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The Complete Guide To Online Retail Insurance

By Maria Hickey on June 16th, 2022

Even if you don’t run your retail business from a traditional brick-and-mortar physical shop, you still need to cover your online retail business with good quality insurance.

This guide will examine why you need to have online retailer insurance in place and what cover you should consider getting to ensure your business is protected from the most common risks you may face.

What Is Online Business Insurance?

Online business insurance helps to protect your business from losses suffered from legal claims. For example, a customer may sue you for compensation because they had a problem with a product you sold them online.

In most cases, you will still need to cover your online business with protection from professional indemnity insurance, public liability insurance, and employers’ liability insurance if you employ staff as part of your online business operation.

Why do I need online retailer insurance in the UK?

Insurance is an essential element for any UK business, but if you run your business online, it doesn’t mean that you are free of the many risks that a physical shop owner will face.

You will need online retail business insurance to protect you against the everyday risks of running your online business. This insurance covers you should you make any professional mistakes, if your stock gets stolen, a customer gets hurt or injured, or their property gets damaged through using your products.

For example, online product liability insurance will cover you should a customer buy a skin moisturiser from your online shop, and then their skin breaks out in an allergic rash, or the natural hair treatment you sell turns a customer’s hair green. You could be liable to pay their compensation claim.

If you keep your stock stored away in a warehouse, and sell products online, it is likely that your customer interactions will be virtual. This means your public liability risk will be low.

However, you may still need to have public liability insurance because you or your warehouse staff may come into contact with the general public or people that pass by your warehouse premises. This means you could still be held liable for any accidents and injuries in or near your warehouse.

What Does Online Business Insurance Cover?

Here is an overview of the business insurance you should consider when setting up your business online:

Stock Cover

Protecting your inventory is an important consideration for online retail business owners. You wouldn’t have a business to run if you didn’t have products to sell. Stock insurance will protect your assets while being stored before you sell them to your customers.

Should your stock be stolen or damaged by a burst pipe, flood, or lost in a fire, your stock insurance will cover the cost of replacing your lost inventory based on the cost price of your stock.

Losing your stock can also have a knock-on effect for your business. Any pause or interruption in trading can mean losing customers to your direct competition, making it harder for you to win them back. This is why having stock insurance cover is essential to help minimise your downtime and enable you to get back up and trading again.

Employer’s Liability Insurance

You may or may not be legally required to have employer liability insurance. This depends on your particular business, but if you employ staff, then it is a legal requirement to have employers liability insurance.

If you are a sole trader and the only person working your business, you won’t need to worry about employer’s liability insurance until you start hiring staff. Many sole traders plan to grow and expand their business over time, but they need to ensure they have the proper insurance cover to protect themselves and their staff once they start hiring.

This insurance protects you in the event of any staff-related insurance issues. You can scale this cover to suit the number of staff you have, so if you hire more staff in the future, you can increase your employer’s liability insurance to meet your changing needs.

Public & Product Liability Insurance

As your will be selling retail goods online, you will need product liability insurance cover for your online retail business. In most cases, you can arrange to have both product and public liability cover rolled up into one policy with your insurance provider.

This can be more convenient than having separate policies to manage, especially if they are taken out at different times with individual expiry dates. Building an online retail insurance policy that includes all the elements you need for your business is much simpler to understand and manage, especially if you ever need to make a claim. You will be using the same insurance provider for all your needs.

Product liability insurance covers you should any of the products you sell online causes any injuries to your customers or damages their possessions. You could be held liable for damaged caused by your product, and your product liability insurance will cover the cost of compensation claims and legal fees.

Even if you sell products you haven’t made yourself, such as white-label goods branded with your company logo, you could be held responsible for compensation claims.

Many online retailers sell a vast inventory of goods manufactured by others. Suppose you cannot trace the original manufacturer, or their company goes out of business. In that case, you could still be held responsible for any of the products you sell through your online company.

Digital business insurance

Your online retail business is not just a website. There is no one-size-fits solution for protecting your business from risks. Think about how you operate online. You will have your main shop front website, social media pages, and business blog.

Your online presence can leave you open to potential business risks such as online hacking to steal customer data, such as their credit card details or personal ID.

You also need to be careful about what content you include on your business website. For example, be wary of posting images and photographs without the owner’s permission. The original image owner may sue your business for copyright infringement and using their photo without their consent.

This is why you need digital business insurance. It helps protect your business from all sorts of issues that can lead to paying out costly claims.

Do I Need a Specialist Provider of Online Business Insurance?

It can help to source your retail business insurance from a company that specialises in creating bespoke business insurance policies to meet the needs of business owners, such as Brisco Business insurance.

It can be challenging to find an off the shelf solution that will suit your needs from a standard insurance supplier, as most ready to go policies are built for domestic customers rather than business customers.


At Brisco Business Insurance, we know that it takes a lot of time, effort and commitment to build up your own online retail business. We can take care of your insurance needs, so you are free to concentrate on your business. Your business deserves choice, compare quotes for business insurance the best insurance for your needs.

Maria Hickey

For more than 20 years, Maria has worked in the insurance sector and has extensive underwriting and customer service expertise. Maria is an experienced Senior Underwriter with a particular specialism for shop, office and surgery related insurance.

All articles by Maria Hickey

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