How to Get the Best E-Commerce Insurance in Canada (2024)

With the internet having revolutionized the ways in which we buy and sell things, more and more people are setting up their own e-commerce businesses. Accounting for over $58 billion in revenues for the year 2021 alone, Canada has the 9th largest e-commerce market in the world.

While it's a huge market, every one of those online businesses comes with its own unique set of circumstances and risks. To that end, it's important for online retailers to guarantee that they and their employees are protected.

Whether you’re new to e-commerce or have been in business for years, we’ll help you understand business insurance for online shops and e-commerce, the best ways to buy it and the associated costs.

What is e-commerce insurance?

E-commerce insurance refers to business insurance for online retailers. It may be specifically designed to meet their needs. You might also hear it referred to as online store insurance or just insurance for online businesses, but these are all referencing the same product.

In most cases, e-commerce insurance will offer coverage for a variety of losses including damage to property, theft of online data, and lost or damaged goods in transit. E-commerce insurance also helps protect against liability claims made against the business in question. That means if there is a lawsuit, legal fees and damages could be covered by your insurance policy. Additionally, e-commerce insurance can be tailored to include renewal costs for website domains and cyber liability coverage for instances such as identity theft or computer viruses. By investing in e-commerce insurance, small businesses can ensure that they are protected from costly financial risks associated with running an online store at an affordable price.

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Why do I need e-commerce insurance?

E-commerce insurance is a must-have for small businesses selling online. Like any kind of business insurance, a good policy will provide protection for you and your employees if things should go wrong. While not always a legal obligation, certain retail platforms such as Amazon that you may require you to purchase a relevant policy. Furthermore, the costs of legal proceedings can be crippling to small businesses so it's always good to play things safe.

A good policy will typically do the following:

• Protect your employees and customers if a product injures them.
• Protect against lawsuits from breach of contract allegations from vendors and clients.
• Protect against data breaches or other forms of cyberattacks that expose sensitive customer data.
• Protect your business against lost, stolen or broken inventory either in transit or at your warehouse/storage facility.

Who needs e-commerce insurance?

The list is long, but if your business sells things online, you probably need e-commerce insurance. And if you do so regularly and have employees, all the more so. For your reference though, here is a list of different types of vendors who fit the bill:

• Amazon Sellers
• Dropshipping Companies
• Ebay Shops
• E-Commerce & Retail Stores
• Etsy Sellers
• Manufacturers
• Shopify Business
• Subscription Companies
• Wholesale Companies

What are the best e-commerce insurance companies?

What is included in an e-commerce insurance policy?

E-commerce insurance policies typically provide small businesses with a range of protection from the various risks and liabilities of retailing online. The types of coverages vary depending on the insurer and the policy you select, but most policies will typically include the following:

Coverage type	Description
Commercial General Liability Insurance (CGL Insurance)	Even though most of your business is conducted online, you may have a location where you and your employees work or a storage facility containing goods for distribution. CGL insurance, also sometimes referred to as slip-and-fall insurance, protects you against the kind of accidents that can happen when interacting with third parties who might allege bodily injury or injury to property.
Cyber Liability Insurance	Cyber liability insurance is essential to guarantee the safety of your business by protecting against data breaches and cybercrime. In 2017 over one-fifth of Canadian businesses were exposed to cybercrime and the number has only gone up since then.
Commercial Property Insurance	Whether you have a brick-and-mortar location, a storage facility or operate from home, commercial property insurance protects your physical location as well as its contents from events beyond your control. This usually includes events such as fires, floods, thefts and other such incidents.It is important to note that even if you are operating from home, most home insurance policies will not cover commercial activities occurring within the insured premises, so an additional policy is advised.
Product Liability Insurance	This insurance protects your business against claims that allege third-party property damage or bodily injury either caused by a product you manufacture or distribute/sell.
Business Interruption Insurance	Business interruption insurance protects your business and its revenue stream when you can’t function as you normally would due to events outside of your control, and usually covers your expenses, payroll and other related financial burdens. While it often features as an add-on, employees business interruption insurance can be an essential part of any comprehensive ecommerce insurance policy, especially if you have employees.

As ever, prices and add-ons vary so it is important to read through your policy carefully to ensure you are getting the coverage you need.

How much does e-commerce insurance cost?

It depends on a range of factors. But in general, policies range from $350-$900 dollars per year for a $1 million general liability policy. Every business is different though, so your unique circumstances should be taken into account before assessing how much you might be liable to pay.

Some factors to take into account are listed here:

• Your claims history
• Your product and its associated risks
• Your number of employees
• Your annual income
• Your location
• Your business assets

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Can I bundle commence insurance with my other existing policies?

Yes, it is possible to bundle commence insurance with other existing policies. In general, you might find yourself creating a bundle consisting of e-commerce insurance with general liability insurance, property and casualty insurance, professional liability insurance and cyber liability insurance among others. This can be a cost-effective way for small businesses to cover all of their potential risks. If you are operating in a particularly risk-prone field this is all the more advisable.

What should I look for in an e-commerce insurer policy?

What you look for in an insurer depends upon your business, its associated risks and what you are selling. You will want to take into account the size of your company, its exposure to accidents and unplanned disasters and any kinds of lawsuits you could face. Like any insurance policy, you will want to look for the most expansive array of protections for the most competitive prices available. And in order to find that, you’ll need to compare quotes from different insurance providers. So don’t be afraid to do your research!

While you are having a look at the marketplace, consider the following factors before signing up for a policy:

• Payment terms
• Policy coverage
• Limits of liability
• Premium and deductibles
• Provider rating and reviews
• Customer service

Do I need e-commerce insurance if I have a physical store?

Absolutely. Having a physical store, location or even a storage facility exposes your business to more kinds of risk, so it is important to have the right kind of coverage. Depending on the nature of your business, you may find yourself better served obtaining a normal business insurance policy with e-commerce add-ons used as needed. But if the bulk of your sales are done online, it's usually best to opt for a policy that caters to this kind of business model. To get an idea of the best kind of insurance policy for your online business, talk to a licensed insurance broker.