shoplifting, or package theft, as well as protect against financial losses caused by dishonest employees or contractors. For broader protection, you can also consider commercial crime insurance.
Why is cyber insurance important for e-commerce businesses?
Cyber insurance is a key coverage for any business operating online, protecting against financial losses from hackers, data breaches, and other cyberattacks. For e-commerce retailers, it can help cover costs related to common threats like phishing scams, ransomware, cybersecurity attacks, and stolen customer data.
Coverage typically includes:
- First-party coverage: Pays for expenses such as customer notifications, credit monitoring, data recovery, and extortion payments. It’s vital for any e-commerce business that handles sensitive customer information.
- Third-party coverage: Offers protection to small businesses if they're responsible for a client's online security and fail to do so. This policy would pay for your legal defense and settlement support if customers or clients sue your business following a cyber incident at their business.
Many insurance options also include data breach coverage to address the specific costs of recovering from a breach. Together, these protections can help your ecommerce company recover quickly while minimizing financial and reputational damage.
What other insurance policies do digital businesses need?
Beyond general liability and cyber coverage, several specialized policies help protect digital and e-commerce businesses from common risks:
- Business income insurance, also known as business interruption insurance, covers lost income and extra expenses if your business operations are disrupted—such as equipment failure, cyberattacks, or natural disasters.
- Equipment breakdown coverage pays to repair or replace essential tech (like servers or POS systems) if they fail due to electrical or mechanical issues.
- Electronic data processing insurance, or EDP coverage, protects hardware, software, and data from perils like power surges, fire, hacking, or hardware failure.
- Inland marine insurance covers business property, like laptops and inventory, while in transit or stored off-site—risks usually not covered by standard property coverage.
- Hired and non-owned auto (HNOA) insurance protects your business from liability if you or your employees use personal, leased, or rented vehicles for work-related tasks and get into an accident.