Everything you need to know about how your insurance needs will change when you take your brick-and-mortar business online in South Africa.
Since the historic lockdown in March 2020, many South African businesses have taken their products and services online. A digital business model offers unique benefits that helped many companies and organisations stay afloat during the pandemic.
Customers can visit your shop and make purchases without being exposed to pathogens or donning PPE gear. Because people don’t need to leave home to buy from you when your business is online, it is ideal for a lockdown situation. By limiting person-to-person contact, your business will be contributing towards the fight against the SARS-Cov-2 virus.
While you may have decided to take your business online, it is important to consider how your insurance will be influenced by the business change. Do online businesses need insurance? If they do, why do they need it, and what kind of insurance do they need?
Do Online Businesses Need Insurance?
In short, yes. Business insurance is a great idea if you’re running a business of any kind. Business insurance is created to mitigate risks that could otherwise be disastrous for the future of your company. By covering these risks, business insurance helps to protect your business continuity. This is true, even if your business operates solely online.
There’s no single insurance solution for all online companies, so it’s important to assess your risks based on the way your online business is going to operate. Once you’ve identified these risks, you can find insurance that covers them adequately.
Why Do Online Businesses Need Insurance?
At a glance, an online business may seem to be exposed to few insurable events. Your online business will still need business insurance because operating your business online exposes it to possibilities that can cost your business a lot of money if you aren’t insured.
An online business is more than just a website. You will be communicating with members of the public on social media and via email. Your company will still need to deliver products or services to people’s homes or companies. Your business may still use an actual office for administration, bookkeeping, and other necessary day-to-day operations.
If you already own a business insurance policy, you may be able to upgrade to a more comprehensive plan or purchase additional policies that cover specific risks. Here are a few types of business insurance to consider when taking your South African business online.
Buildings Insurance
Many online businesses are run from a business property or office. The property may be used to house servers or for packaging and distributing products. This property and its contents should still be insured against events such as theft, fire, natural disasters, and more. If people are often in the building, you may want to include liability insurance too.
Liability Insurance
Liability insurance can protect your online business from third-party claims due to accidents, injuries, product liabilities, and more. If you have a business property that members of the public can access or company vehicles that deliver or transport products, you will need liability insurance. If a truck or car owned by your company is in an accident and you are deemed liable, you will then have financial cover.
Liability claims can be made against your company for injuries, loss, or damage caused by a faulty product too. Make sure your business is protected against third-party claims and include liability insurance in your arsenal.
Stock and Stock-in-Transit Insurance
Will your online business be selling products? Then you may need stock or stock-in-transit insurance. If your stock is stolen, damaged, or lost, whether in storage or in transit, it could cost so much that your business may not be able to recover. Mitigate this massive financial risk by purchasing stock insurance.
Electronic Equipment and Data Loss Insurance
One of the most important elements in an online business is its electronic equipment and data. Instead of bricks, your online business is built out of data. From the website to your client database and login information, the data used from day-to-day in your online business needs to be protected and insured. The loss of important data can have a significant financial impact on a company. So too can the loss, damage, or theft of important electronic equipment such as servers, laptops, and other hardware.
If someone hacks into your payment system, they can access clients’ credit card details and more. Your insurance should cover this loss and any legalities related to claims against your company. Online businesses often face copyright claims for the use of images or content, or even claims for breach of contract.
When you take your shop onto the internet, remember to get the extra insurance you need to make sure the endeavour doesn’t bankrupt you. Safe from third party claims, theft, loss, and damage, your online business will be able to grow and find success.
DISCLAIMER: The information provided in this article is meant for informational purposes only and should not be construed as legal, medical, or financial advice. Facts stated in this article are correct at the time it was published.
Sources: thehartford;
