Online Store Insurance: Business Insurance for Online Retailers

Running an online store is one of the most promising ventures for those interested in e-commerce . Roughly 15% or approximately 49,422,000 Americans buy merchandise online weekly.  In addition, Americans spend $504 billion on online shopping. 

Insurance is not a necessity when running an online store. However, some decide to get it because it can help. In this article, let’s talk about the different online store insurance policies, their cost, and the best providers of it. 

Why Consider Getting Online Shop Insurance?

You should get online shop insurance to have protection against the risks common in online retail . Risks like third-party bodily injuries or delivery of defective products to a client can be very costly, especially if the aggrieved party files a lawsuit. 

Privacy Rights Clearinghouse recorded 9,016 cases of a data breach , and insurance for online retailers is helpful as it pays for the costs, from data recovery to the compensation of affected parties. 

General Liability Insurance for Online Retailers

Business insurance online retailers policy mostly include general liability insurance as the most basic protection. A basic general liability policy provides armor against lawsuits arising from bodily injuries or property damage.

General liability insurance doesn’t only account for personal injuries to the client but also personal injuries to independent contractors or other persons with whom the online retailer does business. 

In practice, general liability insurance will pay for the cost of attorney fees, other legal costs, and compensation if an independent contractor, other persons, or client files a lawsuit for personal injuries and property damage. The online retailer can get $1 million up to $2 million from their general liability insurance. 

Should you not think twice about getting general liability insurance? The answer is an absolute yes. On average, personal injury and property damage claims independent contractors or customers file against an online retailer can cost $75,000 – $500,000.

Another thing that general liability insurance protects you from is advertising injury. This will kick in if you end up getting sued for slander in your advertisements or if you are found to have stolen an ad from another company. 

The average general liability insurance cost for online stores and retailers is about $32 per month or $380 per year.

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Cyber Liability Insurance for Online Retailers and Stores

Online stores have access to their client’s personal information such as names, locations, phone numbers, credit card numbers, and bank account numbers. The leakage of these data can result in heavy losses. Here are some examples:

  • Neiman Marcus, a fashion and clothes online store, had to pay $1.6 million in a data breach lawsuit after a successful cyberattack exposed the credit card data of $350,000 clients 

  • Equifax, in 2017, had to pay $575 million after a cyber security issue exposed the personal and financial information of 150 million people

  • In 2014, cybercriminals accessed Home Depot’s network and stole more than 50 million credit card numbers and 53 million email addresses. The resulting costs of the accident are as follows; $134.5 million Home Depot paid to credit card companies, $19.5 million as payment to customers the breach affected, and $25 million to financial institutions. 

The policy that will take care of the cost associated with data breaches or errors in cyber security is cyber liability insurance. With this policy, the online retailer can pay for the recovery of data and compensation to the parties affected. Also, this policy will provide money for the legal costs of data breach or cyber security lawsuits 

Cyber liability insurance tends to be slightly more expensive for online businesses, with an average cyber liability insurance cost of about $64 a month or $768 a year. However, the smaller your online store is, the more affordable your online store cyber liability insurance quote will be, as it  tends to handle less sensitive information.

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Public Liability Insurance for Online Retailers

Public liability policy in online retail insurance will cover the cost of personal injuries or property damage an online store caused to a third party because of business operations. 

The average small online store/retailer insurance cost is about $43 per month for a standalone public liability insurance policy, which comes out to about $516 per year for this kind of coverage. It’s up to the individual business owner to decide if they see clients in person frequently enough to make this worth it, our recommendation though is to invest in general liability insurance, which covers more than just the public.

Get general liability insurance if you think that public liability insurance is too limited. This insurance provides the same protection but offers additional coverage for advertising injuries, reputational harm, damage to rented premises, and more. 

Compare Online Store Insurance Quotes

Get all the best quotes from leading providers in a click of a button!

Product Liability Insurance for Online Retailers

When shopping for cheap business insurance online retailers typically invest in product liability insurance before anything else.

Disputes with clients over defective products are another danger that online retailers face. Online retailers have liability if ever the product defects injured or caused property damage to the customer.  Again, this incident is costly. Here are some examples:

  • Amazon, the United States’ biggest online store, had to pay $1,000 for the damages customers experienced after buying defective products from sellers

  • Walmart had to pay compensation to injured customers who bought defective Blitz gas cans. The cost of compensation for all customers amounts to $25 million

Product liability insurance is the policy that will pay for the cost of defective product lawsuits customers file. It provides $1 million up to $2 million so that the policyholder can pay for attorney fees, other legal costs, and compensation to the injured persons. Note that product liability doesn’t only cover defective product claims but also counterfeit product claims.


Just like public liability insurance, carriers include product liability insurance in general liability insurance or offer it as a stand-alone policy.

Keep in mind that your product doesn’t have to be a traditional item that you use. Product liability insurance can also cover you if you sell food through your online business.

The average product liability insurance cost for online retailers and stores is about $100 per month or $1,200 per year. However, product liability is mostly included in general liability insurance policies.

Commercial Auto Insurance for Online Retailers

Some online retailers use their personal vehicles to get the stocks from suppliers or deliver products to clients. Personal auto insurance can still cover a vehicle used for business purposes. However, the policyholder will experience increased premiums. 

Vehicles used for business purposes is best covered with commercial auto insurance that offers the following protection:

  • Auto liability coverage

  • Physical damage coverage

  • Emergency roadside assistance

A fully-loaded vehicle is hard to maneuver. That’s why it’s possible for online retailers to cause an accident while driving.  Auto liability coverage sees to it that online retailers won’t incur losses to get injured third parties treated or reimburse individuals whose property got damaged. Furthermore, if the matter is taken to court, auto liability coverage will help pay for the online retailers’ attorney fees and other legal costs. 

A vehicle used for business purposes is very prone to damage. That’s why online retailers’ commercial auto insurance has physical damage coverage. 

Physical damage coverage has two forms – collision and comprehensive. Collision physical damage coverage takes care of costs if the commercial vehicle of online retail businesses was damaged in a vehicular accident. 

Comprehensive physical damage coverage, on the other hand, takes care of damage not resulting from a  vehicular accident.  This one takes care of parts repair or replacement expenses if the commercial vehicle of online retail businesses is wrecked by:

  • Fire

  • Vandalism

  • Lightning

  • Hail

  • Wind

  • Storm

  • Theft

  • Other named perils

The timely transportation of stocks is crucial for online retailers. And if they’re doing the transportation themselves, then the vehicle needs to be constantly running on the road. Experiencing issues can be very problematic, and most online retailers pay a lot of money for emergency roadside assistance. 

Some insurance companies include emergency roadside assistance coverage to online retail commercial auto insurance.  As the name implies, emergency roadside assistance takes care of out of pocket expenses for the following services:

  • Battery jump start

  • Towing

  • Gas delivery

  • Tire delivery and replacement

  • Tire repair

Workers Compensation Insurance for Online Retail Businesses

Most online retail businesses are family-run – meaning that sons, daughters, nephews, and other family members operate the business. In some states, family members are considered employees. As a result, a few online retail businesses decide to get workers compensation insurance.

Workers compensation insurance helps online retail businesses take care of employees. This can be claimed when at least one employee gets sick or injured because of work. 

Through workers compensation insurance, online retail businesses can get injured or sick employees hospitalized and rehabilitated. Moreover, workers compensation insurance also provides an allowance to replace the employees’ lost income. 

Business Stocks and Contents Coverage for Online Retailers

Online retail businesses rely on their stocks to make a lot of money. In the event that fire or other causes render the items in the inventory unsellable, online retail businesses will lose a lot of money. For this reason, insurance companies offer business stocks and contents coverage for online retailers. 

Business stocks and contents coverage reimburses losses if the items in the inventory are rendered unsellable by fire, theft, vandalism, and other named perils. Particularly, this provides money equal to the value of all the items listed in the inventory. 

Online Wholesale Insurance

The exposures in online retail are different from online wholesale. And so, carriers offer online wholesale insurance for those who sell bulk products to businesses through e-commerce. 

Online wholesale insurance offers general liability, product liability, public liability, and cyber liability policies just like online shop insurance. However, it also offers other policies that provide protection from missed shipment, damage to stocks in the warehouse inventory, unpaid deliveries, theft, and employee injury claims. 

Online Store Insurance Cost

  • Online stores pay $56.25 a month or $675 a year for a $1 million general liability policy

  • The cost of cyber liability insurance for online shops is $64 a month or $768 a year

  • Online retailers pay $43 a month or $516 a year for public liability insurance

  • The cost of product liability insurance for online retailers is $41 a month or $492 a year 

For further reference, here’s a table that shows the pricing of the best online store insurance companies:

Cost per Month  Cost per Year Best for 
CoverWallet  $19 $228 Online store insurance quote comparison
Thimble  $20 $240 On demand online store insurance and cheap cyber liability insurance for online stores
NEXT $45 $540 Fastest online retailers insurance
Hiscox $47 $564 General liability insurance for online retailers
Embroker $51 $612 Startups

Best Online Store Insurance Companies

It’s faster and safer to purchase insurance if you know which companies provide the best coverage. Here are reviews of the best online store insurance companies. Read to know their pros, cons, and pricing for a $1 million general liability insurance. 


Hiscox Online Store Insurance

Insuranks rating 9.5/10
Best for General liability insurance for online retailers 
Average cost $47 per month
Year Founded 1901
CEO Aki Hussain
Headquarters Pembroke Parish, Bermuda
Customer Support 1-866-424-8508 and
AM Best Rating A – excellent
BBB Rating A-
Number of Complaints 12

Why Get Insured by Hiscox?

  • 94% of online retailers are satisfied with Hiscox

  • Flexible payment options

Why Take Hiscox with a Grain of Salt?

  • Hiscox doesn’t insure online retailers in the food and beverage sector

  • Only offers general liability insurance for online retailers

Online retailers looking for comprehensive liability coverage must try Hiscox. This company offers liability coverage having more than a $2 million limit. Furthermore, Hiscox provides business resources to help customers make their businesses stable and more profitable. 


Next Online Store Insurance

Insuranks rating 9.5/10
Best for Fastest online retailers insurance
Average cost $45 per month
Year Founded 2015
CEO Guy Goldstein
Headquarters 75 California Ave, Palo Alto, CA 94304, United States
Customer Support 1-855-222-5919 and
AM Best Rating A-  (excellent)
BBB Rating A+
Number of Complaints 13

Why Get Insured by Next?

  • Next insures online retailers in less than 5 minutes

  • Allows you to save 30% on your online store insurance

  • Offers general liability together with commercial auto and workers compensation insurance

  • Free certificate of insurance which Amazon requires online retailers to have

Why Take Next with a Grain of Salt?

  • Currently doesn’t offer public liability insurance and cyber liability insurance for online stores

NEXT offers commercial auto insurance, general liability, and workers compensation insurance for online retailers.  Amazon online retailers benefit the most from NEXT because they can easily get covered through the Amazon prime store. 


Embroker Online Store Insurance

Insuranks rating 7/10
Best for Startups
Average cost $51 per month
Year Founded 2015
CEO Matt Miller
Headquarters San Francisco, California, United States
Customer Support 844-436-2765 and
AM Best Rating A+ – excellent
BBB Rating A-
Number of Complaints 150

Why Get Insured by Embroker?

  • Offers all of the policies online stores need

  • Has resources that startup online stores will find useful 

Why Take Embroker with a Grain of Salt?

  • There is limited information on how Embroker handles claims online stores make

Embroker offers business interruption insurance and business stocks and contents coverage to online retailers. There’s also general liability with product liability coverage. 


CoverWallet Online Store Insurance

Insuranks rating 10/10
Best for Online store insurance quote comparison
Average cost $19 per month
Year Founded September 2015 and acquired by AON at 2020
CEO Inaki Beringuer (former)
Headquarters 101 Avenue of the Americas 18th Floor New York, NY 10013 United States
Customer Support (646) 844-9933
AM Best Rating A ( excellent)
BBB Rating A+
Number of Complaints 158

Why Get Insured by CoverWallet?

  • CoverWallet is the best online store insurance quotes comparison

  • Great rates from top industry carriers

  • Easy policy management

  • Customizable insurance solutions

Why Take CoverWallet with a Grain of Salt?

  • No particular reason to

CoverWallet offers a streamlined insurance solution to online retailers. With this company, online retail businesses can get quotes from different companies and purchase insurance policies online. Policies online retailers can purchase from CoverWallet are general liability, directors and officers liability, cyber liability, and commercial property insurance. 


Thimble Online Store Insurance

Insuranks rating 9.5/10
Best for On demand online store insurance and cheap cyber liability insurance for online stores
Average Cost $20 per month
Year Founded 2015
CEO Jay Bregman
Headquarters New York City
Customer Support
AM Best Rating A+  ( excellent)
BBB Rating A+
Number of Complaints 53

Why Get Insured by Thimble?

  • Thimble Offers on demand policies that take care of advertising injury, commercial car accidents, employee injury, and damage to business equipment

  • Excellent rates 

  • Offers affordable cyber liability insurance for online stores

Why Take Thimble with a Grain of Salt?

  • Customer support is not available through phone

Thimble offers short-term general liability insurance for online retailers that lasts for hours, days, weeks, or months. This company covers customers instantly online. Furthermore, claims can be filed the same way. 

Frequently Asked Questions

I Used Copyrighted Elements for My Online Store’s Design, is There an Insurance That Will Cover Me?

The general liability policy of online store insurance will cover copyright infringement lawsuits if it comes with advertising injury liability. Advertising injury liability coverage is an optional policy in general liability insurance. Some carriers offer it while others don’t. Therefore, it’s best to ask your carrier if you can add advertising injury liability coverage to your general liability insurance. 

What is Business Interruption Insurance? Do You Need It?

Continuing to let consumers visit a breached online store can result in more problems.  And so, you might have to shut down your store’s site temporarily. According to  IBM,  containing a data breach takes 66- 69 days on average.  

Halting business operations will result in a lot of losses without insurance. And so, consider getting business interruption insurance because it will help. 

Business interruption insurance in cyber insurance for online stores will account for the temporary closure of your online shop. This policy gives money equal to your business’s revenue so that you can pay for employee wages (if there are employees), taxes, loans, and mortgages. 

How Much Liability Insurance Do Online Retailers Need?

Online retailers need general liability insurance having a $1 million product liability coverage. General liability insurance might be required for business permits. 

Do Online Retailers Need Business Hazard Insurance?

If such online retailers are planning to get an SBA loan, then the answer is yes. If not, then online retailers don’t need to have business hazard insurance unless they need it for other purposes. 

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