E-commerce Insurance

If your business operates online, you face a unique combination of risks. E-commerce insurance protects you from a range of risks that you are exposed to as the owner of an e-commerce store.

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What is E-commerce Insurance?

It is an important coverage designed to protect e-commerce stores from the most common risks they face, which are different from the risks faced by brick-and-mortar small businesses and retail stores, but have the same consequences in a courtroom.

Most common risks include hackers stealing credit card data, damage to e-store inventory and products injuring a customer.

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E-commerce growth in Canada

Great news for online retailers – e-commerce continues to grow strongly with no signs of slowing down:

E-commerce revenue in 2018: $53.4 billion.
Expected growth in the following years: 10% per year.
72.6% Canadians purchased something online in 2018.

E-commerce continues to grow as more and more people are buying online rather than visiting a brick-and-mortar store, and the trend isn’t just limited to millennials.

What risks does an e-commerce store face?

Risks are unavoidable. As an e-store owner, these are some risks you should prepare for:

Hacked data – Canada ranked third for frequency of cyber breaches in 2018. 70% of the targets were small businesses.
Injured customers – if a product you sold injures the customer, you could be sued, even if you are not the product manufacturer.
Inventory damage – do you store your products in a warehouse or in your garage? damage to business inventory is not covered by a homeowner’s policy.

What is covered by e-commerce insurance?

These are the most common coverages that you will need and that will be covered by your insurance:

Cyber security coverage – protects you in the event that hackers breach your security and steal your customers’ personal and financial data.
Product liability coverage – if a child chokes on your product and the parents sue, product liability coverage will cover medical and legal expenses.
Commercial property coverage – if a fire wiped out your inventory, you will be insured for the cost of your damaged products.

How much does it cost to be insured?

Insurance cost will vary from business to business. Major factors that are taken into account are sales volume, type of products sold, value of inventory and where products are imported from. High risks products like fireworks can hike up the premium, as will expensive inventory such as luxury watches.

Considering these factors, insurance premiums can start as low as $500 per year for an e-store that sells a few thousands dollars worth of products every month and go up steadily for businesses that sell more and store more.

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Popular E-commerce Products Sold in Canada

These are the most popular products sold on Canadian E-commerce stores:

Fashion – clothing
Jewellery
AR/VR headsets and equipment
Online learning platforms

Electronics
Grocery and food
Healthy pet snacks
Drones

Sporting gear
Office supplies
Cell phone accessories
Cosmetics

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Common scenarios where E-commerce Insurance is useful:

Hackers breach your systems and steal your customers’ personal and financial data. E-commerce insurance with cyber liability protection will cover you.

A fire wipes out all the inventory you had stored in your garage – E-commerce insurance with a commercial property policy will cover you.

A child chokes on a product that you sold and the parents sue – you would need a product liability policy to protect your business.

Frequently Asked Questions about
E-commerce Insurance

Do I need to carry insurance on my stock if I am operating by dropshipping?Khaled Bashir2019-06-07T17:25:03-04:00

Do I need to carry insurance on my stock if I am operating by dropshipping?

Confirm with your supplier if they are responsible for insuring inventory. However, it never hurts to carry this coverage in the event that you get dragged into a claims scenario. If you have multiple suppliers, it can be difficult to keep track of which suppliers have insurance and which don’t. It is highly recommended that you add Property Insurance to your insurance policy to manage your risks.

Do I need Cyber Liability Insurance if I am operating online?Khaled Bashir2019-06-10T15:29:53-04:00

Do I need Cyber Liability Insurance if I am operating online?

It is recommended that you protect your business operations with Cyber Liability Insurance if you are selling products online as online transactions usually require an exchange of financial information over the internet. Many online retailers also store customer data to complete and ship out orders. If any third party data on your systems are stolen or damaged in a cyber attack, you may need Cyber Liability Insurance to cover the damages. Cyber attacks are becoming increasingly common. According to StatCan, one-fifth of all Canadian small businesses were targets of cyber attacks in 2017, and the number has only gone up since.

Can my online business be held liable for selling a product that caused injury to a customer, despite the product being manufactured by a different company?Khaled Bashir2019-06-10T15:31:04-04:00

Can my online business be held liable for selling a product that caused injury to a customer, despite the product being manufactured by a different company?

Yes, it is possible that you can be held liable for products you have sold even if you did not manufacture the products. Make sure that products liability coverage is present in your insurance policy. Take a thorough look at your inventory to determine if you sell products that are highly likely to cause injuries, such as products for babies and toddlers. Whenever possible, do business with manufacturers that already carry an insurance policy.

What our customers say about us

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Learn why thousands of Canadian small businesses trust their insurance to us.

Zensurance has been the easiest company I’ve ever received insurance from. Simple, painless and responsive, look no further than Zensurance for your company’s insurance needs.
★★★★★

Chris Chan, Dwello

The Zensurance team was responsive, professional, and knowledgeable. Zensurance knew exactly what we were asking for after a few minutes on the phone. I would highly recommend them for liability insurance especially if you’re not sure what you need to protect your business.
★★★★★

Melissa Kwan, Spacio