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Do I need insurance to sell things on Etsy?


A woman making products, thinking about insurance for Etsy sellers

Handcrafted gifts made with love, care, and attention, are at the very heart of what you do.

And by doing what you do, you give shoppers a chance to treat themselves to a special something or spark someone else's joy with a gift.

Unfortunately, that feel-good factor can quickly dissipate if you run up against expensive, time-consuming problems that take you away from the crafting bit of your business.

Banking on the goodwill of others will only get you so far. Protect yourself with insurance for Etsy sellers, though, and you can get on with doing what you love, knowing your business is in safe hands.

Is insurance for Etsy sellers compulsory?

In a word: no.

Etsy doesn’t require you to have insurance to sell on their website. But it’s essential if you want to safeguard your online shop from surprise events that could put it out of action.

Like your stock getting stolen or damaged, leaving you without a thimble to sell. Or a customer demanding compensation after something you made sets off a severe allergic reaction.

Problems like these take time and money to sort out. What’s more, they take you away from the day-to-day running of your business.

Pile on court costs, legal fees, and lost revenue, and you could be looking at some hefty losses.

The comparatively small amount you spend on insurance for Etsy sellers, though, goes a long way towards fixing those problems. It rights your wrongs, covers any compensation you’re liable for, and keeps you up and running. No matter what.

Here’s a good yarn

There's nothing like a bit of crafting to beat away the blues.

During the COVID-19 pandemic, demand for handcrafted products and crafting supplies soared – everything from homemade facemasks to DIY craft boxes and macramé kits.

Luckily for Etsy and its 9 million sellers, the demand has stayed high with 96.4 million active buyers in 2023.

9 million sellers, that's a lot. And these fledgling businesses, especially, might not know where they stand on their business insurance; what they need, what’s covered, and how it works.

Let’s start with some basics, then.

What does insurance for Etsy sellers cover?

Protection for the things you make

Product liability insurance covers you against claims where one of your products hurts a customer or damages their property, and they seek compensation in return.

Certain handmade or handcrafted products are more likely to harm than others, so will likely need insuring eg jewellery, cosmetics, body and bath products, candles, wax melts, kids’ clothes, and food and drink.

In other words, anything that can be eaten, swallowed, or applied topically should probably be protected with products liability insurance.

Same goes for anything with buttons, threads, or fabric scraps that could easily come off and get hoovered up by the family pet or swallowed by a child.

Protection for accidents on your premises

Public liability insurance for Etsy sellers covers claims of accidental injury or damage to anyone who comes into direct contact with your business.

Like a courier who comes a cropper on your slip-slidin' doormat, breaks their hip and has to take time off work. Or Joe Public seeking compensation after your pop-up market stall pops down on top of them.

Just as with product liability insurance, it pays for your legal expenses, as well as any compensation you’d need to pay.

It may be essential if you occasionally sell at markets and craft fairs; many venues ask for it beforehand.

Protection for your employees

Employers’ liability insurance is a legal requirement if you employ any non-family members. It covers your staff if they get ill or injured while working for you. Even if they’re temporary, part-time, or volunteers.

It's useful if you hire an extra pair of hands at Christmas to help pack and ship your products - and they get bitten by the dog. Or if an accident with a wayward crafting knife means they're prescribed stitches and some time off work.

What’s more, the Health & Safety Executive can fine you £2,500 for every day you don’t have it. That's enough for anyone to sit up and take notice.

Protection for your stock and property

Last but not least, stock and property insurance pays out to replace your business's lost, stolen, or damaged stock and equipment if there's an accident.

For example, if a burst pipe leaves all your stock water-damaged and wipes out your PC or laptop. Leaving you unable to ship out orders.

It's usually best not to count on your home insurance policy to cover your losses where your business equipment's concerned. Unless specified, most policies wouldn't cover the items you'd need to run your Etsy business.

A stitch in time

In a sense, knowing what Etsy sellers' insurance you'd need is only half the battle. You also have to make sure it pays out when you need it to.

To make sure this happens, you need to make sure you’re not doing anything illegal that’d stop your insurance from doing what it's meant to do. Forewarned is forearmed, as they say.

In other words:

  • Check you’re following the UK government’s regs on what you’re selling, including face masks, cosmetics, toys, furniture, and products that resemble food.
  • Check the shipping regulations for the countries you sell to, especially those with restrictions on ‘natural products’ (eg wood).
  • Make sure your products are labelled correctly and include instructions on how to use them. The government has advice on how to do this.
  • If you sell handmade toys, mobiles, etc within the UK or to the EU, make sure they’re appropriately CE marked.
  • Be clear in your product listing about what you make and how it’s made. Make sure you’re not making any unfounded statements.
  • Make customers aware of your return period (14 days minimum), GDPR policy, and contact details in case of any complaints.
  • Check the HSE’s advice on working with fragrances, essential oils, paint, and chemicals, especially if you make candles or cosmetics.
  • And, of course, bone up on Etsy's rules and regulations.

Get more advice and guidance on online retailers' insurance or call us on 0345 222 5391.

Image used under license from Shutterstock.

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