The Indian ecommerce industry is growing at a breathtaking pace. According to the Internet and Mobile Association of India, the Indian ecommerce market is slated to touch Rs. 2 Lakh Crore by December 2016. The rate at which the market is growing is also phenomenal – As compared to the 30% growth spurt from 2011 to 2015, the size of the market is expected to double by the end of 2016 as compared to that of the previous year. With a rate of development like this, it is important for the ecommerce businessman to periodically take a step back and review the security of their business. One important question in this context is that of insurance.
While business insurance is a common practice when it comes to brick-and-mortar stores, the same is not necessarily true when it comes to ecommerce and online retail. Brick-and-mortar businesses are always susceptible to various kinds of liabilities, from natural disasters, accidents, theft and intentional/unintentional damages. A prudent businessman, therefore, tries to cover all her bases by making sure that all her assets are insured. For the online business, things are slightly different. There are many reasons for this.
Firstly, ecommerce cannot be restricted to one business model. Instead, we need to look at it as a terrain – it is a collection of various business models ranging from purely online, like drop shipping, to a more overreaching model that involves both offline and online areas. The range of involvement of a business in either offline or online models is therefore extremely subjective, which means that it is difficult to find a single comprehensive insurance policy that would fit all ecommerce businesses. Secondly, cyber insurance as a field in itself is very new and complicated to pin down, which leaves it open to interpretation.
Considering these factors, it is important to decide whether your ecommerce business needs insurance, and to what extent. Let us take a brief look at a few things that would help us decide when your ecommerce needs business insurance.
Types of Insurance Relevant for Ecommerce Businesses
1. Property and Casualty Insurance
This is a basic type of property related insurance policy. This type of insurance covers the physical location of your business from various natural and manmade casualties. Different providers have different terms in defining what property insurance, so it is important to read the terms and agreements carefully while considering policies.
2. Transit Insurance
Transit insurance covers loss or damage to your goods while they are in transit in air, land or water. Some independent logistics providers offer this kind of insurance as a service, while in other cases you might have to cover the policy yourself.
3. Liability/Product Liability Insurance
Liability insurance makes sure that your interests are covered in case someone sues you for negligence. This is important for ecommerce and online retail, because a customer can sue you for lack of service or due to damage caused by a product that you sold. It is important to be covered in case of such eventualities.
4. Cyber Insurance
Although cyber insurance is a broad and emerging field, it is of extreme interest for ecommerce and online retail. Cyber insurance is an umbrella term that is meant to denote policies that cover various aspects of your online interests. Some of them are –
- Data Breach/Privacy Crisis Cover
- Media Accountability Cover
- Extortion Accountability Cover
- Network Liability Cover
Tailoring a Policy
As we mentioned before, it is difficult to find a comprehensive, one-size-fits-all insurance policy when it comes to ecommerce insurance. In fact, even if such policy exists, it would be better advice to tailor one instead. This way, you have better control over your potential liabilities that may be unique for your business. After all, the only person who understands the ins and outs of your business is you.
To know more, get in touch with Browntape. We are India’s leading ecommerce solutions experts, and we are always happy to help!
