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eBay Seller Insurance: What Is It, Who Needs It

A man and woman sit on the hardwood floors of their home as they photograph different products they are listing on their eBay store.

When you hear about buyer and seller disputes on eBay, it typically has to do with shipping delays, stolen packages, or dishonest buyers scamming sellers.

But what about the disputes no one really talks about?

Consumer injuries, illnesses, property damage, and even death are unfortunate disputes some eBay sellers have found themselves battling over the years. As an online seller, you are expected to provide a product deemed safe for consumers—yet accidents can still happen.

Product liability claims are more common (and more expensive) than you might think. A 2019 product liability report by Lex Machina shows the number of claims has been steadily increasing by at least 20% each year since 2011. Data collected from Insurance Canopy customers shows the average cost of a product liability claim is $25,336.

So, how can you keep yourself and your e-commerce business safe? By investing in protections like eBay liability insurance. Let’s take a deeper look at what eBay liability insurance is, who it’s for, and what it can do for you.

An eBay seller looks at his phone to let his buyer know he is about to ship their package.

What is eBay Seller Insurance?

eBay seller insurance is coverage for the products you sell online. It can typically help you cover the cost of first- and third-party claims, medical bills, legal fees, lost wages, and more.

Covered incidents caused by your product or business operations can include, but are not limited to, the following:

  • Bodily injury
  • Slip and fall accidents
  • Choking
  • Allergic reactions
  • Illnesses or death
  • Damage to rented or personal property
  • Failure to provide labels or warnings
  • Mislabeled products
  • Manufacturing defects

Insurance Canopy’s insurance plans are composed of multiple policies to help you cover the cost of claims. It includes general liability and product liability insurance and offers a wide selection of additional coverages you can tailor to your plan.

Additional coverages eBay sellers can benefit from include:

  • Business Personal Property (Inland Marine) insurance
  • Product Recall coverage
  • Cyber Liability insurance
  • Hired and Non-Owned Auto coverage
  • Employee Benefits Liability insurance
A woman takes a photo of a product to list online for her eBay business that is insured with eBay liability insurance.

Who Needs eBay Liability Insurance?

While it’s good practice for any seller to have eBay liability insurance, not everyone carries the same risks. Insurance is strongly recommended for sellers who:

  • Work with a large volume of customers
  • Are categorized as a Top Seller
  • Sell high-risk products
  • Wholesale large amounts of products
  • Have hired employees

One of the most common product liability claims we see at Insurance Canopy are from manufacturing defects. Typically, products on eBay are manufactured by someone other than yourself. Even if you did not make the product you are selling, you can still be named liable in a lawsuit for simply being the seller. In fact, the injured party could go after anyone involved in the life cycle of the product.

If you know you work with a large amount of manufactured goods, chances are you might encounter a few product recalls. As the seller, you have a responsibility to notify your customers, organize returns and refunds, and discard any recalled items in your inventory. Product Recall insurance can assist you through this process and help keep business operations running smoothly.

You may also want to invest in insurance if you want to protect the property you use for your business. Business Personal Property insurance can insure items such as computers, printers, scales, and even your inventory. It can also cover your products while they are in transit or shipment.

Because your business operates mostly online, Cyber Liability insurance can be crucial in the instance of a malware attack or phishing scam. If a hacker got ahold of your business finances or customer’s private information, this coverage can help you restore lost funds and retrieve stolen data.

Are There Insurance Requirements For eBay Sellers?

Currently, eBay does not require its sellers to carry any type of insurance. Yet with 2 billion daily transactions, there are a lot of products passing from sellers to buyers globally. And with Amazon’s recent change to seller insurance requirements, it’s possible other e-commerce marketplaces like eBay may do the same.

It can be easy to look past the need for insurance. After all, many online sellers are only part-time and sell products as a hobby or small side hustle, so they do not view themselves as a “business.” Yet this does not eliminate them from the risk of claims.

Just a single claim could put your entire operation on the line. You’re facing thousands of dollars in expenses, a slow or halt in day-to-day operations, and a huge blow to your Seller Performance on eBay—putting your storefront at risk of being suspended, shut down, or permanently banned from the site.

eBay does have a Seller Protection Policy, but it only covers you if there are issues with shipping, dishonest returns, or a buyer is attempting to scam you. In the case of a liability claim, eBay’s User Agreement reads:

“…in no event will eBay …be liable to you or any third party under any claim at law or in equity for any consequential damages or losses… and you agree not to hold us responsible, for any damages or losses…”

Essentially, this means eBay will not support you in third-party claims, such as a product liability claim, and you also agree to not hold eBay responsible. This leaves you on your own to protect your business and pay for any claims you may receive.

An eBay seller is buying eBay liability insurance from her computer in her home office where she manages her eBay business.

How Much Does Business Insurance For eBay Sellers Cost?

On average, Insurance Canopy customers pay anywhere from $800 to $2200 for an annual policy—which breaks down to an estimated $67 a month. Some of the factors that can affect your overall costs include:

  • Yearly revenue
  • Claims history
  • Product risks
  • Number of employees
  • Additional coverages

eBay currently only offers some sellers the chance to opt-in to eBay’s shipping insurance, ShipCover. If you are a Top Rated Seller, or someone who makes at least 300 transactions per month, you are able to qualify. However, you can only receive coverage for the duration of shipping. Starting at $1.70 for $100 of coverage on domestic shipments and $2.83 for $100 of coverage on international shipments, the cost to insure every shipment adds up fast.

Let’s say you meet the minimum of 300 transactions per month and you opt-in for ShipCover on all 300 items you plan to mail out. Just on domestic shipments alone, you’ve spent $510. If they were international shipments, you’re looking at $849.

You’re only receiving a few days or weeks of coverage each time you opt-in, and realistically, you’re going to be mailing out products multiple times a year. If you continue using ShipCover for a year, you could be spending over $10,000.

Insurance Canopy could help you save up to 63% for a year’s worth of business insurance for ebay sellers. You can enjoy coverage for most of your shipments and everything else included in a plan for a fraction of the cost.

An eBay seller is surrounded by packages ready to be shipped as he purchases eBay liability insurance online from Insurance Canopy.

Protect Your Business With Insurance Canopy Today

If insurance feels like the right choice for you, then choose a top-rated policy created with sellers like you in mind. Start investing in your business and strengthening your financial security with a plan you can trust.

Great seller insurance for eBay starts with Insurance Canopy. Submit an online application for your free quote today. Peace of mind is only a few clicks away!

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