How Much Does E-commerce Business Insurance Cost? (2023 Rates)

Thang Truong
Thang Truong
Updated on:

Running an e-commerce business can be tricky. You want to make as much profit while avoiding issues that can come with it. One way to do that is to get the right insurance policy. Some business partners like Amazon or Walmart actually require you to have insurance coverage for your e-commerce business before allowing you to sell on their platforms.

In this article, we will discuss the cost of different coverage for e-commerce business insurance. The article also contains other helpful information you may need about the coverage.

How much does e-commerce business insurance cost?

The average cost of a general liability insurance policy for an e-commerce business is $28 per month, or $336 per year. Most e-commerce businesses pay between $280 and $900 a year on a $1 million general liability coverage.

All e-commerce businesses should have general liability insurance. Some may need other coverages as well. If you add more coverages, you will pay more for your e-commerce business insurance. Below are the average costs of different coverages for e-commerce businesses.

E-commerce business insurance coverageAverage costs
General liability insurance$28 per month
Product liability insurance$25 per month
Cyber liability insurance$67 per month
Commercial auto insurance$92 per month
Workers comp insurance$52 per month per employee
Commercial property insurance$113 per month

These are just the averages. You will get different rates from different companies. Be sure to shop around with a few companies or work with a broker like Simply Business, InsurePro, or CoverWallet to compare several quotes to find the cheapest one for you.

E-commerce business insurance quotes

Many insurance companies offer e-commerce business insurance. However, only a few offers quotes online. We have tried to get quotes from several companies and below are sample quotes we got from three top companies: Simply Business, NEXT, and CoverWallet, for a small e-commerce business located in Houston, Texas.

We post the quote screenshot below for your reference. It is relatively easy and straightforward to get quotes from these companies. Each should take just about 10 minutes or less. We prefer Simply Business, InsurePro, CoverWallet, and NEXT the most for different reasons:

  • Simply Business offers an easy and fast quoting process. They offer several quotes online, making it very easy for us to compare these quotes side-by-side to choose the best and cheapest one.
  • NEXT offers the best digital experience. However, their quotes are limited to only general liability insurance.
  • CoverWallet offers quotes comparison from the top insurance companies.
  • InsurePro is the only company offering quotes for short-term coverage.

The following are some sample quotes obtained from top insurers:

What factors affect the cost of e-commerce business insurance?

The following are the factors that may affect the price of your business insurance. 

Potential risk

The larger your risk, the more insurance coverage you will need, resulting in a higher premium. If you operate a small eCommerce business that manufactures and sells items from your home, your insurance expenses will be far cheaper than those of a large eCommerce company with workers and warehouses.

Number of coverages you need

Your overall cost will also depend on the number of insurance you need. For instance, a startup e-commerce firm may not get business interruption insurance until it has significant cash flow. In contrast, a mid-to-large-sized company with a fully operational warehouse and several staff will need to protect its premises.

What you sell

If you sell valuable items, you will pay more for your coverage. If you manufacture and sell more risk-prone products such as food or baby products, you are exposed to greater risks than selling paper towels or paper cups. You’ll need higher coverage and your premiums will be more.

Other important factors include:

  • Annual business profits: the higher your profits, the higher your premiums 
  • Business assets: businesses with more valuable assets will need to pay more to cover their assets.
  • Claim record: if you have had many insurance claims in the past, you will likely pay more for your insurance.
  • Number of personnel: the more employees you have, the more you will pay for your insurance.
  • Location: companies in busier urban areas tend to pay more for insurance. 

Types of e-commerce business insurance coverage and their costs 

The following are the main types of insurance policies eCommerce businesses may require and their cost. 

General liability insurance costs for e-commerce businesses

The price of general liability insurance varies largely amongst e-commerce businesses. However, most e-commerce businesses pay between $300 and $1,000 annually for their general liability insurance policies.

General liability insurance protects your eCommerce business if a third party is hurt while interacting with your business. The hurt can either be physical injuries, emotional casualty, or property damage.  This policy is the most popular amongst eCommerce companies since it offers the first line of protection against business-damaging risks.

Generally, your insurer will determine the scope of your general liability insurance, but then, most standard policies protect businesses against these three many perils:

  • Allegations of defamation, libel, or violation of copyright made against your company.
  • Any physical harm claims filed by customers or other parties, such as delivery personnel, who engage with your firm.
  • Claims for property damage resulting from interactions with your company.

The following are some scenarios where this policy might cover your business: 

  • A delivery guy slips due to slippery floors while taking products from your property. 
  • A customer claims they had peroneal tendonitis after wearing a shoe you sold. 
  • Another eCommerce store claims your libelous advert on YouTube is the reason they have lost customers 

Learn more at the best general liability insurance companies and general liability insurance costs

Product liability insurance costs for e-commerce businesses

The price of product liability insurance ranges between $200 and $600 per year for most e-commerce businesses. 

Product liability insurance will cover any compensation if someone is hurt by a defective product that your eCommerce company sold. This policy is similar to general liability, only that it focuses on design and manufacturing defects

Product liability coverage typically pays for:

  • Legal fees and trial-related expenses
  • Settlements handed out
  • The customer’s medical expenses for injury treatment.

Without product liability insurance, you would be responsible for these charges. 

The following are examples of scenarios that this insurance policy would cover:

  • Design flaws, such as the absence of protections or the accidental creation of a hazardous product
  • Failure to warn, which is defined as failing to provide adequate instructions or warnings for product usage
  • Hidden flaws such as harmful substances or food
  • It can be a standalone policy and an add-on to your general liability insurance.

Learn more at product liability insurance costs and the best product liability insurance companies

Commercial property insurance costs for e-commerce businesses

Commercial property insurance costs about $113 monthly on average. The policy protects you against theft, loss, or destruction of your company’s inventory and property. 

If any covered peril happens, property insurance will pay for the damage in your building and the cost of replacing your goods and equipment in the building.

This policy is essential even if you run your eCommerce business from home. The reason is your homeowner’s insurance coverage (if you have one) will only cover your personal belongings. 

Therefore, to cover your inventory and equipment, you need to get commercial property insurance.  Otherwise, you may have to replace everything yourself if something happens. 

You must note that your commercial property insurance will only cover the cost to replace your belongings up to the limit of the policy, not their market worth.

That means the policy will only pay to reimburse you the amount you spent on buying the damaged belongings. For instance, if someone breaks into your office and steals a copier that you purchased for $100. Your insurer will pay you $100 to replace the copier even if the copier is now sold for $150.  

Learn more at the best commercial property insurance companies and commercial property insurance cost

Workers’ compensation insurance costs for e-commerce businesses

Workers’ compensation insurance costs an average of $52 monthly for most e-commerce businesses. 

It provides salary and medical benefits to injured employees. In addition, it pays death payments to the family of a worker killed on the job. 

A majority of states mandate that businesses carry workers’ compensation insurance. So, if your eCommerce business has employees, you will likely need this policy. Otherwise, you risk paying huge fines or even business closure. Your state government also decides a worker’s coverage, salary, and medical benefits.

Workers’ compensation insurance typically covers the following:

  • Continuous care if the severity of the injury or sickness necessitates repeated treatments
  • Expenses linked with a work-related injury, including trips to the emergency department, surgical procedures, and medications.
  • If an employee dies on the job, the employer will pay for their funeral expenses.
  • Lost earnings if they need time off to recuperate from an accident or sickness sustained on the job.
  • Repetitive injuries, such as carpal tunnel syndrome, which take years to develop and need continual medical care and expenses.
  • When an employee becomes temporarily or permanently handicapped, workers’ compensation helps cover medical expenses and restore lost earnings.

Learn more at workers comp insurance cost and the best workers comp insurance companies

Cyber liability insurance costs for e-commerce businesses

Cybersecurity insurance would cost about $67 on average monthly. Depending on the risk profile and coverage, costs may vary from one insurer to another.

This insurance protects you against litigation, legal penalties, consumer settlements, and fines arising from a data breach or hack. It also includes costs associated with investigating the problem and restoring lost data and cash caused by the assault.

Since eCommerce businesses work online, digital security is their greatest threat. Hackers and individuals with malicious intent can steal client or credit card information or install harmful software that can lead to many issues for your online business. 

Cybersecurity insurance varies according to the coverage you choose but often includes the following:

  • Costs of data loss and recovery
  • Digital extortion
  • Expenses for forensic consultancy to avoid future breaches
  • Investigating and informing clients of a security breach
  • Loss of monies transmitted
  • PR management following a breach
  • Revenue loss due to a security breach

Learn more at cyber liability insurance costs and the best cyber liability insurance companies

Other Additional Policies 

The following are additional policies worth considering if you run an eCommerce business. 

Transit insurance (or inland marine insurance)

Inland marine or transit insurance provides coverage for your merchandise while it is on the move. On average, insurers charge eCommerce businesses $14 per month for this policy.

This policy typically protects high-value merchandise in large quantities; it assists in replacing the covered property if damaged by theft, fire, flood, wind, or hail. Some plans may also cover loss resulting from accidents or improper handling.

Not all eCommerce businesses need this policy.  Nonetheless, it is a sort of insurance that might become important as your eCommerce business expands and your physical goods increase.

In most cases, your inland marine insurance should cover the following:

  • Computer, video, sound, or radio equipment
  • Electronics
  • Fine arts and antiques
  • Medical diagnostic equipment
  • Property and goods in transit
  • Trade expo displays

Here is an example of how it works. Suppose you send many clothes to a fulfillment warehouse to optimize your shipping procedure. The next day, you learn that the truck had an accident en route and your clothes got burned. Your inland marine insurance may cover your losses.  

Business  interruption coverage

ECommerce businesses pay between $40 to $130 per month for this policy. However, some companies might pay higher rates if they run high-value or high-risk enterprises.

Business interruption insurance restores lost revenue if your company cannot operate due to direct physical loss or damage. This sort of insurance would pay policyholders for any expenses incurred as a result of natural disasters or fires, as well as fund the reconstruction of any destroyed structures. It is often marketed as an addition to existing insurance.

Coverage for business interruption covers, but is not limited to:

  • Employee salary so that you do not lose staff during a closure.
  • Running expenditures and other company charges.
  • Business interruption insurance might assist you in making your monthly loan payments.
  • This protection assures timely tax payment during business interruptions to avoid fines.
  • This policy may cover the cost of replacing equipment and retraining personnel before your resume again to avoid such occurrences in the future. 

How to get affordable e-commerce business insurance?

The following ideas may help you get considerable discounts when seeking business insurance for your eCommerce enterprise. 

Compare policies

One of the easiest ways to get affordable insurance is to compare quotes from different companies. To find an affordable policy, look for a company that offers you a good policy for the best prices.  

Purchase and renew yearly

Your insurer will likely renew your policy after your first year. Some companies offer the best price in the first year to attract new customers. So, to avoid paying more, ensure you review your premium yearly and see if you can get better prices elsewhere.  

Select the appropriate forms of insurance

There are several types of commercial insurance, but not every firm needs the same coverage. Buying a policy your eCommerce business does not need will only lead to wasting resources. So, start with a basic policy, such as general liability, product liability, and commercial property insurance, then increase coverage as necessary.

Evaluate your risks

To determine what insurance you need, you will need to assess the risks particular to your organization. The greater the size of your eCommerce firm, the riskier your commercial operations will be. In this instance, you will need several sorts of insurance. If you operate a home-based e-commerce firm, you will likely need less insurance.

The majority of dangers are specific to your company and its geography. However, there are a few considerations to consider:

  • Accidents that might occur at your company
  • lawsuits are none of my concern
  • Natural or unforeseen calamities that might impact your company
  • Once you know the threats you may encounter, you will have a clearer sense of the kind of security you will need.
  • The number of workers you have.

Consider combining numerous forms of insurance with a business owner’s policy (BOP) for your online company 

You may tailor your BOP to match your company’s requirements, but it typically consists of general liability insurance, commercial property insurance, and business interruption insurance.

Best e-commerce business insurance companies

Tens, if not hundreds, of insurance companies offer coverage for e-commerce businesses, which can make it a bit overwhelming to find the best one for your business. We have researched more than 30 companies and here are our recommendations of the best providers for your consideration:

  • Simply Business: Best for ecommerce businesses to compare and find the cheapest coverage online
  • CoverWallet: Best for finding affordable e-commerce business insurance from reputable insurance companies
  • NEXT: Best online buying experience for online business owners
  • Progressive: Best for discounted e-commerce business insurance, especially for commercial auto coverage
  • The Hartford: Best for buying e-commerce business coverage through an agent
  • Hiscox: Best for coverage from a small-business-focused insurance company
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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