With retail purchase trends shifting from storefronts to e-tailers, e-commerce businesses today are quickly becoming the modern storefronts of the 21st century. But when it comes to tailoring risk management programs, some e-commerce businesses incorrectly assume that their businesses are more insulated, or even immune to liability and potential claims versus their retail counterparts (due to the lack of a physical store). While there may be less “slip and fall” and customer theft exposure, there is significantly increased risk in other areas – the risks haven’t been eliminated they’ve just been shifted. Yesterday’s shoplifter have been replaced by today’s cyber thief.
For US based e-commerce retailers with manufacturers located overseas, product liability is one of the more misunderstood and exposures. As the only US entity to pursue litigation against, e-commerce retailers can be held liable for any bodily injury resulting from their products’ defects and failures. Due to the high volume of online sales, dependency on server “uptime” and volume of credit card transactions processed, cyber threats are the fastest growing risks of concern. With revenues entirely dependent on your website, one breach in the form of a ransomware attack could have severe financial consequences in terms of lost income. In the world of insurance for online businesses, cyber-liability is likely the most concerning large loss threat given its dependency on online sales and the amount of credit cards and personal data that is stored and processed. With the average data breach costs calculated at $100-$200 per client, the notification and legal costs can accumulate quickly. With inreasing FTC oversight and newly published OECD guidelines governing the protection of consumers, Directors and Officers insurance is another intergral part of a wholistic program. This is particularly important for online businesses with a larger number of employees, shareholders or investors, those actively pursuing financing and any e-tailers that make specific claims about their products.
- Apparel, Acessories & Jewelry
- Health & Beauty
- Consumer Goods
- Home, Appliances & Electronics
- Office Supplies & B2B
- Auto & Machine Parts
- Custom & Made To Order
- Resale Sites & Discount Retailers
- Online Professional Services