Subscription Box Business Insurance
Getting insurance for your subscription box business is essential.
This is because subscription box businesses need to be protected against a variety of different risks, such as accidental FTC violations and contract disputes.
For example, your website may not properly disclose the “unsubscribe” process to your customers, or one of the brands you work with may claim that you didn’t compensate them properly.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Subscription Box Business
General liability insurance is — generally speaking — one of the most important insurance policies for subscription box businesses.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Having said that, you will likely need to purchase additional coverage in order to adequately protect your subscription box business.
This is because a general liability policy will not protect you from a variety of serious financial risks, such as those that relate to:
- Workers’ compensation: Protects you from employee-related disputes and claims.
- Business income: Protects you in the event that you are required to temporarily close down.
- Commercial property: Covers the cost of replacing or repairing damaged business equipment (e.g., inventory, etc.).
- Commercial auto: Protects you against damage caused to a company vehicle (e.g., transportation truck, etc.).
When it comes to actually purchasing your coverage, you will notice that there are two different types of insurers available as of 2024:
- Traditional brick and mortar insurers: Includes The Hartford, CNA, Nationwide, and other popular insurers that have been established for several decades.
- Online insurers: Includes Next Insurance, Tivly, and other online insurers that use AI in order to offer personalized quotes.
We recommend going with an online insurer as it tends to be the most affordable option due to the lower overhead involved.
Cost of General Liability Insurance
On average, subscription box businesses in America spend between $400 - $700 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a subscription box business to other professional industries using the graph below:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
Common Situations That General Liability Insurance May Cover for a Subscription Box Business
Example 1: As an employee shows a visitor around your place of business, the visitor slips, breaks her tailbone, and asks your business to pay for her medical treatment. General liability insurance would cover her medical bills.
Example 2: A competitor files a lawsuit against your company, claiming you libeled his business in your last marketing campaign. While you disagree with the claim, you know you need a lawyer to defend your interests. General liability insurance would pay for your legal defense and any required settlement.
Example 3: While visiting your business to discuss upcoming opportunities, a potential investor slips on wet flooring in the restroom, breaks an arm, and decides to sue your business for damages. General liability insurance would pay for your legal defense and any required settlement.
Other Types of Coverage Subscription Box Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Product Liability Insurance
While you strive to ensure your subscription boxes meet or exceed customer expectations, there’s always a chance someone might decide your product caused them injury. In the event of a lawsuit, product liability insurance would cover your legal fees and any required settlement.
Commercial Property Insurance
You made a major investment in the equipment and supplies needed to create and distribute your subscription boxes. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property.
Workers’ Compensation Insurance
If you have any employees, most states will require you to carry workers’ compensation insurance for your part-time and full-time workers. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover, but also any disability or death benefits stemming from a workplace accident.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your subscription box business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Subscription Box Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
Generally speaking, yes. This is because you will want to ensure that you are covered before you begin interacting with clients or hiring staff members.
All in all, getting business insurance can end up saving you thousands of dollars down the line as it can ensure that you do not have to deal with a legal dispute or lawsuit whilst being uninsured.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.