If you have an online business and are still not sure what kind of Insurance to give to it, in this article, we explain a different type of online business Insurance and provide full guides to enable you to decide which you should choose.
The term “Insurance” came to be as a result of “Risk.” In our everyday activities, we face risks; some of these risks are avoidable or controllable while some are unavoidable or uncontrollable.
Take a look at ensuring your life! Aka Life Assurance, it is unavoidable because death must occur.
Going to sleep at night is a risk because one is not sure if he will make it till the next day.
Risk is all about uncertainty – not being 100% certain of a possible outcome.
The risk we speak about exists in our day-to-day business, as we are not very sure of uncertainties that may occur.
Online business is also not left behind. Although most people neglect online stores to be a risky business, one can wake up seeing his online business “disappearing from the surface of the earth.”
Never say never, I will back up all my statements with facts.
Insurance came into play as an option to control the effect of risk on an individual, Institution, or company.
Before going further, let’s first understand the concept of Insurance.
What is Insurance
Insurance is a legal contract that is represented by a policy, in which an individual or entity will receive full financial protection, repairs, replacement, or reimbursement against certain losses from an insurance company if the insured event occurs.
Although, a certain sum of money known as a “Premium” will be paid on a regular interval by the Individual or Entity before being fully Indemnified, or being in a position to make claims for insured damages.
Insurance for Online Business
In Online Business Insurance, there will be an agreement between the online business management and the Insurance Company.
This agreement will enable the insurance company to protect the online business against the agreed possible risk.
If the insured risk occurs, then the Insurance Company (Insurer) will Indemnify the Online business (Insured) on all insured losses either by paying the equivalent sum of damage, by replacement, or by repair as the case may be.
Now you may be asking “What kind of risk do you need to ensure your online business against”?
Risks An Online Business May Face
Risk does not only affect real businesses nowadays, but even virtual companies are also even more prone to risk.
Online businesses now are involved in several risks by harming their customers via digital means, risks such as spreading viruses or malware in marketing emails sent or even compromising customers’ privacy and customers’ details through an online security breach.
It is unfortunate that these new exposures are not only normal risks but as well, it mean that the online business must not only ensure itself against online threats but also take into consideration its customers site visitors, and users who the effect of risk may fall on.
The risk here may include product liability insurance if they sell goods online, as well as professional indemnity insurance if they offer professional online services.
Risks Online Businesses Should Insure Against
1. Customer Privacy Protection
Consumer Privacy Protection will cover all legal costs and indemnification for all privacy breaches and loss of customer data or information.
2. Hacker Damage
The Hacker damage insurance will cover the cost of repairing and replacing all damage caused by a hacker to a site, network, or database.
3. Breach Costs
The breach cost covers any data recovery and repair costs, that are caused by a breach, be it both physical or reputational.
4. Cyber Business Interruption
This insurance will compensate the online business for all lost profits while it is unable to trade due to a breach.
5. Cyber Liability
Cyber Liability covers all legal costs and compensation for the third parties, which suffer a loss as a result of the online business operations.
6. Cyber Extortion
Cyber extortion will cover the cost of ransoms or forensic investigation if online business data is hijacked or threatened.
Online Businesses Prone to Most Risk
Not all online businesses are so much prone to risk, an online company such as blogging has very little chance compared to eCommerce or online stores, although they can be hacked or hijacked, for such, it is better to have a daily onsite and offsite backup.
If such happens, you can restore the website to the previous state and change your login credentials, making them stronger. Learn how to create a bulletproof password.
Below we listed the type of online businesses that are more prone to online risk.
It is essential to have cyber insurance coverage if you manage any of the listed businesses.
- Online Retailers stores and e-commerce,
- Hospitality Providers such as Hotels & Restaurants,
- Professional Services such as; Accountants, Lawyers, Media & Technology companies,
- Travel Providers and travels agencies and Tour Operators,
- Healthcare Providers such as; Doctors and Dentists plus other Private Healthcare Providers
How Online Business Insurance Works
With insurance, you are in the position to choose what you wish to protect your online business.
After making your choice or choices, your insurer (the insurance company) will then calculate the risk that the events to be insured against will occur.
Based on the calculations, the insurance company will then determine the price you will need to pay as your premium at regular intervals.
Finally, once any of the insured events occur – you can then make your claims, if affirmative, your online business will receive compensation.
The indemnity by the insurance company will depend on the kind of damage. Some damages are settled by financial reimbursement, some by replacement, and some by repairs. All these will all be on the insurance policy.
I hope this article was helpful to you. Please remember to share it with your friends; sharing is caring. If you have any comments endeavor to use the comment section below, we will reply to your comment as soon as possible.
