1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.
Dismiss Notice
Have you checked if your business appears in our directory? Add your basic information for FREE!

Click Here to know more!!

If you would like links to source leads, upgrade from £12.50 a month!

Click Here to subscribe!
Dismiss Notice

Hi Guest!

Our website stays online because of the support of our advertisers. A huge part of them are from banner ads that appear on our site. While some of them seems to be intrusive for some, these ads are needed to keep our community running and continue providing free membership service for buyers.

In light to this, we request that you disable ad blocking programs or add our website to your ad blocker's whitelist. This keeps us from offering our basic membership to everyone for free and help with maintenance costs of our website.

If you have already disabled ad blocking programs or added us into the whitelist, please ignore this message, this message will disappear in a few seconds!

Products Liability Insurance - when is it required

Discussion in 'E-Commerce and Online Selling' started by Karen, Jul 14, 2004.

  1. Karen

    Karen

    Joined:
    Sep 14, 2003
    Messages:
    2,380
    Well I thought I would tell everyone about my recent discussion with an Insurance Broker found via the Federation of Small Businesses.

    Apparently because of the funny laws in the US there is a £500 premium automatically added to insurance policies if you want to export there. I'm also having a nightmare because none of my secondhand products are covered re Products Liability. And what is the point of having Products Liability for brand new items that will be covered by the Manufacturer's Product Liability Insurance anyway?

    I don't fully understand all of this. I'm beginning to think that I should stop exporting to the US. I'm also wondering about the implications for all those people selling secondhand goods on ebay? I can't get into Ebay's helpfiles at the moment, does anyone know if selling via ebay gets round these problems in any way?

    [​IMG]

    Karen
  2. Richard

    Richard

    Joined:
    Nov 21, 2002
    Messages:
    2,323
    Hi Karen

    I am no insurance expert but basically product liability covers you for a situation whereby a product that you sold causes some form of damage/loss to the buyer. For example, lets say you sold them a television and when they turned it on, a faulty wire caused them to be given an electric shock which kills them. Your product liability insurance would cover the cost of any claim brought against you. Equally, if the faulty TV then caused a fire which burned the buyers house down, the product liability insurance would kick in. An extreme example maybe but you get the idea.

    Secondhand products will not normally be covered by product liability insurance because there is more chance that they will be faulty and cause a claim etc. The US like to sue for everything and this probably explains why there is a higher premium if you deal with the States.

    In the situation outlined above, the buyer may have a claim against both the retailer and the manufacturer hence the reason why you would both have insurance.

    That said, product liability insurance is not required by law so the first question that comes to mind is, are you actually selling any products that could cause damage or harm to your buyers? (I have an image of some poor kid choking on a smurf!)

    Hope that is of some help....

    Cheers

    Richard
    TheTrader

    PS. I have just found this link online which appears to indicate that as a retailer you cannot be responsible for product liability claims as long as you can identify the original manufacturer - http://www.birmingham.gov.uk/GenerateConte...=0&MENU_ID=1522 Therefore, maybe you don't even need this insurance? My advice would be to pick up the phone to your solicitor and ask them - might cost you £25 but it could save you a large insurance premium....
  3. Karen

    Karen

    Joined:
    Sep 14, 2003
    Messages:
    2,380
    <div class='quotetop'>QUOTE </div>
    Yes that's the image I am having as well! I think like you say I need to get further advice.

    Thanks

    Karen
  4. Karen

    Karen

    Joined:
    Sep 14, 2003
    Messages:
    2,380
    I phoned the FSB Legal Advice line, should have thought of that in the first place really!

    Anyway, they told me that it would be very difficult for someone in the US to sue me as they would need to get lawyers in the UK to act for them. They also said in the case of the new products that they could try to come after me as well as the manufacturer, but they were unlikely to sue a small business as there wasn't much to gain from it! Also, because I have set up a limited company at least they won't come after me personally, only the business. So if I don't take the products liability insurance then I am gambling my business but not me personally. While I am making peanuts I am not going to panic too much.
  5. techseller95

    techseller95

    Joined:
    Apr 4, 2020
    Messages:
    7
    Digging up an old thread but I seem to be in a similar boat with setting up a dropshipping company. I cannot for the life of me get a clear quote for Product Liability Insurance. If you are expecting to sell more than 50% of your items to US/Canada (most likely for dropshippers) then it complicates the policy. If you sell any kind of product aimed for kids younger than 5 years old then they can't cover you. If you sell any kind of product for older kids (e.g. toys or games) then it makes the policy more complicated. If you sell jewellery, then they want to know exactly what kind of jewellery (e.g. earrings, necklace, bracelet etc) as that changes the cover. Selling products to the USA/Canada will cause at least an extra £300 premium (as the opening poster mentioned with their £500 premium). Also, if I change what products I sell, then I need to update the insurance company so that the policy is updated. It sounds like such a faff. I only started looking at Product Insurance because I wanted to start the business as a sole trader and didn't like the idea that I was personally liable for anyone suing me. I didn't want to start a limited company because of the extra cost but that's not looking like a bad idea after all.

    To be honest, it doesn't matter what you sell. Some countries (especially places like USA) will sue for anything they possibly can if they can earn a few quid. Think of the most safest and riskless product and you're guaranteed that someone in the USA is already thinking of a way to exploit the system to sue you.
Back to top

Share This Page