The popularity of the online commerce sector is growing significantly within the retail industry. 2020 estimates from Digital Commerce 360 state that consumers spent around $861.12 billion online with U.S. merchants, which demonstrates the highest annual U.S. e-commerce growth over at least two decades.
However, this means that online business owners are more vulnerable than ever when it comes to data breaches and cyber-attacks. Because of this, every e-commerce business should consider investing in cyber liability insurance to strengthen its security. Cyber insurance is important to add on top of your typical business insurance coverage to address the unique threats you face online.
One of the top risks that every online business faces are related to security. Third parties can steal customer information, credit card numbers, and even install malware on your website. In terms of liability, you face many risks as an online retail company.
Because the financial and legal costs of cleaning up a data breach can be extremely high, investing in e-commerce business insurance gives you protection against court costs, product liability lawsuits, and other unexpected costs. Here are some types of coverage you should consider:
Small business owners, as well as larger vendors, are particularly vulnerable to having their sites hacked by cybercriminals. Any business owner that collects customer data from online orders and processes financial transactions should look into purchasing data breach insurance. To protect your computer system, cyber liability insurance policies cover you from certain threats.
For instance, any lawsuits, legal penalties, customer settlements, and other fines can be covered by insurers that specialize in this process. In addition, discovery and investigation expenses to address a threat can be paid for by insurance companies. Restoring lost data after a data breach as well as any funds you may have lost can be covered by some cyber policies.
In addition to a cybersecurity policy, technology errors and omissions can address any claims against vendors due to physical injuries caused by your product or the unauthorized disclosure of proprietary information.
For companies that operate a warehouse or store their product inventory via a third party, cargo insurance is a valuable type of coverage to invest in. To cover the risk of shipping your products to customers and distributors, consider looking into policies like this that protect you financially from losing inventory during transport or storage.
Cybercriminals tend to target online companies to steal identities or make fraudulent transactions using their financial information. Cyber insurance varies depending on the policy you choose, but it typically covers the following claims:
In addition, a good cyber liability insurance policy also covers claims related to the loss or theft of personal information and legal defense costs. If a hacker accesses data from customers like their Social Security numbers, home address, and bank account information, coverages also include payments for:
While the cost of a cyber insurance policy can vary depending on the coverage you're after as a small business owner or a larger company, the average cost of cyber liability insurance in the United States was $1,501 per year for $1 million in liability coverage, with a $10,000 deductible in 2019.
As an e-commerce business, you need to look into purchasing business insurance that can cover the costs of a data breach including cyber liability insurance, cargo insurance, and technology errors & omissions insurance. This helps cover claims including notification costs, business interruption, and more.
This resource provides tips on how consumers and businesses can stay safe online. It also provides a way for individuals to report online fraud if they have been victimized by hackers, helping authorities spot trends and combat risk.
Although there are always going to be some risks involved in running a business, identifying and mitigating them is something that you do on a constant basis. Before choosing a cyber insurance policy, looking at the coverage limits and services it provides can help companies recover financially from a cyber breach.
The bottom line is that having cyber insurance is necessary to manage risks you might not have planned for in the first place. To help you choose the best cyber insurance policy for optimal protection online, contact us today at Assured Standard!