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Posted By Pablo Conde on September 19, 2015 in Business Insurance
Pablo Conde



I work online from Home – Why buy Liability Insurance?

Typically, the at home online business involves web development, freelance writing, affiliate marketing, or an e-Commerce store. Since you’re working from the comfort of your home and not physically interacting with your clients or prospective clients, what is the risk?

 

Even if you do not have physical contact with customers, there are always risks involved when you transact business, whether it is a brick and mortar business or online only. Let’s take a look at what can go terribly wrong using the above mentioned business examples:

Web Developer

 

A web developer has a considerable professional liability exposure. Plagiarism and copyright infringement comes to mind, as well as data breach, and product delivery risk.

 

For example, you design and launch a website that contains images that are unlicensed.

Your client is notified by a stock photo company that many images on the website are owned by the company, and they issue a demand for license fees for each image over the period of time they were found to be on the site. Your client could be required to pay thousands of dollars for images they believed were licensed by you and demand reimbursement. In this case, your professional liability insurance would pay for your defense, settlement fees, or judgments awarded by the court.

 

Freelance Writing

 

A freelance writer that provides content on the web has certain risks that must be transferred to a 3rd party insurance company. The freelancer could be accused of slander, libel, and plagiarism by an individual or an organization for printing false information that caused a financial or reputation loss to the business or company making the complaint. This type of action is covered under the Personal Injury Liability section of a General Liability policy.

 

Affiliate Marketing

 

This category has a product liability exposure unless the affiliate marketer is added as a vendor to the manufacturer’s Product Liability policy.

 

A good example would be, you are an affiliate marketer for an organization that manufactures and sells vitamins and other supplements. A consumer visits your site that contains 5-star reviews about the products, and makes a purchase after clicking through your site. After receiving the product and ingesting it, the consumer becomes violently ill because of the supplement they purchased on your site. Even though they purchased the product directly from the manufacturer, the consumer is going to also name you in the lawsuit because you steered them to the manufacturer by giving the product a 5-star rating. The court (if the case gets there) is more than likely to dismiss the suit against you. However, you will have hired an attorney and paid significant fees to defend yourself.

 

E-Commerce – Online Store

 

An online store is subject to many of the same risks that a brick and mortar store experiences.

The online retailer does not have to be concerned about a slip-and-fall claim or having their store burn down, but they do have a product liability and data breach exposure. Also, the online store is going to have a website that might possibly infringe on the copyright of others. All of these risks can be transferred by purchasing General Liability and Professional Liability insurance.

 

If working online does not present a risk for the business, why do you suppose that Amazon requires all affiliate marketers to carry General Liability Insurance? It is because their risk management people have identified the exposure and understand that when lawsuits start flying, everyone involved in the transaction is going to be named in the action.