Why do Shopify sellers need insurance?
Though Shopify doesn't require you to carry insurance, selling on the platform exposes you to risk. Business insurance can pay for your legal costs if you're sued by a customer, inventory losses after a fire or storm, and recovery costs in the event of a data breach.
Though it's not required by Shopify, sellers should carry product liability insurance for financial protection against lawsuits related to their products.
If one of your products injures a customer or damages their property, your business could be held responsible. That could lead to costly attorney's fees, a settlement, or a court-ordered judgment—even if you weren't responsible for the product defect that caused the harm.
Product liability insurance helps cover all of these costs. It's recommended for retailers, manufacturers, and wholesalers, as any business in the supply chain can be held liable for a faulty product.
Examples of product liability lawsuits include:
- Design defects, such as a top-heavy bookcase that tips over and injures a child
- Manufacturer defects, such as a loose screw on a wall-mounted TV cabinet
- Marketing defects, such as improper assembly instructions that lead to an injury
A general liability insurance policy, also called public liability insurance, usually includes product liability insurance. You might also want to consider product recall insurance to protect against costly product recalls. In addition to carrying coverage, it's important to manage your risks to avoid a lawsuit and keep your premium low.
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FAQs
Though Shopify doesn't require you to carry insurance, selling on the platform exposes you to risk. Business insurance can pay for your legal costs if you're sued by a customer, inventory losses after a fire or storm, and recovery costs in the event of a data breach.
Do I need business insurance for a Shopify store? ›
Shopify store owners don't have to have business insurance, but it's a good idea. Business insurance covers a lot of risks, like product liability, cyber threats, and business interruptions. Buying insurance is based on how much your store costs and what kind of store it is.
How much does ecommerce business insurance cost? ›
The cost of general liability insurance for e-commerce companies is between $23 to $31 per month, according to Next Insurance. Your own e-commerce insurance cost will depend on factors such as: Type of e-commerce store. Business revenue amount.
Is cyber liability included in general liability insurance? ›
Crucially, a cyber liability policy protects your business beyond the basics of a general liability policy, which on its own typically does not protect against the operational, legal, and other costs arising from cyberattacks and data breaches.
Do small businesses need cyber insurance? ›
A cyber attack can be costly – the losses incurred from suffering one could mean that you'd have to go into debt to cover the cost of getting your business back up and running, or even shut your doors completely. Cyber Insurance mitigates risk by helping to pay the cost for your business to recover from an attack.
What policies do I need on my Shopify store? ›
Adding store policies
- Return policy.
- Privacy policy.
- Terms of service.
- Shipping policy.
- Legal notice.
- Subscription policy.
Do you need an LLC to start a Shopify store? No, you do not need an LLC to build a Shopify store. There is no legal requirement for you to have an LLC in order to open a Shopify merchant account as the company does not require you to have proof of business registration.
Do I need business insurance if I sell online? ›
Ecommerce businesses need insurance to help them recover any financial losses from damage that occurs during business operations. Most businesses can find themselves in need of insurance from unexpected issues that crop up.
Do you need a tax ID to start a Shopify store? ›
You need a sales tax ID number only if you determine that you need to charge taxes in a particular state.
How much does a 2 million dollar business insurance policy cost? ›
How much is a 2-million dollar insurance policy for a business? On average, an insurance policy that offers coverage for up to $2 million can cost about $30 a month in premiums.
How Much Is a $1 Million General Liability Insurance Policy? A 1 Million Dollar General Liability Insurance Policy can cost $40 Per Month up to $150 Per Month for most small businesses. Of course, the cost of general liability insurance varies depending on the size of the operation and coverage amounts selected.
What is the best insurance to sell online? ›
Commercial General Liability (CGL)
Whether you sell widgets or gadgets, you should consider carrying a CGL policy. Commercial General Liability is a standard insurance policy that can protect you and your business from liabilities involving bodily injury, property damage, or personal and advertising injury.
What does cyber insurance not cover? ›
Cyber risks excluded from cyber insurance coverage
Human error: Any cyberattack caused by human error by an organization's employees. Insider attacks: The loss or theft of data due to an insider attack, which means an employee was responsible for the incident.
What is an example of cyber liability insurance? ›
“Cyber liability insurance can provide coverage for costs and expenses related to a number of cyber threat scenarios including, for example, suspected network intrusions and cyber extortion threats, data breach, network or security wrongful acts, denial of service and network outage situations,” says Bryan Smith, vice ...
How to qualify for cyber insurance? ›
Here are six examples of cyber insurance requirements your business should be ready to meet.
- Strong security controls. Most cybersecurity insurers will want to know about the state of your security controls. ...
- Multifactor authentication (MFA) ...
- Incident response plan. ...
- Network security. ...
- Encryption. ...
- Security awareness program.
Shopify provides robust security measures, including SSL encryption, protection against DDoS attacks, and adherence to PCI DSS compliance standards throughout the platform.
Do I need a Privacy Policy on my Shopify website? ›
If you run a Shopify store or you're planning to set one up, you need to create a Privacy Policy to let your customers know how you use their personal information.
Is cyber insurance really necessary? ›
Summary: For businesses wondering "when do you need cyber insurance?" the answer is now. Cyber attacks continue to grow, with the average attack costing a company as much as $200K. Commercial cyber insurance or data breach insurance supports the business's efforts to recover in the event of a cyberattack.
Do I need to be PCI compliant if I use Shopify? ›
All stores powered by Shopify are PCI compliant by default so you can keep payment info and business data safe.
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