Selling products through online platforms such as Amazon, Etsy, or eBay can open up valuable opportunities for small businesses and independent retailers. However, with increased reach comes increased responsibility. If a product causes injury or damage, sellers could be held liable, even if they did not manufacture the item themselves.
We explore what product liability insurance can cover, why it may be important for online sellers, and how brokers can support sellers in finding protection suited to their commercial risk.
What Is Product Liability Insurance?
Product liability insurance can help protect businesses that sell, distribute, or supply products to the public. If a product is found to be defective and causes harm to a customer or their property, this type of insurance can provide financial support for compensation claims and associated legal costs.
Cover can apply whether the product was:
- Manufactured directly by the seller
- Imported from outside the UK
- Supplied under the seller’s brand
- Altered or repackaged by the seller
This type of insurance is often considered by businesses of all sizes, especially those involved in consumer goods.
Why Online Sellers May Be Exposed to Liability
Selling through Amazon, Etsy, or eBay does not remove the seller’s responsibility for product safety. Even if a product was manufactured by a third party, the seller may still be named in a claim if:
- They are based in the UK and sell imported goods
- Their name appears on the packaging or promotional material
- The manufacturer cannot be clearly identified
- The seller has modified or assembled the product
In many cases, online platforms expect sellers to carry their own insurance. Amazon, for example, may require product liability cover once a seller reaches a certain sales threshold. Etsy also encourages sellers to consider relevant insurance for the protection of their business.
What Can Product Liability Insurance Include?
The level of protection can vary, but a typical product liability policy may support claims involving:
- Injury caused by a faulty or mislabelled product
- Illness resulting from the use of a contaminated item
- Damage to property caused by a defective good
- Legal expenses linked to defending or settling claims
Some policies may offer optional extras or be combined with public liability insurance for broader protection.
Examples of When Product Liability Claims Could Arise
Online sellers could face claims for a wide range of scenarios, including:
- A cosmetic product that causes an allergic reaction
- An electronic item that overheats and damages furniture
- A toy with a design flaw that injures a child
- A kitchen utensil that breaks during use and causes harm
Even with strict quality control and product testing, accidents can happen. Having cover in place can help safeguard a business from potentially significant financial loss.
Key Considerations for Online Retailers
When arranging product liability insurance, online sellers may wish to review:
- The nature of the products being sold and their potential risk
- Whether items are imported or rebranded
- Volume of sales and target markets
- The limits of cover required for specific contracts or platforms
- Any exclusions, such as for certain product categories or territories
Brokers can assist sellers in identifying policies that align with their product range and operational model.
Protecting Your Online Business Reputation
Customer trust is essential in a competitive ecommerce environment. A single product-related incident could lead to negative reviews, cancelled orders, and long-term brand damage. Product liability insurance can help provide peace of mind, allowing online sellers to operate with greater confidence, knowing they have financial support in place should the unexpected occur.