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Do I need insurance to sell things on Etsy?

01/12/2020

Let’s face it. The last year or so has been pretty rough.

With the coronavirus pandemic lingering on, there's hasn't been much in the way of good news around. So quite rightly, people have been looking for ways to lift their spirits.

That’s where you come in. 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 either to treat themselves with a special something or bring a little joy into the lives of others with a gift.

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

Banking on the good will of others will only get you so far then. 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 events that could put it out of action.

Like your stock getting stolen or damaged, leaving you with nothing 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.

Add 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 pandemic blues.

With lockdowns and social distancing forcing many people to spend more time at home, demand for handcrafted products and crafting supplies has soared – everything from homemade facemasks to DIY craft boxes and macramé kits.

According to Etsy’s Q3 results for 2020, the e-commerce marketplace now has over 3.7 million sellers and 69.6 million active buyers, with a 100% increase in new sellers signing up to use its site.

It’s these fledgling businesses especially that might not know where they stand on their business insurance; what’s needed, 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 products are more likely to harm others and so will likely need insuring e.g. 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 in direct contact with your business.

For example, 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 market stalls topples over and injures them.

Similar to product liability insurance, it pays for your legal costs and representation, as well as any compensation you’re liable to pay.

It’s an essential one if you occasionally sell at markets and craft fairs; many venues ask for it as a condition of trading.

Protection for your employees

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

Useful if you employ an extra pair of hands to help you pack and ship your products and they get bitten by your dog. Or an accident with a wayward craft knife means they need 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, which is enough to make any employer sit up and take notice.

Protection for your stock and business premises

Stock and property insurance pays to replace lost, stolen or damaged stock and equipment, while business interruption insurance covers you if a fire, flood or other event prevents you from trading.

For example, if a burst pipe leaves all your stock water-damaged and wipes out your PC or laptop. Or if your internet gets cut off, and you can’t get online to fulfil orders.

In both cases, your policy covers the total of lost or damaged stock. It also pays to set you up to run your business from elsewhere temporarily, and covers your lost profit for the time you’re out of action.

A stitch in time

In a sense, knowing what insurance you 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 policy from paying out. 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 here).
  • 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.
  • Bone up on Etsy’s guidelines for COVID-19 safety.

For advice and guidance on insurance for Etsy sellers, call us on 0345 222 5391. Or click here to find out more.

Image used under license from Shutterstock.

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