More businesses large and small are moving parts of their operations online due to the COVID-19 pandemic. If you’re getting ready to launch your online store or other operations, business insurance can be one of the most important decisions you make.
According to a recent Associated Press article entitled “As shoppers stay away, small stores seek refuge online”, the most recent government retail sales figures found that online stores and other non-traditional retailers have seen their sales soar 26% from May through June, while sales at in-person locations declined. The article also noted that according to retail consultancy The Navio Group, there has been a 71% year-over-year increase in the second quarter in new stores on the e-commerce website platform Shopify. Similarly, a recent article in Fortune magazine, entitled “Many businesses are using e-commerce for the first time”, cited info from technology insights provider Datanyze. It showed that web hosting platform GoDaddy has seen a significant rise in the use of its e-commerce products. That includes a 48% increase in new paying subscribers from February to April.
Farris Insurance offers a wide variety of insurance carriers, including Chubb Small Business Insurance. They’ve produced a guide to How Much Small Business Insurance Costs for Online Retailers. According to Chubb, the cost of your policy depends on three main factors: what you sell, where you sell it, and what is your claims history.
What Does Your Online Store Sell?
According to Chubb, different businesses present different risks based on the products they offer. An antique market or a toy store may have different kind of risk than a manufacturer of gardening tools. The type of business you are engaged in will determine in part how much your coverage will cost.
Where Do You Sell It?
Chubb also notes there are several factors regarding where your business is located and what kind of space you operate in. There may be a difference in risk between business in a rural area and one in a more densely populated area. That’s especially true when it comes to things like theft, property damage, liability, and crime rates. For outdoor-based businesses, the weather may even be a factor. Whether you allow customers into your place of business or you are an online store only can also make a difference.
What is Your Claims History?
Chubb also notes that an individual or business’s previous claims can also be a factor. New businesses typically do not have a history of insurance claims. But an existing business that been operating for some time and is expanding its operations to an online store may have previous claims that become a factor.
Insurance pricing can vary based on the factors above. Other factors to consider may include which specific coverages, or endorsements, the policy includes, and the amount of coverage, or limits.