Why Do Online Retailers Require Insurance Policies?

It’s been a banner few years for online retailers. People have happily adapted to doing the bulk of their shopping from the comfort of their living room. Retailers have invested more heavily in their online presence. Even smaller retailers are utilising tools such as Shopify or platforms such as Etsy to sell their stock online to bigger audiences. 

Customers in the UK are projected to spend a total of £141.33 billion on internet shopping in 2021. In 2020, 87 per cent of people made purchases online, with clothing the most bought item, purchased by 64 per cent of online shoppers. While reports show that, in 2019, 38 per cent of UK consumers shopped online at least once a week, with PayPal being the most common payment method for online shoppers..

Independent retailers have seen a surge in 2021 as Brits plan to spend around £8.4 billion over Christmas to support SMEs and local businesses. This marks an increase of around £2 billion in spending since last year. Almost a third (29 per cent) of these shoppers have said they will mostly be buying online, nearly half (44 per cent) stating this is because of convenience, while 35 per cent are keen to avoid crowds at busy shopping centres and 22 per cent are concerned about the risk of catching coronavirus

Mobile shopping has also seen steady growth, with shoppers spending a total of £33.3 billion in 2019 on m-commerce.

Reports show that people will be spending more money on presents this Christmas, compared with Christmas 2020, which was of course spent in a national lockdown. 

Risks for Online Retailers


Like any business, online retailers will face risks. While many won’t have brick and mortar stores to insure, there is still the matter of inventory, customer data and equipment to protect. Commercial insurance is essential for businesses looking to protect their interests and revenue. If something goes wrong, particularly for smaller, independent retailers, without the right coverage it could signal the end of the business.

Commercial insurance helps online retailers mitigate the impact of such risks. Speaking to an insurance expert provides a valuable opportunity to start assessing potential risks, identifying preventable issues which could have a big impact. For expert, impartial advice on insuring your online retail business, speak to Full Time Cover today.

When assessing the need for insurance, online retailers should ask themselves what kind of risks they may face and how they could respond. For example, if your inventory or equipment was damaged or stolen, could you afford to replace it? In many cases, when it comes to working with other service providers such as warehousing companies, there will be contractual obligations to hold certain types of insurance cover, such as liability or property insurance.

Ecommerce businesses should consider the need for the following insurance types:

Liability Insurance


If someone suffers an injury while using or interacting with your product, liability insurance is invaluable in helping businesses cover the costs associated with product liability claims.

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Property Insurance


Where inventory, equipment or other business-related property is damaged, stolen or destroyed, property insurance can help businesses recoup their losses.

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Transit Insurance


When moving goods, most companies will need to invest in transit insurance, to ensure they are covered should something happen to their products while they are being transported. In fact, many warehousing companies will require their customers to invest in coverage as part of their contract.

Cyber Insurance


With the move towards online retail, a big concern is cyber security. Retailers are privy to customer data, including addresses and payment information that will be a target for online thieves and scammers. With cyber-attacks on the rise, impacting all industries, online retailers must ensure they are covered in the event of a data breach or cyber threat. 

While it’s a good time for online retailers, there are still risks and challenges left to face. Supply chain issues are hitting businesses hard across all industries, and a shortage of HGV drivers, combined with uncertainty over border regulations is impacting the transport of goods. Having the right insurance can give companies a measure of assurance when it comes to the smooth running of their business. Finding a company that specialises in commercial insurance, that understands the risks associated with online retail is key to getting the right coverage. As we move towards a more digital world, ensuring your commercial insurance is fit for purpose should be a top priority for all retail businesses.

For advice and guidance on insurance for online retailers, speak to Full Time Cover in today on 0207 923 4191.

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