Online Store Insurance

What insurance does an online store need?

Selling online looks low-risk because customers never walk into your store. But e-commerce businesses face real risks: a product hurts someone, a data breach exposes customers' information, inventory is damaged or stolen, or someone says your product photos or descriptions infringe their rights.

Product liability insurance is usually the most important coverage. It pays for legal defense and damages if a product you sell causes injury or property damage. You don't have to be the manufacturer to be sued. Retailers and resellers can be named in a product liability lawsuit too, especially if the manufacturer is overseas or out of business.

Most small sellers get product liability as part of a general liability policy. General liability also covers advertising injury, such as claims that your product listing used someone else's copyrighted photo or slogan.

Cyber insurance is the other big need. Online stores collect names, addresses, emails and sometimes payment data. A hacked store plugin, a stolen admin password or a phishing scam can expose that data. Cyber insurance can help pay for investigation, customer notification, credit monitoring and related lawsuits. Some policies also cover cyber extortion and fraudulent payment transfers.

Dropshipping, print-on-demand and private label

• Private label sellers often carry the most product risk, because their brand is on the product.
• Dropshippers may be sued even though they never touch the product. Ask suppliers for their certificate of insurance and to name you as an additional insured.
• Print-on-demand sellers face more advertising injury risk from designs and trademarks.

How much does online store insurance cost?

Insureon doesn't publish an e-commerce-only median. Its 2026 data from 100,000 small-business customers shows these overall medians:

Your price depends on:

• What you sell. Supplements, cosmetics, electronics, children's products and anything ingested or applied to the body usually cost more.
• Annual sales and where you ship (some policies treat foreign sales differently).
• Where products are made. Imported products can increase risk if the manufacturer can't be sued in the U.S.
• Inventory value and storage location.
• Limits, deductible and claims history.

Estimate your package with our business insurance cost calculator, or read how much business insurance costs.

Example claims (illustrative)

Example: A phone charger you sell overheats and damages a customer's couch. The customer sues for the damage. Product liability coverage can pay for your defense and the claim.

Example: A customer has an allergic reaction to a skincare product you sell under your own label. Product liability can respond, subject to the policy's terms and exclusions.

Example: Hackers exploit an outdated plugin and steal customer data. Cyber insurance can help with investigation and notification costs.

Example: A photographer says you used their image in a product listing without permission. General liability's advertising injury coverage may help, depending on the policy.

Is insurance required for an online store?

No general law requires an online store to buy liability insurance. But marketplaces, wholesalers and retail partners often require it, sometimes once you reach a certain sales level, with specific limits and additional insured status. If you have employees, workers' compensation is required in most states; see workers' comp requirements by state.

Data privacy rules can also apply when you collect customer information. The FTC provides guidance for businesses on protecting customer data.

Home-based sellers: protect your inventory

Many online sellers store products at home. A standard homeowners or renters policy often limits or excludes business property and business liability. If a fire destroys $10,000 of inventory in your garage, you may not be covered. A business owner's policy or a home business endorsement can fill that gap.

Selling internationally

If you ship outside the U.S., tell your insurer. Some general and product liability policies limit coverage for lawsuits filed in other countries, or require a higher premium for foreign sales. Check the policy's coverage territory before you expand.

Product recalls

Product liability covers injury and property damage claims, but it usually doesn't pay to recall products. If a supplier discovers a defect, the cost of notifying customers, collecting products and replacing them can be large. Product recall insurance is a separate policy. Sellers of food, supplements, cosmetics and children's products should consider it.

Business interruption for online sellers

If a fire destroys your inventory or a cyberattack takes your store offline, sales stop. Business interruption coverage, often included in a business owner's policy, can replace lost income after covered property damage. For losses caused by a cyberattack, look for cyber policies with business interruption coverage, because property policies usually don't cover them.

Working with fulfillment centers

If a third-party warehouse stores your inventory, ask what its insurance covers. Many warehouses limit their liability for lost or damaged goods. Your own property coverage may need to include inventory stored at other locations.

How to lower your premium

• Buy from reputable suppliers and keep their certificates of insurance.
• Use clear labels, instructions and warnings that meet product rules.
• Keep records of product testing and batches so you can trace problems.
• Secure your store: use multi-factor authentication, update plugins and use a trusted payment processor.
• Avoid high-risk products if you're starting out, or price their insurance in.
• Bundle liability and property in a BOP.