Home Forums Selling online Product Liability Insurance for Online Store

  • This topic is empty.
Viewing 15 posts - 1 through 15 (of 17 total)
  • Author
    Posts
  • #999970
    Nirmalseo
    Member
    • Total posts: 4

    Hey team,

    Thanks for the awesome community, I’ve recently joined and seems like a nice business community.

    My query is related to the business I have been running for the last 2 years. Excellent business/product and great margins. Almost all sales are online.

    I have been trying to get the product liability insurance for the last 6 months and that is proving to be a very difficult task. We have contacted multiple insurance brokers but almost all of them had no success in getting product liability insurance for us.

    The major argument from the insurers is that – We import goods from China and hence I am deemed as a manufacturer. They won’t cover me if I import goods from China. Few insurers have said that – if you source goods locally then they are happy to give the Product liability insurance… I just don’t know how big players get their insurance and I am quite sure most of the companies like Kmart etc, import goods from China.

    What I am particularly worried about is people using our product incorrectly, getting injured and then suing us. And hence I have read online that Product liability is a must.

    I am thinking about selling my beloved business because it’s just too risky to keep running without insurance.

    Any help would be greatly appreciated.

    Nirmal

    #1222096
    Lisa Crocker
    Member
    • Total posts: 221

    Hi Nirmal,

    Thanks for joining our community and glad you are enjoying being part of it :-)
    I can’t help you with your specific question, but hopefully some of our members who have experience with this will be able to share their thoughts.

    All the best with your business.
    Lisa

    #1222097
    bb1
    Participant
    • Total posts: 4,472

    I haven’t seen [USER=37857]@alliedib[/USER] around for a little while, but check out his profile and see if he has contact details, he seemed to be the font of all knowledge on insurance

    #1222098
    Oziecom
    Member
    • Total posts: 33

    Hi, I can comment with a decent amount of experience with this one.

    You’re correct about the difficulty. If you can find it with a one of the typical big insurers, it’s very expensive and not worth it. There are niche players entering this market, specifically started to cater to the online seller with products manufactured in Asia and so on.

    I can point you to both an Australian based company and a US-based agent. The US is going to be cheaper from what I understand, however they need you to have nexus or a business identity /address in the US to be viable.

    My sense is Amazon for example is going to enforce $1 million of cover for all sellers, in fact that’s basically the rule as of today. I believe they will then provide access to discounted partner services to provide this insurance. They aren’t doing it yet, but I think they will eventually.

    As the importer of record, your business is liable, not the manufacturer in many scenarios. What this means is, if you are the target of a lawsuit in the US, they go after you as the importer, not the manufacturer or trading company. For example, bringing a Chinese-based manufacturer to court in the US is fraught with difficulty. The next best target is you, unfortunately. It does depend on your selling model though. If you are simply reselling a product from a major brand, then that manufacturer would be more likely to be liable.

    Where is your main selling market and what platforms are you selling on?

    Jamie

    #1222099
    Nirmalseo
    Member
    • Total posts: 4
    Oziecom, post: 268350, member: 93591 wrote:
    Hi, I can comment with a decent amount of experience with this one.

    You’re correct about the difficulty. If you can find it with a one of the typical big insurers, it’s very expensive and not worth it. There are niche players entering this market, specifically started to cater to the online seller with products manufactured in Asia and so on.

    I can point you to both an Australian based company and a US-based agent. The US is going to be cheaper from what I understand, however they need you to have nexus or a business identity /address in the US to be viable.

    My sense is Amazon for example is going to enforce $1 million of cover for all sellers, in fact that’s basically the rule as of today. I believe they will then provide access to discounted partner services to provide this insurance. They aren’t doing it yet, but I think they will eventually.

    As the importer of record, your business is liable, not the manufacturer in many scenarios. What this means is, if you are the target of a lawsuit in the US, they go after you as the importer, not the manufacturer or trading company. For example, bringing a Chinese-based manufacturer to court in the US is fraught with difficulty. The next best target is you, unfortunately. It does depend on your selling model though. If you are simply reselling a product from a major brand, then that manufacturer would be more likely to be liable.

    Where is your main selling market and what platforms are you selling on?

    Jamie
    Hi Jamie,
    Thanks very much for the detailed response. That indeed makes sense.

    Our e-commerce store target market is Australia only, it would be great help if you could point me to any Australian insurance company that provides product liability to importers.

    EDIT: Also 100% of our sales is from our own website, we don’t use ebay or Amazon etc.

    Thank you
    Nirmal

    #1222100
    Oziecom
    Member
    • Total posts: 33

    Hi Nirmal, there is a company based in Queensland called onlinesellersinsurance. Google them and get in touch.

    Cheers
    Jamie

    #1222101
    bb1
    Participant
    • Total posts: 4,472
    Oziecom, post: 268350, member: 93591 wrote:
    If you are simply reselling a product from a major brand, then that manufacturer would be more likely to be liable.

    Are you sure about this?

    #1222102
    Oziecom
    Member
    • Total posts: 33
    bb1, post: 268391, member: 53375 wrote:
    Are you sure about this?
    Short answer, no. It would really depend on the brand and their Ts & Cs for resellers. There’s a certain amount of grey here for sure.
    #1222103
    bb1
    Participant
    • Total posts: 4,472
    Oziecom, post: 268392, member: 93591 wrote:
    Short answer, no. It would really depend on the brand and their Ts & Cs for resellers. There’s a certain amount of grey here for sure.

    No grey at all really, if a consumer is going to sue someone they will sue everyone involved in the life cycle of the product, and as such if you being reseller or not, they will be in the firing line and will require insurance even if to defend themselves to say its the manufacturers fault. All parties involved will be named in any court action.

    And that is why I repeatedly tell people don’t take any advise from a forum, because you get people who really don’t know, make comments such as ”If you are simply reselling a product from a major brand, then that manufacturer would be more likely to be liable.”, and when they trust this advise (because a lot of people will trust any advise that saves them money). They cant tell the court that [USER=93591]@Oziecom[/USER] said its ok, the court will just laugh at them.

    #1222104
    Oziecom
    Member
    • Total posts: 33

    Totally fair point. I’m not a lawyer. Advice is generalised based on my own importing experience and research to date.

    #1222105
    Nirmalseo
    Member
    • Total posts: 4
    Oziecom, post: 268384, member: 93591 wrote:
    Hi Nirmal, there is a company based in Queensland called onlinesellersinsurance. Google them and get in touch.

    Cheers
    Jamie
    Thank you for your time. I will get in touch with them and keep you posted how I go.

    Cheers

    #1222106
    one1
    Member
    • Total posts: 17

    How did you go?

    #1222107
    Nirmalseo
    Member
    • Total posts: 4
    one1, post: 269154, member: 4789 wrote:
    How did you go?

    Apparently, insurance from the US insurers is available and easy to get ONLY IF YOUR US REGISTERED ENTITY.

    I reckon closing current company and opening US entity wouldn’t make much sense because if in case we plan to sell this business in 1-2 years, then it would be easier to sell a locally registered business than US entity.

    Our supplier has advised that they will be able to obtain international product liability insurance for their products from insurers based in China. I am not too sure how that would work out but so far I can’t see any other positive option. Things have been delayed due to recent tough situations in China and around the world.

    Kind regards, Nirmal

    #1222108
    bb1
    Participant
    • Total posts: 4,472
    Nirmalseo, post: 269178, member: 116839 wrote:
    Our supplier has advised that they will be able to obtain international product liability insurance for their products from insurers based in China. I am not too sure how that would work out but so far I can’t see any other positive option.
    That won’t help you, YOU need the insurance not your supplier.
    #1222109
    Jason Ramage
    Participant
    • Total posts: 3,160
    bb1, post: 269179, member: 53375 wrote:
    That won’t help you, YOU need the insurance not your supplier.

    Yes, would love to see a Chinese insurance company cut a cheque with a claim from an Aussie for faulty Chinese product…

    Jason Ramage | Lucas Arthur Pty Ltd | E: hello@lucasarthur.net.au   P: 61 3 8324 0344    M: 61 412 244 888
Viewing 15 posts - 1 through 15 (of 17 total)
  • You must be logged in to reply to this topic.