If you run an online business, your concerns may vary from those of your brick-and-mortar counterparts — after all, you don't have customers visiting your location — and may focus on cybersecurity.
After all, 27% of small businesses reported facing a customer data breach, while 26% experienced a ransomware attack or a denial of service attack, according to cybersecurity firm VikingCloud.
However, your business may still need some of the coverage types any business needs, such as workers' compensation, which is typically required if you have employees. But things like cyber insurance could be a useful addition to protect against things like ransomware and data breaches.
If you're the owner of a small business primarily operating online, here's what you need to know about insurance coverage and the best companies to help you stay protected.
Best business insurance for online businesses
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Best for cyber coverage: Travelers
Who's this for? Travelers offers the business insurance policies you need, including CyberRisk coverage, which can help you recover from things like data breaches and other online attacks. Additionally, the brand's cyber policies come with access to cybersecurity coaching experts who offer actionable advice on preventing attacks and managing the aftermath if you find yourself dealing with one.
Standout benefits: After a cyber event, this policy can also pay to help you strengthen your cybersecurity and computers through expert advice and continuous risk monitoring.
- Offers equipment breakdown coverage
- High ratings from J.D. Power's small business insurance study
- Policies issued and endorsements processed quickly
- Online quotes aren't available for business policies
Best for managing your policy online: ERGO NEXT
Who's this for? If you need to purchase coverage quickly, ERGO NEXT works with businesses of all types, ranging from independent online shops to vendors selling with marketplaces like Amazon. The entire process is available online and you can get your certificate of insurance within minutes.
Standout benefits: ERGO NEXT policies are affordable — prices average $140 per month for business owners' policies (BOP). That falls just below the $147 monthly average in the U.S., according to MoneyGeek.
- Wide variety of policies available and quotes are available online
- Certificate of insurance available online immediately
- Prices start at $19 per month
- Not available in all states
Best for e-commerce: Hiscox
Who's this for? E-commerce business owners, including those who sell on marketplaces like Etsy or Amazon, can get coverage from Hiscox in minutes. The insurer also offers coverage like cybersecurity insurance.
Standout benefits: When you bundle multiple types of business insurance, you'll get a 5% discount.
- Offers directors and officers (D&O) liability insurance, an option not available with every insurer
- Short-term liability insurance available for small businesses, as well as BOP insurance for contractors and freelancers
- Policies start at $22.50 a month, making them a good fit for those wanting affordable coverage
- Not available in Alaska
Best for cyber protection: The Hartford
Who's this for? Businesses that collect personal information from customers could benefit from coverage that would protect business assets if that data is leaked, stolen or lost. The Hartford's data breach insurance, sometimes called cyber liability insurance, can be bundled with other types of coverage and can help with incidents like these.
Standout benefits: The Hartford also offers affordable coverage for BOPs, with an average cost of $141 per month.
- Home-based small business owners can get coverage for property damage, lost income and legal fees
- Professional liability insurance and cyber coverage are available
- BOPs include business income coverage
- Quotes are available easily online, making it possible to shop for coverage
- App doesn't support business policy management
Do I need insurance for my online or e-commerce business?
If you're running a business, there's a good chance you need some level of business insurance. From helping restore your property after a fire to covering employee compensation, business insurance can get your company back on its feet after a setback.
There are several types of business insurance coverage that could be a fit for online and e-commerce business owners, including:
- General liability insurance: A helpful tool for most businesses, this can assist you if you're sued for harm to others.
- Commercial property insurance: Covers any items or spaces you use to run your online operation, from a laptop to a warehouse.
- Business interruption insurance: Helps you replace lost revenue during a covered event, typically including a fire, theft or vandalism, as well as the costs of renting a temporary space or making payroll, loan payments or other costs.
- Business owner's policy: Combines property insurance, general liability insurance and business interruption insurance.
- Cyber liability insurance: Protects your assets if customer data is leaked, stolen or lost in a cyberattack.
- Workers' compensation insurance: If you hire anyone, you'll need workers' compensation insurance for on-the-job injuries — most states require this coverage by law.
How much is business insurance for an e-commerce business?
The exact cost of your coverage will vary with your industry, the number of years you have in your field, your location, the coverage limits you choose and the types of insurance you buy, among other factors. However, there are some averages to keep in mind if you're looking to get a sense of how much you'll pay.
Here's how much customers getting coverage from The Hartford pay on average per month:
- BOP coverage: $141
- General liability insurance: $68
- Workers' compensation insurance: $86
With ERGO NEXT, about 45% of customers spend $45 or less for general liability coverage, while BOP customers spend about $140 per month on average.
Business insurance for e-commerce and online businesses FAQs
What insurance do I need for an e-commerce business?
The types of insurance you need will vary based on your business, including whether you have employees and what equipment and spaces you need to run your business. You'll likely need general liability insurance, which can protect your business assets if you're sued for damages to someone else. You might also need commercial property insurance, which covers any space and equipment needed for your business, as well as business interruption insurance, which can help with lost revenue and other expenses following a fire, theft or other situation. These three coverages can be bundled as a business owners' policy.
Does my e-commerce brand need cyber liability coverage?
If your shop collects customer data online, cyber liability insurance could be a smart move to guard against cyber attacks, data breaches and other situations where you could be held liable for exposing information.
How much does e-commerce insurance cost?
You'll likely pay somewhere between $45 and $70 per month for general liability coverage, or bundle general liability, commercial property and business interruption coverage for a business owners policy for about $140 per month.
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Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of Amazon Prime products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Our methodology
To find the best business insurance for online and e-commerce companies, CNBC Select collected hundreds of data points on more than 10 companies offering business insurance.
When narrowing down and ranking the best providers for business insurance for small companies, we considered affordability data when available, the types of coverage sold, the variety of industries insured, availability and customer service.
We reviewed customer satisfaction ratings from J.D. Power, the National Association of Insurance Commissioners and the Better Business Bureau and considered A.M. Best's financial strength ratings, which measure an insurance company's ability to pay on debts.
We also considered CNBC Select audience data when available, including general demographics and engagement with our content and tools.
Based on these criteria, our picks for the best small business insurance are:
- Best for cyber coverage: Travelers
- Best for managing your policy online: ERGO NEXT
- Best for e-commerce: Hiscox
- Best for cyber protection: The Hartford
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