Online business in the UK is a massively growing market, with online sales accounting for 16.4% of total retail sales in 2017 and 4 in 5 British SMEs now having an online presence. In addition to retail, there are a number of types of online-only businesses including service-based businesses such as writing, coaching, and designing.
As with any sort of business, business insurance is a smart investment for the protection of your online business. Unfortunately, it’s something that many people are quick to neglect. Especially when so many online business owners start out as hobbyists, it can be easy to dismiss insurance as something only a “big operation” or a “serious business” would need. After all, you may not even necessarily deal with customers face-to-face, let alone have a physical shop front where they can injure themselves or be broken into by thieves or vandals.
Does home insurance cover online business?
You may assume that you’d be covered by your home insurance, but this is not the case. Even when you’re using your desktop or laptop computer to conduct your business, your home contents insurance may not cover equipment used for business by default. In some cases, you may be able to extend your home insurance to cover both personal and business use, but this is considered to be a specialist home insurance and you will need to study the finer details in your policy.
Insurance for Online Retailers
If you run an e-commerce business from home, selling products through a third-party online marketplace (such as eBay or Amazon) or from your own e-commerce website, then you most likely keep valuable stock in your own home. (Unless, of course, you’re a dropshipper.) Wherever you keep your stock—be it in a shop, a warehouse, or even your bedroom—stock insurance can help you to recover the cost value should the stock be destroyed, stolen or damaged.
When you’re manufacturing or distributing products, you are responsible for any defects in the manufacture or the design. This includes any food and drink that you may produce in your home, as well as products that you yourself did not manufacture. Online marketplaces such as Etsy allow creative hobbyists to sell arts and crafts that they create themselves, such as clothing, accessories or stationery. If you are liable for any damage or harm caused by a product that you sold, this can quickly turn a lucrative hobby into a financial nightmare. Product liability insurance can help online retailers with any legal costs.
If you don’t primarily work from home, and have a commercial premises that acts as a warehouse for your goods, you may want to consider a shop insurance package that will include contents and stock cover.
Insurance for Online Freelancers
UK freelancers make up 42% of the self-employed, and more and more are turning to online freelancing as an additional stream or their main stream of income, persuaded by the level of flexibility this lifestyle affords them. With the growing number of freelance job sites such as Fiverr, Freelancer, and Upwork, anyone can find contract work online that can be completed remotely from wherever in the world to wherever in the world. Else, you may go the more traditional routes to acquire freelance work. From graphic design and web design, to ghost-writing and transcription services, there is sometimes a risk that something you do may accidentally cause the company financial or reputational damage. A bug in your code, copyright infringement, bad advice… Whichever it is, the company may hold you responsible.
If you provide a service or consultation to paying customers or clients, professional indemnity insurance can help you with the legal defence costs and compensation fees so that you won’t be out-of-pocket if you are sued by a client for professional negligence.
If you run an online business, call us now and we can discuss your insurance requirements!
As an online business owner, it is likely that you offer goods and services to EU residents. As of May 2018, this means that you are affected by GDPR. Read our post for more information: What does GDPR mean for small businesses?