This article is intended as a guide only, and not as advice. Please speak to each company mentioned to ascertain what is right for your needs.
Starting an online business or side project is an exciting time, but it’s important to make sure you have appropriate legal cover in the event of the unexpected.
It’s easier than ever to start an online business which has led to an explosion in dropshipping, Amazon FBA and creating whole businesses via eCommerce sites such as Shopify.
However, just because it’s easy doesn’t mean you don’t need to take adequate precautions such as taking out business insurance. You are running a business, and that comes with responsibilities - and consequences if things go wrong.
Dropshipping and Amazon FBA Business Insurance
Amazon sellers (Pro) require certain levels of insurance to be able to sell on the platform, and if you’re selling physical goods to individuals in the UK, it’s always good to have cover in the event of anything going awry.
If you’re running an Amazon business, product liability insurance, or a general liability policy will cover you against any damage caused by products you sell.
Imagine this - you sell scooters which are imported from China and white labelled to your brand. While using your scooter, one of the wheels fall off and the child riding the scooter breaks their arm. Their parents are pursuing legal action against the brand as a defective product.
While you didn’t manufacture the item, to the customer your custom branded scooter looks and feels like it’s from a big company that would have all of these quality checks in place. Amazon won’t cover you - and you may be held individually responsible if you don’t have the right protections and cover.
It’s in this situation that having cover suddenly becomes a huge relief, protect (and likely save) your business.
eCommerce Business Insurance
If you’re running a more established eCommerce business with physical premises or holding stock at your house or warehouse, then you may need to consider Stock insurance.
A general liability policy will also be needed as the cover provided to an FBA business will also apply to an eCommerce company. However, it’s likely you hold a higher value of physical stock. In the event of theft, damage or destruction, stock insurance can cover the costs incurred to replace it.
It’s worth noting that the value covered is usually the cost price, not the retail though it may be policies can be tailored. You can also usually bolt on items like in-transit cover for damage caused by handling.
Usually these will require storage criteria to be followed to manage and minimise risk, so be aware that you comply otherwise your cover may be invalid.
Another insurance worth considering is business interruption or income insurance. If you’re a solo owner and become ill for a prolonged period of time, the business may start to lose money while you’re out of action. In these events, income insurance can give you the finances required to keep operating until everything is up and running.
Online Retailers Insurance
Quite often providers will offer a combination of all of the above into a single policy which will cover your stock, your income and any public claims. When looking for quotes, look out for these combination policies which may offer more peace of mind!
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