Nate runs a direct-to-consumer outdoor gear company out of a leased warehouse in Boise. He designs the products, a factory overseas makes them, and almost all sales happen on his own website and a large online marketplace. Six people pack and ship orders.
His insurance was a package policy an agent set up when he signed the warehouse lease. He called us after his checkout page went down for most of a holiday weekend because of a third-party plugin failure.
What he asked for
Whether any of his insurance covered the lost sales.
What the review found
The website was uninsured. His package covered the warehouse building's contents against fire and theft, and business income if the warehouse was physically damaged. An outage caused by a software failure or a cyberattack is not physical damage, so business income did not apply. For a company whose storefront is a website, the most likely interruption was the one with no coverage.
Customer data had no protection. The site stored customer accounts and order histories. Payments ran through a processor, but a compromised site can still skim card data at checkout.
Imported products needed real products liability. Because Nate imports goods made overseas, he can be treated as the manufacturer in a products claim. His package included general liability, but at a low limit and without a clear picture of what he sells.
Inventory limits did not track the season.
What we put in place
We placed a cyber liability policy built for online retailers, covering breach response, card data exposure and payment card industry assessments, cyber extortion, and business interruption from a network outage, including dependent business interruption when a platform or vendor he relies on goes down. The policy defines the waiting period in hours, which matters for a store that loses real money in a single weekend.
We rewrote his commercial property coverage around real inventory values with a seasonal increase for the fall build-up, and added stock throughput to cover goods on the water and on trucks between the factory and the warehouse.
We moved his general liability to a carrier that understands imported consumer products, with products liability limits the marketplace's seller requirements call for and the marketplace named as an additional insured.
Idaho businesses have their own considerations too: Nate's six employees are covered by workers comp from a private carrier, which Idaho allows, and we confirmed it was in place.
Why it mattered
The following spring, a credential stuffing attack took over a batch of customer accounts and placed fraudulent orders. The cyber carrier's team handled forensics, customer notices, and reimbursement of chargebacks, and the store stayed open throughout.
If you sell online
- Business income on a property policy does not cover a website outage
- Ask for dependent business interruption if you rely on a platform or processor
- If you import products, expect to be treated as the manufacturer
- Insure inventory in transit, not just on your shelves
See how we build programs for retail businesses, or get a free policy review.