Is Product Liability insurance required by law for e-commerce businesses?

Explore the legal requirements of product liability insurance for your e-commerce businesses plus the benefits you can get from it.

Aditya Raghunath - Writer for NEXT Insurance
By Aditya Raghunath
Michelle Meyer - Editor for NEXT Insurance
Edited by Michelle Meyer
Matt Crawford for NEXT Insurance
Fact-check by Matt Crawford

Published June 5, 2023.

Product liability insurance isn't usually required by law for e-commerce businesses — but its important to check with local regulators or consult with a lawyer to be sure.

Product liability insurance can help protect your e-commerce business from financial loss if a defect with your product causes third-party property damage or bodily harm to a customer.

The problem with a defective product can be part of its design, manufacturing or marketing. This includes incorrect or unclear instructions on using the product and any missing warnings.

Even if you only sell the product and you weren't involved in its creation or marketing, you can still be held liable if the product is defective.

Benefits of having Product Liability insurance for your e-commerce business

  • Financial protection Product liability insurance can be a financial safety net for your e-commerce businesses by covering expenses like legal fees, settlements or judgments associated with product-related claims.
  • Customer confidence Knowing that a company holds insurance coverage could reassure customers that they're buying from a responsible business that takes product safety and quality seriously.
  • Risk management Acquiring product liability insurance promotes better risk management practices. This proactive approach can give you peace of mind that your e-commerce business is covered for the unexpected.

Insurance tailored to your e-commerce business needs

Although product liability insurance isn't legally required for e-commerce businesses, it can still be a significant asset to include with your e-commerce insurance. You can view it as a proactive step towards protecting your business, building customer trust, and ensuring sustainable growth.

NEXT can help you obtain an affordable insurance package that's tailored to your business needs. Get an online quote in just a few minutes, plus instant access to your certificate of insurance once you've purchased your coverage. Easily share your insurance information with others 24/7 on the NEXT app.

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» Find out how to avoid other common retail business insurance claims