Most online marketing companies are small businesses that do not need a traditional insurance policy. However, if you are looking for a niche market, then you may want to consider specialising in this area. Being a specialist could prove to be quite rewarding, and it may help you develop a niche that can support you and your business financially.
Traditional business policies do not usually take into account the specific risk that the insurance company is faced with when insuring a company in the internet marketing space. Below, we will examine the issues surrounding internet marketing insurance and how traditional business policies do not necessarily cover your business.
Why Are Online Marketers Special?
First off, let’s examine why online marketers are considered special. Above and beyond the usual selling of goods or providing a service, online marketers frequently do this as a part of their business model. That is, they use the internet to attract and then gain access to potential customers, and in most cases, these customers are subsequently encouraged to make a purchase. This model of direct sales is considered high-risk by insurance companies, as it frequently involves individuals and/or companies taking a chance on the business they are engaging with. In most cases, these customers will not be aware of the risk that they are taking on by engaging with your business, but it’s always there.
On the other hand, insurance companies consider online marketers to be valuable customers, as they usually spend a lot of money with the brands they love. This means that as an insurer, you are often in a position of being able to negotiate attractive rates with these customers. When you add this to the fact that many internet marketers are experts in their field, and some of them have very profitable careers, you start to see why many insurers consider this group to be special customers. It’s not just about the money.
In short, if your business involves selling your services or products online, then it’s considered high-risk by insurance companies. This is because the online world is constantly changing, and it’s easy for customers to seek out your competitors if you don’t have sufficient protection in place. If you’re a web designer, for example, and your client is experiencing issues, it could be quite problematic if you are not prepared to help them out. Your first port of call should always be your workmate, which in most cases will be your partner in business. They will be the ones experiencing the problems, and it’s up to you to help them out. However, if you are not prepared to offer this sort of support, then it’s time to revisit your business plan and consider whether this is a niche that can support you financially.
The Special Nature Of Online Marketing
As mentioned above, businesses that operate solely online are considered high-risk by insurance companies. This is because it’s easy for any competitor to pop up and take your place should you encounter any sort of problem. In most cases, your clients will not have the physical presence to defend your business in case there is a lawsuit. This is why many insurers consider this sort of policy to be a minimum requirement for any business that operates online. In some cases, the lack of an offline presence altogether could be considered a default position for any business that chooses to operate online, as you will be unable to defend your service or product should a dispute occur. In these cases, the onus is on you, the business owner, to ensure that proper documentation is submitted in the event of a legal action. This may mean hiring a lawyer or an international dispute resolution service to get the matter sorted out. It’s well within this scenario that you could end up spending thousands of dollars without the guarantee that your expenses will be covered by your insurer. For this reason, it’s essential that you have business insurance in place before you even think about taking your business online. In some cases, this may even mean that you need to stop advertising and go back to the drawing board.
Traditional Business Insurance Does Not Always Cover Your Business
Traditional business insurance policies do not always cover your business, regardless of whether you decide to specialise in high-risk industries or not. This is because the risk assessment that an insurer performs when insuring a standard business is quite different from the one they perform when insuring a business that operates online. In the first instance, they will assess your product or service, the industry you are operating in, and the economic conditions of the area you are located in. In the second instance, they will examine your online presence, including things like website content, social media presences, and SEO. To get an idea of what we mean by SEO, keep in mind that when an insurance company evaluates a business that operates online, they will look for keywords and phrases that customers are using to find your product or service. As an example, if you are a medical equipment supplier and your product is hospital x-ray machines, then your insurer may want to see that you have the keywords “x-ray machines hospital” as this may help them find you in a search engine.
In some cases, traditional insurance policies will not cover your business due to a lack of purchasing power in the companies that the insurance companies are typically covering. In other words, if you are insuring a business that sells expensive products or provides luxury services, then your insurer may not have the funds available to cover your product or service should it become damaged or broken. In these cases, you may have to pay for the repairs yourself, or outsource the work to a company that does have the funds available.
Why Are You Special?
Most online marketers do not need a traditional insurance policy, but if you are looking to specialise in this area, then you may want to consider why you are considered special. It’s not just about the business insurance, although that’s a significant factor. Below, we will examine some of the things that make you special.
First off, are you a woman-owned business? If so, then you are considered very special, as women in business are often overlooked by insurance companies when it comes to providing them with coverage. This is despite the fact that many women are driving the innovation and success of today’s businesses. In the event of a legal dispute, it’s quite possible that the courts will put you in a position where you have to defend your business, as you cannot afford to lose clients due to a lack of insurance coverage. For this reason, you may want to consider whether women-owned business are a fit for your company.
What’s your unique selling point? Do you have a service that no one else provides? If so, then you may be able to negotiate very attractive rates with insurance companies, as they will value your product or service. In most cases, insurance companies will not cover you for damage or loss of your unique selling point, as this is what makes you special. In order to get unique selling point coverage, you will need to notify your insurance company upfront should you start to gain a reputation for providing this service. In these cases, the onus is on you, the business owner, to ensure that proper documentation is submitted in the event of a legal action. We would advise you to consult an experienced business attorney should you decide to go this route.
Some businesses choose to operate solely online because they cannot physically operate out of one location. In these cases, where you cannot reside in the same state of residence as your business, it’s quite likely that you will need an international insurer should you decide to go ahead with your plans. Being an online business, you will not have an office to go to, and consequently, you may not be able to establish physical presence in the same state or country. For this reason, we would advise you to look into international business insurance policies, as they can prove to be quite lucrative, should you decide to specialise in this area.
The Final Takeaway
In the above, we examined why online marketers are considered special, as well as some of the things that make them special. From a business insurance perspective, most online marketing businesses do not need traditional insurance, as they do not have the same risk profile as a business that operates out of one location or provides a service that can be difficult to reproduce. Of course, this does not mean that you will not need coverage should you decide to go online or should another natural disaster hit your area. In these cases, traditional insurance policies provide limited coverage, and in some instances, will not cover you at all. For example, if you run a dog grooming business from your home, and a dog with parvovirus enters your home and infects your guests, then it’s quite possible that you will end up going bankrupt. In these sorts of cases, you may want to consider seeking legal advice before you make any sort of financial commitment.