Online sellers: who’s to blame when it all goes wrong?
Just before the Christmas break I was looking for a gift for someone, my daughter introduced me to online sellers – Etsy and other online e-commerce market places like Amazon, Notonthehighstreet and similar. A vast spectrum of gifts to choose from all this – the common theme of hand made. I was confronted with many items of quality, and not so quality, potential products and gifts to choose from.
This got me thinking, not about me as the buyer but the seller of the items. I will pick on one in particular; I can only describe this as a ‘wooden light holder thing’, described that it was sourced from reclaimed timber. It was, three offcuts of wood, not finished, a hole in the centre with a light pendant through it on a bit of flex.
Do people really think they shouldn’t have insurance cover?
Being a commercial broker, usually dealing with much larger entities I thought I would investigate further to find out how such businesses are insuring themselves against liability claims for any loss, damage or injury that their product may cause to someone. Just because the product is being sold on someone else’s e-commerce site doesn’t mean you don’t need your own protections. Online selling platforms such as Etsy, Amazon etc certainly are not going to jump in to defend you.
I was truly amazed at what was going on: Groups, forums, and similar platforms full of people with assumptions and above all ignorance. I am sure they are very nice people with the best of intentions but leading others to believe that protecting themselves against losses arising from their product doesn’t really matter. Well it does!
Why do you need Product Liability Insurance?
What makes a business, small or large selling items, hand made or not, on an e-commerce site different to someone who has a high street shop? Answer: absolutely no difference at all.
A product is being sold, the product may cause a loss or cause injury to the user, what’s worse is that this product could be sold online, anywhere in the World and that could include places like the USA & Canada – and that ladies and gentlemen is where things start to get really interesting. I won’t go into any detail, however needless to say that it’s a bit of a different ballgame to the UK. The product laws are different, varying from state to state. In the UK you have to be negligent, in the USA much of the time you just have to have supplied the product, in this care specialist USA Product Liability insurance is required.
OK, so the product itself isn’t scary, selling a scary product might be deemed a bit silly, or would it… mmmm. So the product, whilst surfing around the endless amounts of goodies, I was coming across childrens items, toys, electrical goods, soaps, candles and other items that all could cause a problem.
Children’s items, even a woolly hat with a fluffy pompom, toys with easily breakable parts, all potential choke hazards. Electrical goods with parts obviously not manufactured by the seller and possible bought from overseas – where did these parts come from? Can the original supplier be traced and if so is there really any recourse against them for a faulty product. Soaps, smell lovely but have they been tested and comply to a standard? Just one person out of the thousand sold could have a reaction, And candles… well will leave that one to your own imagination.
A lot of insurers don’t like online sellers, and to be honest I cannot blame them. For many selling anything from anywhere is fine for their business, however for an insurer this is like herding cats, computer parts one day, diet pills the next… an insurer likes to know what they are covering.
Once you have a few online quotes, you really then need to understand exactly what cover is being provided. Certainly Product Liability Insurance is an absolute essential, selling to the USA, unless you restrict your business – then it’s probably inevitable you could be sending products there.
Does the policy you are planning on buying cover the USA & Canada?
What about the Jurisdiction limits of the policy? If you are selling worldwide and to the USA then restricting the jurisdiction to the United Kingdom is going to be a little interesting as the action would be no doubt brought in the country where alleged loss has occurred.
Selling in quantities to certain retail groups and supermarkets overseas, you should check the contract terms. Does the buyer require that they are named as a dual insured or do they refer to Vendors liabilities? Dual Insured is something that most insurers in the UK will not agree to.
Where do I buy insurance for selling Online and to Amazon, Etsy or other platforms?
Speak to Real Insurance about your individual requirements. we understand insurance for online sellers, we are specialist brokers for UK companies selling to the USA and Canada, and understand the special requirements providing you with peace of mind.
Insurance can be a complex area – buying online is fine as long as you know what you are buying. Real Insurance is not a Call Centre, and unlike many we can give you professional independent advice specifically tailored to your needs – whether you are a small seller or you trade throughout the world.
Talk to a specialist today on 0330 058 0260.
Steve Taylor is Managing Director of Real Insurance Group.
All ecommerce solutions named in this article (Etsy, Amazon, Notonthehighstreet) are brands and property of their respective owners.
All ecommerce product and service names used in this article are for ecommerce example purposes only.
Use of these names, logos, and brands does not imply endorsement.