⏰ Estimated read time: 9 minutes
Running an online business can mitigate some of the risks that brick-and-mortar stores face, like slip-and-fall accidents or physical damage to a storefront. But e-commerce businesses still need insurance.
Most online retailers should have general liability insurance and product liability insurance to protect against risks like customer injury and inventory damage. Some third-party platforms, like Amazon, may require proof of business insurance to allow you to sell using their site.
Here’s what you need to know about e-commerce business insurance and our picks for the best coverage options.
Best e-commerce business insurance options
The right business insurance company for you is one that offers you the best coverage at the best price. NerdWallet recommends getting multiple quotes before choosing an insurer, since costs can vary from one company to the next.
These are our top picks for e-commerce insurance.
Next: Best for Amazon sellers
5.0
NerdWallet ratingNext offers an e-commerce business insurance policy that complies with Amazon’s requirements for sellers clearing $10,000 in monthly revenue. You can get a quote online within minutes. If you buy a policy, you can generate unlimited copies of your certificate of insurance online — which you may need to provide to Amazon as proof of coverage.
You may be able to buy a Next policy through Amazon Seller directly, since it’s one of the companies included in Amazon’s Insurance Accelerator. Read NerdWallet’s review of Next business insurance.
Thimble: Best for crafty businesses
4.0
NerdWallet ratingIf you need to expand your business insurance coverage to comply with the requirements of a contract — like one for a craft fair — you might consider buying temporary coverage from Thimble, which offers coverage by the event or by the month. Thimble offers coverage packages tailored to a variety of craft businesses, including candle-makers, jewelry-makers and leatherworkers.
Thimble also offers an Amazon Seller policy designed to comply with Amazon’s requirements. Read NerdWallet’s review of Thimble business insurance.
Chubb: Best business owner’s policy
5.0
NerdWallet ratingChubb sells a business owner’s policy online for companies that generate less than $1 million in annual revenue. It may be a good choice for e-commerce businesses that store inventory — the BOP includes commercial property, business interruption insurance and extra expense coverage, which can help you recover after a property-destroying accident or disaster. You can tack on data breach coverage, too. Read NerdWallet’s review of Chubb business insurance.
The Hartford: Best for client-facing e-commerce businesses
5.0
NerdWallet ratingThe Hartford’s business owner’s policy offers professional liability insurance as an add-on, which can help protect companies that offer services to clients for a fee. Data breach insurance is available as well. You can get a quote online, but some businesses may have to pick up the phone to buy coverage. Read NerdWallet’s review of The Hartford business insurance.
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What types of insurance do e-commerce businesses and online retailers need?
Generally, most e-commerce businesses should have standard general liability insurance to cover claims of third-party bodily injury and property damage. For online retailers that sell physical goods, product liability insurance can offer specific coverage for claims related to defective or flawed items.
General liability insurance for e-commerce businesses
Typically, general liability insurance policies cover the following:
Bodily injury: Third-party claims of bodily injury as a result of interacting with your business. For example, if a delivery driver visits your home to drop off a shipment for your business and they trip over a broken stair on your front porch, breaking an arm — this policy would cover medical bills, legal fees or settlement costs associated with the incident.
Property damage: Third-party claims of property damage as a result of interacting with your business. If a customer is coming to your home-based business to pick up an online order, and while taking their payment you spill a cup of hot coffee on the table that fries the customer’s cell phone, your general liability insurance will cover the costs to replace it.
Personal and advertising injury: Third-party claims of libel, slander or copyright infringement made against your business. If one of your employees publishes a promotional article on your e-commerce website and makes a false statement about a competitor — and the competitor reads the article and sues your store — this policy will cover any associated legal fees and settlement costs.
Product liability insurance for e-commerce businesses
Product liability insurance helps protect online stores from third-party claims of bodily injury or property damage caused by a product that it made or sold. This insurance can cover physical or property damage as a result of:
- Manufacturing defects.
- Design flaws.
- Failure to provide adequate instructions, labels or warnings.
Most general liability insurance policies include “products and completed operations” coverage, which provides that protection.
But businesses facing greater product liability risks — like those that manufacture or sell products for kids — may want to consider buying a separate product liability insurance policy.
Additional insurance options for e-commerce businesses
Although general and product liability insurance may be sufficient for some e-commerce businesses, others may benefit from some of these additional types of business insurance.
Type of insurance | What it covers | Who needs it |
Financial losses if your property is damaged due to certain weather events, hazards and accidents. | E-commerce businesses that keep inventory in stock or own real estate, like storage or warehouse space. | |
Employee medical expenses for work-related illnesses or injuries. | Businesses with staff. Most states require employers to have workers' compensation for their employees. | |
Claims of error, professional negligence, breach of contract or failure to deliver a promised service on time. | Digital businesses that do work for clients for a fee. | |
Financial losses caused by cyber incidents such as data breaches, ransomware attacks and hacking. | E-commerce businesses that keep customer data on file. | |
Lost income and operating expenses, such as payroll and rent, after a major disaster. | Businesses that also have commercial property insurance. | |
Business property while it’s in transit or while it’s stored at a third-party location. Covers damage that results from theft, vandalism, as well as certain hazards and weather events. | E-commerce companies that ship goods themselves. |
E-commerce businesses looking to purchase multiple types of insurance may opt to bundle coverage through a business owner’s policy, or BOP. Typically, a BOP combines general liability insurance, commercial property insurance and business interruption insurance.
You may find a business owner’s policy allows you to add data breach or cyber liability coverage, as well as professional liability insurance.
For smaller online retailers that only need a few types of coverage, business owner’s policies can be more cost-effective than purchasing multiple policies separately.
How much does e-commerce insurance cost?
The cost of your business insurance will depend on a variety of factors, such as:
- Number of policies you need.
- Extent of your coverage and your policy limits.
- Business location.
- Products or services you offer.
- Number of employees you have.
- Your business assets.
- Previous claims history.
Typically, businesses with higher risk — and those that need more insurance coverage — will have higher costs. Therefore, a home-based e-commerce retailer with limited customer foot traffic will likely have much lower costs than an online business with multiple employees, or one that runs operations through a separate warehouse.
To find out how much e-commerce insurance will cost your online store, we recommend getting several business insurance quotes.
How to get e-commerce business insurance
To get business insurance for your e-commerce store, you can follow these six steps:
1. Evaluate your risks. What kind of accidents, hazards, disasters or lawsuits pose the greatest risk to your business? Is your online store home-based? Do you have employees? Where do you store your inventory, and how do you transport it to customers? Answering questions like these can help you identify the risks your business faces.
2. Decide which types of policies you need. Based on the risks you’ve identified, you can determine which e-commerce insurance policies will best protect your business. General liability and product liability coverage can be good options to start for most online retailers, but additional policies — such as cybersecurity insurance, professional liability insurance and commercial property insurance — can be beneficial as well.
3. Choose how to shop. You have multiple options to choose from when deciding how to shop for your e-commerce business insurance. You can work with a broker, use an online marketplace or contact insurance providers directly. Online retailers may find it easier to opt for either of the latter options, as these can be much quicker and more hands-on than working with a broker.
4. Pick a provider. NerdWallet recommends getting quotes from multiple insurance providers before making a decision. In order to choose the provider that’s best for your business, you’ll want to look at factors such as:
- Policy coverage.
- Liability limits.
- Cost.
- Provider reviews and complaints.
- Customer service.
5. Buy your policies. After you’ve determined which provider is right for your needs, you’re ready to purchase your e-commerce business insurance. Once you’ve purchased your coverage, you can set up your online account, if available, set up monthly payments and learn how to file a claim.
You should also make sure that you know how to contact customer service — and, if you need a certificate of insurance to sell using an online marketplace like Amazon — that you request it from your provider.
6. Keep your policies up to date. You should renew your e-commerce insurance on an annual basis. When your policies are up for renewal, you can reevaluate your risks to determine if you need to change or adapt your coverage. However, if your online store experiences an impactful change before your policy is up for renewal, such as hiring your first employee, you can reevaluate your insurance coverage at that time.
Methodology
Business insurance ratings methodology
NerdWallet’s business insurance ratings reward companies that offer small-business owners reliability and ease of use. Ratings are based on weighted averages of scores in several categories, including financial strength, customer complaint data, shopping experience and customer service. Learn more about how we rate small-business insurance companies.
These ratings are a guide, but insurance policy details and prices can vary widely from business to business and provider to provider. We encourage you to shop around and compare several insurance quotes.
NerdWallet does not receive compensation for any reviews. Read our editorial guidelines.
Insurer complaints methodology
NerdWallet examined complaints received by state insurance regulators and reported to the National Association of Insurance Commissioners in 2018-2021.
To assess how insurers compare to one another, the NAIC calculates a complaint index each year for each subsidiary, measuring its share of total complaints relative to its size, or share of total premiums in the industry. To evaluate a company’s complaint history, NerdWallet calculated a similar index for each insurer, weighted by market shares of each subsidiary, over the three-year period.
Our star ratings consider ratios for both general liability insurance and commercial property insurance. When an insurer sells policies that are underwritten by several different insurance companies, we consider the NAIC complaint ratios of all the underwriters.
