What Digital Small Business Should Consider For Insurance

The digital-driven market is ever-expanding and will continue to do so. It will not be wrong to say that the pandemic would have had devastating effects on the human psyche, if not for the internet. Digital kept many business operations going during the lockdown phase. Ecommerce companies and digital content platforms also experienced a surge in consumption rate, as people were confined to their homes. 

By some estimates, in about eight weeks of lockdown, digital adoption was propelled five years forward. While the banking and entertainment sectors topped the charts, grocery, apparel, and utilities followed closely. Nearly 51% of internet users switched to more streaming services online to fight boredom and anxiety. For example, the online video streaming platform, Netflix saw about 16 million more subscriptions in the early days of the pandemic. 

Small businesses also didn’t shy away from developing robust strategies to survive the crisis. While brick-and-mortar stores anticipated a steep fall in revenue (about 50%), digital small businesses expected only about a 21% reduction. As the digital economy is considered more crisis-proof than offline businesses, they are probably in a better position right now. It further cements the idea that digital adoption seems to be the future of business. 

But digital adoption has its set of challenges

The online world is still pretty unregulated and unchartered. For large enterprises, the situation is a tad less risky. They have in-house experts and various protective measures in place to minimize cybersecurity and other similar threats. However, not many small digital business owners are aware of the risks of looming infrastructure risks, data breaching, and systemic fraud being some of them. 

One shouldn’t ignore the fact that these businesses deal with a lot of sensitive data from customers. Any breach may jeopardize customer loyalty and even cause grave financial repercussions. On top of that, digital small businesses also have more liability than their offline peers. Regarding any complaint, they may face troubles regarding legal expenses. Insurance can help save small business owners in such cases. 

But what should these businesses consider for insurance?

Securing all aspects of the digital business

It is not only the website that needs protection but also the various channels used for interacting and communicating. Emails, social media, and other digital platforms used in the business need to be adequately protected. Personalized business insurance can help against malicious hacking attempts, data breaches, and theft. It can also help the owners manage copyright claims seamlessly. If a client or customer files a lawsuit for breach of contract, insurance can come to your rescue. Have a detailed discussion regarding the need for proper insurance in these areas.

Types of insurance these businesses need the most:

When it comes to insurance, small business owners are often confused or simply clueless. First of all, they need to know what coverage will protect their online business from all sides:

  • BOP for online businesses 

Business Owner’s Policy or BOP can provide you with general liability coverage, business income, and commercial property coverage. It can form the base of your plan of running a risk-free business online. This apart, it will also protect against risks of physical damage, injuries, and liabilities that your business may face in real-time. 

  • Product liability coverage for digital retailers

Although you have run your products through various screening stages before launching them online, accidents may happen during usage. The product liability coverage will help protect you when/if your products/services hurt anyone. If it’s found out to be a defect in the product, you can be sued. Product liability insurance will pay for your legal expenses then.

  • Data breach insurance 

By far, this is the most important insurance that all online businesses should consider buying. It will help protect business reputation by providing the protection needed to effectively handle data theft or cybersecurity failures. Customers pay online for your services/products by using sensitive credit/debit card data. Any breach can jeopardize their financial security, thus hampering your business reputation in the process. The data breach insurance can help businesses minimize the damage and address customer concerns too. 

  • Professional liability coverage

This can protect digital small businesses, like online consulting firms or financial services. For example, if you are working on a sensitive digital process and end up exposing them to cyberattacks due to some error, you may face the prospect of legal suits. Professional liability insurance will pay for such extra expenses. 

Some other coverages that can offer 360-degree protection to digital small business are commercial auto insurance (for delivery services) and worker’s compensation insurance (for online retailers). Opting for these may give you the peace of mind you need to run a successful business online. 

The best way to choose insurance to secure your digital business is to find a reliable and knowledgeable insurance agency. Let the agency explain each nuance of the coverage and its benefits to you before you buy it. Customization is the need of the hour, as your needs are unique to you. Hence, study and observe before making any decision about insuring your online business.