5 Ecommerce Fulfilment Models and the Covers You Need
In this guide, we’ll cover the 5 main types ecommerce fulfilment models, what risks come with each, and the key types of ecommerce insurance every online retailer needs plus why partnering with Morgan Insurance Brokers is the smartest way to protect your business.
Running an ecommerce business in Australia offers massive potential but it also comes with serious risks that can impact your stock, income, and reputation. Whether you’re dropshipping, importing, using a 3PL, or manufacturing your own products, the right ecommerce insurance ensures your business is protected every step of the way.
The Core Types of Insurance Every Ecommerce Business Should Have:
No matter your business model, these are the essential insurance policies every ecommerce operator should consider:
Public Liability Insurance
Protects your business if your operations or products cause injury to a person or damage to their property. This is the foundation of all ecommerce insurance, it covers everything from customer accidents to courier injuries at your premises.
Transit Insurance
Covers your goods while they’re being transported, locally or internationally. It protects against loss, theft, or damage in transit, whether the goods are on a ship, plane, truck, or courier van.
Stock (Property) Insurance
Protects your inventory while stored at your premises, in a 3PL warehouse, or even at home. You can include Business Interruption cover to protect your income if an insured event (like a fire or flood) prevents you from trading.
Cyber Insurance
Ecommerce businesses are prime targets for cyberattacks and data breaches. Cyber insurance covers losses from hacking, ransomware, and data theft including recovery costs, legal expenses, and even reputational damage.
Morgan Insurance Brokers can tailor all these covers into a comprehensive ecommerce package, ensuring there are no gaps between your operations, stock, or online risks.
1. Overseas Dropshipping model
Overseas dropshipping is when products are sent directly from an international supplier to your customer and is one of the riskiest ecommerce models.
The key risks:
- No quality control: Products ship straight to customers without you inspecting them first. If items arrive faulty or unsafe, you can be held responsible.
- Limited recourse: Overseas suppliers often operate under different laws, making it difficult to claim compensation or for the insurance companies recover claim costs/losses.
- Transit exposure: Long international shipping routes increase the chance of loss, theft, or damage.
Insurance considerations:
You’ll need product liability insurance to protect yourself if a customer claims your product caused injury or damage.
It’s also crucial to have public liability insurance, which covers you if your business activities accidentally cause harm to a person or property whether that’s a courier, customer, or even a member of the public affected by your products.
Expert tip: Morgan Insurance Brokers specialises in ecommerce insurance and can help structure coverage that protects you from both overseas supplier risks and customer claims.
2. Customer-to-3PL Warehouse (Australia)
If your stock is shipped to a 3PL warehouse in Australia before being sent to customers, you face a unique set of risks — particularly around how long your goods stay in storage.
The insurance challenge:
Most marine transit policies only include 90 days of incidental storage. After that, your goods may no longer be insured while in the warehouse.
The best solutions:
Stock Throughput Policy:
This policy combines transit and storage insurance into one seamless cover — protecting your goods from the moment they leave the supplier until they reach your customer.
- Covers both transit and warehoused stock
- Reduces coverage gaps
- Suitable for growing ecommerce businesses with ongoing inventory movement
Business Package Policy:
This allows you to cover your stored stock and also include business interruption insurance — crucial protection if, for example, a fire at your 3PL warehouse delays your ability to trade. Business interruption cover helps you recover lost turnover while waiting to restock.
Don’t forget:
Public liability insurance is still vital, if someone is injured at the 3PL site due to your products or operations, you could be liable. Even though the 3PL has its own cover, your business still needs independent protection.
3. Local Dropshipping
Local dropshipping, where suppliers are based within Australia, is a lower-risk model compared to overseas fulfilment.
Benefits:
- Australian Consumer Law protection: Local suppliers must adhere to strict quality and safety standards.
- Easier claims: Domestic logistics make it faster to resolve delivery or product issues.
- Better recourse: You can rely on local insurers and suppliers for dispute resolution.
Insurance must-haves:
Even with local suppliers, you still need product and public liability insurance. If a customer claims a product you sold caused harm, or if a delivery results in property damage, your insurance will cover legal and compensation costs.
Partnering with Morgan Insurance Brokers ensures your local dropshipping business is covered from supply chain to customer delivery giving you peace of mind as you scale.
4. Importing and Storing Stock Yourself
If you’re importing goods and storing them in your own warehouse or at home, you take on full responsibility for both transit and storage risk.
You’ll need:
- Marine Transit Insurance — to cover your goods while being shipped internationally or domestically.
- Stock Insurance — for protection against fire, theft, or accidental damage while in storage.
- Business Interruption Insurance — to safeguard your income if a covered event (like a warehouse fire or flood) disrupts your ability to trade.
And of course, public liability insurance is essential. It covers injuries or property damage that occur because of your business operations — for example, if a courier trips at your premises or a product you sold causes damage.
Why Work With a Specialist Broker?
Ecommerce insurance is complex — and not all brokers understand the nuances of online retail, dropshipping, and logistics. That’s where Morgan Insurance Brokers comes in.
As Australia’s ecommerce insurance specialists, Morgan Insurance Brokers tailor cover for:
- Dropshipping businesses (local and overseas)
- 3PL and stock throughput needs
- Importers and warehouse operators
- Online retailers of all sizes
With expert advice and access to leading insurers, Morgan Insurance Brokers ensure you’re not overpaying or underinsured.
5. Manufacturing Your Own Products
If your ecommerce business manufactures its own goods, your risk profile expands dramatically.
Unique Risks
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Product defects — Design or production flaws can lead to injury or property damage claims.
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Equipment and machinery — Breakdown or fire can halt production and cash flow.
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Supply-chain dependency — Delays in raw materials can interrupt orders.
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Employee and visitor safety — Injuries on-site can result in liability exposure.
Recommended Cover
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Product Liability Insurance — protects against defective or unsafe products.
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Public Liability Insurance — essential for injuries or damages arising from manufacturing operations.
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Business Interruption Insurance — helps replace lost income if production stops.
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Machinery Breakdown or Plant Insurance — to repair or replace critical equipment quickly.
Manufacturers often underestimate liability exposure. A specialist like Morgan Insurance Brokers can secure comprehensive, affordable protection designed for both ecommerce and manufacturing risks.
Final Thoughts
Every ecommerce business, regardless of its model, should have a combination of:
- Public Liability Insurance for injury or property damage caused by your business
- Product Liability Insurance for defective or harmful products
- Transit / Stock / Business Interruption Cover to protect your goods and income
- Cyber Insurance to protect you from cyber criminal attacks
Protecting your online business is not optional, it’s essential.
Get in touch with Morgan Insurance Brokers today to safeguard your ecommerce business with specialist, tailored insurance solutions.
