Etsy seller insurance: We answered the top 5 questions online sellers have

Setting up an Etsy shop is straightforward. You can open your storefront and start selling your goods in no time at all. But even if it’s a side hustle or a hobby, an Etsy store is a business, and businesses come with risks and legal requirements.

For instance, did you know that if your products hurt someone, you could be liable for medical payments, property damages and legal fees and judgments? Here’s what you need to know about protecting yourself with Etsy insurance.

1. Does Etsy require seller insurance?

The short answer is no. Etsy doesn’t require you to have insurance to sell or operate a store, so you might think you’re off the hook. If Etsy insurance isn’t needed, then why buy it?

Think of it this way. Suppose you sell handcrafted nightlights, craft supplies or custom t-shirts. What harm can come from that? But there are hidden risks in e-commerce. For instance, think about what would happen if:

• The custom nightlights you sell are popular with your buyers. But the nightlight’s parts were defective and caused an electrical fire, damaging a buyer’s home.
• You sell craft supplies in your shop, including paint. A buyer complains of painful, difficult breathing after using the paint in a poorly-ventilated room.
• Buyers love your custom t-shirt, but another company claims you’ve stolen their ideas for your designs.

You could face serious legal trouble and steep financial consequences in these scenarios.

According to the Insurance Information Institute, the average product liability claim is $7.6 million. E-commerce insurance can give you financial protection if you’re involved in a lawsuit.

2. Can you get Etsy seller insurance from Etsy?

Etsy doesn’t offer product liability or e-commerce insurance for sellers. If you search the Etsy Help Center, you’ll only find one reference to insurance — shipping insurance. But shipping insurance doesn’t protect you from product liability.

The platform does have an Etsy Seller Protection Policy — but that doesn’t cover product liability, either. Instead, it claims not to hold you financially responsible for “non-delivery or not-as-described cases that result in a refund.” 

3. Will homeowners or renters insurance cover you?

Aside from product liability, consider your own operations and business set up. You likely have invested in printers or specialized tools for your workshop. And what about that closet or spare room full of supplies or products? 

Contrary to what you might think, homeowners and renters insurance doesn’t cover your home-based business. Most policies specifically exclude business-related claims and loss of inventory.

Etsy sellers who run their shop out of their homes should consider e-commerce insurance. Otherwise, you’re on your own if a fire or leaking roof destroys your inventory and supplies.

4. What’s the best insurance for Etsy sellers?

Etsy is an e-commerce marketplace, and protecting yourself is as easy as buying e-commerce insurance. Coverage can bundle several policies:

• General Liability
• Commercial Auto
• Workers’ Compensation
• Commercial Property

General Liability

One of the most important features of general liability is product liability coverage. Product liability includes bodily injury and property damage liability. So, you’re protected up to policy limits if your goods harm someone or their property. For example, if your handmade bracelet causes a rash, or your hand-poured candle explodes and destroys furniture or flooring.

Commercial Auto

Personal auto insurance probably isn’t enough if you run an Etsy shop. Do you use your vehicle for errands related to your Etsy store? Your personal policy may not cover accidents that happen while you’re driving for your business, but commercial auto coverage can.

Workers’ Compensation

As your Etsy business grows, you might decide to hire an employee to help keep up with orders.Depending on your state, you  may be required to buy workers’ compensation insurance to cover employees.

Commercial Property

You don’t own a physical storefront, so you don’t need commercial property insurance, right? Not so fast. Your homeowners or renters policy may offer a little coverage for your home-based Etsy business, but it’s usually not enough — even for Etsy sellers.

Commercial property insurance can protect the equipment you use for your Etsy shop and inventory. For example, it can protect you financially if fire, water damage or theft destroys your equipment, supplies or inventory.

5. What other rules are there for selling on Etsy?

Etsy insurance is just one way to succeed as an Etsy seller. There are plenty of other things you can do to grow your shop:

• Find out if your state requires you to get a business license to sell on Etsy.
• Know that the site only lets you sell handmade items, vintage items and craft supplies.
• Create well-written details about your products to reduce returns and refunds.
• Read Etsy’s seller policy to understand legal tips and tools you need to know.

You don’t need a detailed business plan to sell on Etsy, and your insurance needs may be small as you begin. But insurance and other protections can help you focus on your shop instead of looking over your shoulder.

How NEXT helps keeps Etsy sellers thriving

If you’re like most sellers, you haven’t thought much about needing insurance. You may not need much coverage when you set up shop, but Etsy seller insurance can go a long way to giving you peace of mind.

At NEXT, we make it easy for Etsy sellers to get the protection they need to keep selling and sharing their passion with others. We’re 100% dedicated to helping small businesses thrive by making insurance accessible and customizable. You can get a quote for e-commerce insurance and print your certificate of insurance online instantly.

The best part? Coverage can cost less than $3 a day. And if you have questions, we have licensed, U.S.-based insurance advisors standing by, ready to help. 

Start a free instant quote to get custom insurance for your Etsy shop.