E-commerce Business Websites? – Insurance Risks Involved
E-commerce Business Websites: E-commerce and the Insurance Label? –
There is much debate over the conversation of E-commerce in the insurance industry.
This comes in light, of new cyber-attacks, and the online growth of the
online marketplace for businesses.
With online business developments, there is more of a need for a
complete e-commerce insurance package.
So, if your business has Commercial Lines Property and Casualty coverages,
but also needs a comprehensive e-commerce package, read on.
What is E-commerce Insurance protection?
This question depends on the size of your business and operations.
Meaning, the amount of product, and to what degree of production,
are elements that can be considered in the business description.
For example, if you are a small business insurance owner, you would purchase a
BOP or business owner’s policy.
E-commerce Business Websites: –
General Insurance Package
This type of insurance package combines two types of insurance options,
• general liability
• property coverage.
Gaps in Coverage – The Insurance Breakdown
However, this commercial package does have some gaps in coverage,
which could expose a business owner, to unforeseen risk and exposure.
So, if a customer should slip and fall in your place of business, while shopping,
the liability portion would kick in on this policy type.
This coverage would help to pay for medical expenses
that occurred because of the slip and fall.
Other Risk Coverage and Policy Structure?
Each business owner’s policy or BOP,
is a complete insurance contract, between two parties.
This policy structure is very similar in
policy structure to that of other insurance policies.
There are many different insurance
components for this type of policy structure.
However, the main 3 pillars of this foundation are as followed:
• Declarations page to the Business owner’s policy
• The coverage forms
• Required policy endorsements
Policy Coverage Form Illustration
The BOP insurance policy would also cover in the
event of damage done to your businesses’
windows due to a vicious wind storm.
The property that was damaged in this event,
would be covered under this type of insurance policy.
Ecommerce Business Websites – E-commerce Operation?
Under an e-commerce operation, it compares differently
than a traditional business operation.
Online businesses are exposed to many
online threats and possible outside external factors.
Therefore, an insurance policy was formed with
this type of insurance coverage in mind.
Standard vs. Special – Property Coverage Form
When speaking about BOP policies, it is important to note, that property
coverage must be written on 2 types of coverage forms.
These 2 types of insurance forms are:
• Standard – basic
• Special – open perils
The difference of Insurance Forms
There is a major difference between the two coverage type forms,
this difference is the cause of loss form.
These two forms have very similar,
it not identical coverage descriptions and applications.
The difference lies in the actual risk or loss evaluation.
So, even though these two forms may have like, or identical coverage options,
it’s the application process to risk, that the true
difference needs to be made, mention and noted.
The actual type of risk needs to be examined in more detail
to better understand the process of the actual risk coverage.
So, for example, if the risk coverage type
was written on a basic or standard loss form,
the type of risk coverage would be limited.
Meaning, not all risks would be covered under
this type of loss form, due to policy regulations.
The opposite effect would hold true for the counterpart of the basic or standard form.
This form is labeled as a special or open loss form.
As you can tell by its labeled description “open loss form”, it sounds as though it
would encompass more insurance risks.
You would be correct in this assumption since an open loss form,
does include more insurance risk coverage.
So, if a business owner is looking to have a more inclusive BOP, business owner’s policy,
then including this open form would be recommended.
You can always compare the coverage premium amount for the two-loss forms.
This way, you can make a sound determination
Business Insurance – Add on Coverage
Just remember when comparing both business insurance loss forms,
that nothing is permanent.
This means, that even though you purchased
your insurance policy with certain loss coverage,
you are not set in stone with these options.
You do have the freedom as a business owner,
to alter your active policy through endorsements.
What acts of freedom do we mean when discussing your business owner’s insurance policy?
Meaning, if you do decide to choose a lower premium policy, for example, you’re
just starting an online business, you can always consider the
bare minimum insurance risk coverage.
Once your business operation starts to gain momentum and profits,
you can always increase or change your policy options.
This policy change is normally done through endorsements.
For example, you can always choose
between either policy form, special or standard.
Insurance Coverage Gaps
Both types of policies forms, special or standard, have the same great notion
of other coverage as you may have learned.
This is great news for the policy in its entirety,
the Standard Business Owners Policy.
Missing Insurance Link or Gap?
There is an important detail in coverage when discussing a business owner’s policy.
This policy lacks one important component if you are a business today,
operating online, e-commerce risk insurance.
The BOP, or Business Owner’s policy, does, however, cover for
e-commerce risk, but only a few risks are covered.
This is where the gap in coverage occurs,
and why a more comprehensive coverage policy is required.
This is because under an e-commerce operation,
certain risks and challenges
are associated, and need certain types of protection.
Data Security – Sensitive Information
This type of protection can come in the form of
actual data retrieved from the business owner from clients.
This data is stored from:
- both online software capabilities,
- and saved information and files, on hardware devices.
This is a significant point of coverage and risk assessment,
under an e-commerce insurance policy.
E-commerce Business Websites – (Sensitive Online Business Platforms)
This is because, online businesses keep sensitive client information, including:
• past and prior transactions,
• communications and
• online interactions
This sensitive data and client information
should always be held on a secured database.
This will serve for:
- optimal business and online safety,
- and future online protection.
However, even with all the online safety measures,
breaches are known to still occur.
Risk Insurance Management
Risk management, just as it sounds,
the management of risk in the equation of insurance coverage.
Therefore, risk management is paramount and key,
to this equation of insurance coverage and protection.
How can you reduce a possible security breach?
Action Plan – Insurance Risk Reduction
With most things in life, being proactive and understanding all the elements that
can affect your business, in relation to risk loss and exposure, is first and foremost.
This will pave the way into building a secure online business platform.
This will reduce any potential threats and/or harm.
For example, by having an action plan in place, before a security breach,
all parties involved will feel comfortable.
This is because the event was discussed, an action plan was devised,
and everyone involved in the meeting will
implement these tactics in their business plan.
Online Security Business Breech
Having an actionable plan in place is key to
taking charge of exposure and risk reduction.
This is because, in the event of a security breach, the volume of the leak could be minimized,
or if not entirely, prevented.
This progression would occur because through the preparation stage of
preparing for a potential risk or exposure, crucial safeguarding
would come to light and become apparent in the operations.
This is important because, in this light, areas of improvement or
safety advancement is observed and outline for execution.
Having a proactive plan in place helps everyone involved in the business operation to
be on the same page.
This is what business accountability is all about,
being prepared for the unexpected.
Anticipating certain events based on the business owners plan
is key to understanding this process.
Role of Accountability
So, for example, if a certain role is not being performed to the duties assigned for each role,
then business accountability takes precedence.
This means as an online business owner, you should be held
accountable for each risk and online transaction.
This is the liability portion of this type of risk, since the online business,
assumes this from the immediate point of sale.
What about business interruption?
This insurance coverage is crucial to many online businesses,
working in technology and e-commerce.
This is because, these type of business, rely on third-party companies to carry out their services.
For example, not having internet service, would be a
great illustration of a vital 3rd party company.
If the internet provider company has a server or internal malfunction,
causing all their customers to go offline,
then this would be considered a business interruption.
Third party talks
So, if you are relying on third parties for business and operation functions,
such as internet service or shipping, then you understand,
the importance of having some type of business interruption insurance.
This coverage would assist in the business owner’s functions,
such as recuperating any losses from having the business down.
This type of coverage can assist if a business owner is experiencing a prolonged problem or issue,
stopping business operations.
(Ecommerce Business Websites) – Concluding Thoughts:
There are many areas online businesses need to examine prior and during business online operations.
So, no matter if you are deciding to start an online business, or already have one in operation,
being proactive can be a deciding factor whether you achieve long-term success or not.
This business stance, in an ever-changing marketplace, can ensure business longevity while building
a solid foundation for future success. So, make sure you cover all areas of exposure and
consider risk management as part of your online business portfolio.