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Why do Etsy sellers need insurance?
Etsy doesn't require you to carry insurance—the online marketplace also won't help you if you're sued. Business insurance covers legal costs when your product injures someone or damages their property. You can get coverage for fires, theft, data breaches, and other risks as well.
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With Insureon, Etsy sellers can get insurance coverage the same day they apply for quotes.
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What types of business insurance do Etsy sellers need?
Etsy shop owners often buy the following insurance products.
Business owner's policy
A business owner's policy, or BOP, is a cost-effective way for Etsy sellers to buy general liability insurance and commercial property insurance together.
BEST FOR
- Product liability lawsuits
- Damaged or stolen inventory
- Business interruption coverage
General liability insurance
This policy covers common third-party lawsuits, such as slip-and-fall accidents. It typically includes product liability insurance for financial protection against harm caused by your products.
BEST FOR
- Customer injuries
- Product liability claims
- Copyright infringement
Workers’ compensation insurance
Most states require workers' comp for Etsy shops and other online businesses that have employees. It also protects sole proprietors from work-related injury costs that health insurance might deny.
BEST FOR
- Employee medical expenses
- Disability benefits
- Legal fees from worker injuries
Cyber insurance
This policy helps small business owners recover from data breaches and cyberattacks. It's recommended for Etsy shops that handle email addresses and other personal information.
BEST FOR
- Customer notification expenses
- Fraud monitoring services
- Cyber extortion demands
Commercial umbrella insurance
Umbrella insurance boosts coverage on an Etsy seller's general liability, employer’s liability, or commercial auto insurance policy once the limit is reached on a claim.
BEST FOR
- Customer injury lawsuits
- Property damage lawsuits
- Auto accident lawsuits
Commercial auto insurance
Most states require commercial auto insurance for business-owned vehicles. This policy covers accidents involving an Etsy seller's delivery van or other vehicle.
BEST FOR
- Injuries caused to another person
- Property damage caused by your vehicle
- Vehicle theft and vandalism
Looking for different coverage? See more policies.
How much does Etsy seller insurance cost?
Etsy sellers who work independently can expect to pay less for insurance than an Etsy shop with several employees.
Factors that affect the cost of insurance include:
- Products sold, such as jewelry, candles, or other crafts
- Other locations where you operate, such as craft fairs
- Business equipment and property
- Number of employees
- Types of insurance purchased
- Deductibles and other insurance options
- Claims history
What are Etsy seller insurance requirements?
Unlike Amazon sellers, Etsy sellers are not required to carry insurance. However, that doesn't mean you don't need it. If you're sued by a customer, Etsy won't protect you. That could leave you on the hook for financially devastating legal bills.
Though Etsy doesn't have insurance requirements, it does have "House Rules" for sellers. For example, every item listed on the marketplace must be handmade, vintage, or a craft supply.
The Etsy Purchase Protection Program for sellers covers refunds on orders totaling up to $250. This program applies when items arrive after the estimated delivery date, or when there is a dispute about the accuracy of a listing description.
How do I get Etsy seller insurance?
It's easy to get Etsy seller insurance and e-commerce insurance if you have your business information on hand. Our application will ask for basic facts about your small business, such as revenue and number of employees. You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:
- Complete a free online application.
- Compare insurance quotes and choose policies.
- Pay for your policy and download a certificate.
Insureon's licensed agents work with top-rated U.S. insurance companies to find the right Etsy shop policies for your business, whether you're a sole proprietor or hire employees. Get insured today and find peace of mind knowing your business can survive the unexpected.
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Selling on Etsy? Here’s what insurance you might need
View video transcript.
[video: an animated header displays the Insureon logo. Underneath it, a subheading displays the text: "What insurance does an Etsy business need?"]
MALE VOICEOVER: If you sell handmade goods on Etsy, you might think of your shop as a side hustle and not a business that needs insurance.
But the moment you sell a product to a customer; you’re officially running a business. And that means you could also be responsible if something goes wrong.
So, what insurance does an Etsy business actually need?
Etsy itself doesn’t require sellers to carry business insurance to open or run a shop. However, Etsy only protects its marketplace, not individual sellers.
So, if a customer claims your product caused an injury, property damage, or financial loss, you could still be personally responsible for the costs.
[video: an illustrated header displays the text: "You could be responsible if a customer claims your product caused:"]
[video: Under above header, three bullet points display the text: "An injury"; "Property damage"; "Financial loss"]
And if you ever sell at craft fairs, pop-up markets, or through retail stores, many organizers will require proof of insurance before letting you participate.
[video: an illustrated header displays the text: "You’ll likely need proof of insurance for:"]
[video: Under above header, three bullet points display the text: "Craft fairs"; "Pop-up markets"; "Retail store sales"]
Even as a small business that operates online, you could face real, costly risks.
For example, a candle could overheat and damage someone’s home; a skincare product could cause an allergic reaction; a holiday themed cookie makes a customer ill; or your inventory could be damaged by a fire or theft.
[video: an illustrated header displays the text: "Small businesses face risks too:"]
[video: Under above header, four bullet points display the text: "A candle overheats and damages a home"; "A skincare cream causes an allergic reaction"; "A holiday cookie makes a customer sick"; "A fire damages inventory"]
These situations may not happen to your business... but if they do, they can be expensive.
That’s where business insurance helps protect your livelihood.
Most Etsy sellers start with general liability insurance. This coverage helps pay legal fees, medical expenses, or property damage if your business or products cause harm to someone else.
[video: an illustrated header displays the text: "General liability covers:"]
[video: Under above header, three bullet points display the text: "Customer injuries"; "Product liability claims"; "Copyright infringement"]
Product liability coverage, which is often included with general liability, is especially important if you sell physical goods like candles, cosmetics, toys, or food items.
[video: an illustrated header displays the text: "Product liability covers:"]
[video: Under above header, three bullet points display the text: "Candles and handmade goods"; "Beauty and food products"; "Toys and physical items"]
If you keep inventory, equipment, or supplies at your home or in a studio, business personal property, or BPP, insurance can help cover losses from events like fire, theft, or severe weather.
[video: an illustrated header displays the text: "BPP covers:"]
[video: Under above header, three bullet points display the text: "Fire"; "Vandalism and theft"; "Windstorms"]
And because Etsy businesses operate online, cyber insurance is becoming more important too. It can help if customer data is exposed, or your business accounts are hacked.
[video: an illustrated header displays the text: "Cyber insurance covers:"]
[video: Under above header, three bullet points display the text: "Data breach investigations"; "Customer notification costs"; "Fraud monitoring services"]
Many Etsy sellers decide to get insurance when their shop starts generating steady income, their inventory becomes more valuable, they begin selling in person, or a retailer asks for proof of coverage.
[video: an illustrated header displays the text: "When should you get Etsy business insurance?"]
[video: Under above header, four bullet points display the text: "You generate steady income"; "Your inventory value goes up"; "You begin in-person sales"; "You need proof of coverage"]
Once your hobby starts growing into a thriving business, insurance helps protect everything you’ve built.
Getting coverage for your Etsy business shouldn’t be complicated, and it doesn’t have to be. With Insureon you can get quotes in minutes and find the right coverage for your business.
[video: an illustrated header displays the text: "Insureon is the #1 digital agency for small business insurance."]
Tap the link to get small business insurance you can count on.
[video: an animated header displays the Insureon logo]
FAQs about Etsy seller insurance
Review answers to common questions about insurance for Etsy shops.
Do Etsy sellers need product liability insurance?
All Etsy sellers should carry product liability insurance, which provides financial protection against customer lawsuits related to your products. Every retailer, manufacturer, and distributor should carry this coverage, as anyone in the supply chain could be held liable for harm caused by a product.
Product liability insurance can help cover bodily injuries and property damage caused by defective products. That includes:
- Design defects
- Manufacturer defects
- Marketing defects
To avoid product lawsuits, it's important to consider all aspects of your products carefully. For example, you could manage your risks with clear instructions, warning labels, or regular maintenance of your manufacturing equipment. This helps ensure the safety of your customers, and could save your small business a fortune in legal bills.
Product liability insurance is often included in your general liability policy, along with product recall insurance to protect against costly product recalls. If not, you can add it to your policy as a rider.
Does Etsy seller insurance protect against theft?
Homeowner's insurance usually doesn't cover business property kept at your home, which is why you may need additional coverage. These policies can help you recover financial losses from theft:
- Commercial property insurance: This policy provides compensation for supplies, equipment, and inventory stolen from your business premises (but not other locations). It's also called business hazard insurance. You can bundle it with general liability coverage in a BOP for savings.
- Fidelity bond: Also called employee dishonesty coverage, this type of commercial crime insurance provides financial protection against employees who steal from your business or a customer.
In addition to insurance, it's important to take steps to prevent theft. In some cases, you can even reduce your premium by implementing security measures recommended by your insurer.
What other types of insurance should Etsy sellers consider?
To fully protect your Etsy business, you may need additional types of insurance. Consider the following policies for coverage against other risks you might face:
- Business interruption insurance: Also called business income insurance, this add-on to commercial property insurance helps businesses recover from a temporary closure tied to a fire, storm, or other covered property claim.
- Equipment breakdown coverage: This policy protects your Etsy shop's computers, electrical systems, production machinery, and other equipment from sudden malfunctions. It covers financial losses from short circuits, loss of air pressure or vacuum, or power surges that commercial property insurance typically excludes.
- Electronic data processing (EDP) insurance: This covers electronic data processing equipment, such as computers and POS systems, against data loss during a power surge, fire, natural disaster, or similar incident.
- Inland marine insurance: Be aware that property insurance only covers items at your primary business location. Inland marine insurance covers items at storage units, warehouses, and other off-site locations, along with items in transit.
Some of the above coverages can be added to a BOP, often with a discount. Learn about other ways you can save money on small business insurance.
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