Online businesses: Need for commercial insurance and considerations before buying one

The trend of online business is seeing its most romantic period where everyone is looking to start their online venture. Even the seasoned business owners who used to operate with the brick-and-mortar outlets are moving a notch up and opening their online stores. While online businesses offer numerous benefits as they make the system faster and expand your reach beyond expectations, they come with some unconventional and tricky risks. Cyber-attacks have become increasingly common and attackers have built an industry of their own. Regardless of the risks, you cannot afford not to take your business online, especially in the present time of technological revolution. So, how to insure yourself against cyber attacks? While establishing adequate cybersecurity measures is one way to mitigate the possibility of an attack, these do not guarantee a complete evasion of the probability. You need an appropriate insurance policy to cover the losses if an attack should occur.  

  • Why online business needs commercial insurance

Online businesses need you to put all the business and customer-related information over the Internet, a common medium that can be accessed from anywhere anytime. Although the information and data are secured by access control and authentication processes, none of these processes are flawless. Hackers exploit the vulnerabilities of these processes to steal, alter, or block your data. This can be catastrophic for any business. If sensitive information of your customers is compromised it can be misused in any way. If your business involves online transactions, yours and clients’ banking information can be compromised and incur heavy losses. Invades can even block your website and cause business interruption until you pay them a said amount. For all these reasons, having commercial insurance is a must to ensure security and smooth recovery (in case of an attack) of an online business.

  • Things to consider before investing in commercial insurance for online business

Buying commercial insurance is tricky and it becomes more complicated for online businesses. One simple reason is that you are unaware of what you are buying to determine what would be right for your business.

  • Kind of product your sell

The type of product you sell is crucial in determining the kind of risks your business is more likely to face and its impact. Risks would be different for businesses selling groceries, expensive watches, and jewelry. Knowledge of risks helps in determining the amount of cover you need.

  • Your target market areas

Although the online market targets a wide audience, some insurance providers may still have restricted coverage. They may offer coverage for business in a particular area, state, or country.

  • Putting your brand label on the products

Another information that contributes to determining the level of risk is whether you put your brand or label on your products or not. Putting a label makes you liable for the product and its operation.

  • Storage of customer data

Customer data is most crucial for every business. How you store the data and how you grant its access affects the risk identification. The security of the server that holds the data can also determine the risks and cost of the premium of the insurance.

  • Business interruption

Attackers interrupt an online business by blocking you and your clients from accessing your server. This kind of attack is called a ransomware attack where they relinquish the control only after being paid a certain amount. This attack is gaining popularity which is why you should consider business interruption while purchasing commercial insurance for online business.

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