What is Insurance in E-commerce?
E-commerce insurance acts as a safeguard for e-commerce businesses. Insurance protects your business from potential risks such as revenue loss. Even though running an e-commerce business has fewer risks than brick-and-mortar stores, insurance can protect you from economic misfortune.
Significance of Insurance in E-Commerce
The main significance of e-commerce insurance is to shelter businesses from financial damage. Here are some of the ways that insurance can help an e-commerce business.
- Provides certainty – E-commerce insurance provides a sense of certainty and assurance to businesses in difficult situations. By providing monetary reimbursement, insurance protects insured companies from financial woes.
- Cash flow management –Insurance will be able to cover the financial liability, having a major impact on the company’s revenue.
Prerequisites of Insurance in E-Commerce
Before opting for e-commerce insurance, companies should consider the cost. Certain factors can affect the cost of insurance an e-commerce business gets. These include:
- How many policies you need
- Business location
- Types of products you sell
- Age and cost of assets
- Any previous claims made by business
- Number of working employees
Use Case with E-Commerce Insurance
Insurance is important in all e-commerce businesses to avoid risks. Suppose an Australian-based company sells home decor products which are fragile and require specific handling instructions. While shipment, the whole batch of orders is damaged, and the financial liability lies on the owner. If the owner has shipping insurance, the company’s cash flow remains the same, and the insurance covers the financial burden.