Do I need insurance to sell crafts on Etsy and Amazon?

With platforms such as Etsy and Amazon able to display your products to millions of potential customers worldwide, it's never been easier to get your handmade products out there. However, what rules apply to these marketplaces and do you need any type of business insurance when selling items in this way?

While we have previously explained why you may want to consider purchasing insurance when selling crafts online, in this guide we will focus specifically on two of the most popular online marketplaces - Etsy and Amazon. From selling rules to liability regulation, carry on reading for all you need to know about protecting yourself when selling via these platforms.

Do I need business insurance to sell on Etsy?

Put plainly, no. You are not legally required to take out any form of insurance before selling your handmade crafts on Etsy. That being said, it is generally a good idea to at least consider purchasing online retailer insurance before selling on this platform. Although not compulsory, should a claim be brought against you, this cover could safeguard your business from financial ruin.

Do you need liability insurance to sell on Etsy?

Liability insurance is not a mandatory requirement for Etsy sellers. But this doesn’t mean having this cover in place is a bad idea. On the contrary, it can save you huge sums of money should a claim be brought against you.

Etsy is simply a selling platform. In this regard, it is generally not liable for your business. Whether a customer demands financial compensation after one of your products causes injury or illness, or a break-in, fire or flood at your place of business sees your stock stolen or ruined, it is up to you as an independent craft retailer to fend for yourself financially.

Naturally, issues like this take both time and money to solve. From covering court costs and legal fees to paying compensation and dealing with potential lost revenue, if you are an Etsy seller without insurance, you could face hefty costs should a claim be brought against you.

However, for a relatively small monthly product liability insurance premium, you can purchase peace of mind. Should a claim be brought against you, with insurance of this kind, you would be able to keep your Etsy business trading. 

What are the rules for selling on Etsy?

While insurance is not a requirement for Etsy sellers, there are certain rules and regulations you must agree to before you can sell. These can be read in full in Etsy’s terms and conditions when you sign up as a seller. However, below are the most important Etsy rules all craft sellers need to be aware of:

• All items must be handmade, vintage, or craft supplies. Only some ‘previously manufactured’ items are permitted. For example, designers may use a third party manufacturer to print their designs for them, as long as all manufacturing partners are clearly disclosed.
• Product photos must be original. You cannot use photos from another seller, no matter how similar your item is.
• Copyright infringement is taken very seriously and could result in your business being suspended from the platform.
• If you run more than one Etsy shop, this must be clearly disclosed.
•  Spam and the harassment of other sellers and buyers is strictly forbidden.
• Customer privacy is paramount. If you are found to be in breach of Etsy’s customer data protection rules, your business can be suspended. 

Can you sell crafts on Amazon?

Yes - since its launch in 2015, the ‘Amazon Handmade’ has provided an alternative mainstream craft marketplace to Etsy for online sellers. Described as an ‘artisan-only community on Amazon’, sellers on this platform are only permitted to sell handmade or hand-altered items. This means no mass-produced items are allowed to be sold here.

Although more exclusive in this sense, there are benefits to selling through Amazon over Etsy. The main one of these being traffic and exposure. While Etsy has an impressive customer base of around 35 million buyers, Amazon Handmade provides its sellers with access to Amazon’s worldwide customer base, thought to be made up of at least 300 million people.

Do I need insurance to sell on Amazon?

Like Etsy, there is no legal obligation to purchase insurance as an Amazon seller. However, it’s certainly worth considering. The fact is, if one of your handmade products accidentally injures a customer, makes them ill, or damages their property, you would be held responsible. Product liability insurance can protect you should a claim of this nature be brought against you, financially supporting your business with any legal costs.

What are the rules for selling on Amazon Handmade?

Like Etsy, there are a number of rules all sellers must follow in order to sell on Amazon Handmade. These can be read in full in the terms and conditions when you sign up as an  Amazon Handmade seller. But to give you a helping hand, below we outline some of the most important rules all Amazon handmade sellers should be aware of:

• All items sold must be handmade, hand-assembled or hand-altered. Mass-produced products that can be found on the regular Amazon site cannot be listed. This rule is stricter than Etsy’s equivalent rule.
• Your business must have fewer than 20 employees to sell on this platform.
• You cannot resell any items from a third party business.
• Sellers cannot list or sell any food related items or electronic/digital products.
• Production/manufacturing processes involved in the items you sell cannot be outsourced.
• All product images should be an original image of the product that is being sold. These should be clear in resolution and professionally lit.

Amazon handmade vs Etsy: a comparison

Amazon Handmade and Etsy have a number of key differences. Before making a decision about which platform you would like to sell your crafts on, it’s important to understand these nuances. The biggest of these differences involves the registration process for sellers. While the sign-up process is quick and easy on Etsy, to become an Amazon Handmade seller you have to complete an ‘artisan application process’.

This can take weeks from submission to approval. This is because, while Etsy has over 150 product categories, Amazon Handmade has only 14. If your products do not fit into one of these narrowly-defined categories, it is likely your application will be rejected.

Other differences to note include:

• Etsy charges its sellers a product listing fee. Amazon Handmade does not.
• Etsy pays its sellers via PayPal (or through the post). On the other hand, Amazon Handmade pays its sellers exclusively through direct deposit into the seller's business account.
• Etsy offers optional off-site advertising for sellers. Amazon Handmade does not include an off-site advertising service.

Here at Markel Direct, we offer tailored online retailer insurance. This allows you to combine a number of covers together into a single, specialised policy. No matter what type of specialist craft product you sell online, we also offer specialist trade-based policies. From combined photographer insurance for those who sell images and prints to artist insurance for sellers who specialise in paintings, illustrations, textiles, ceramics, no matter what craft you're passionate about, we have a policy to protect you.

To learn more about what can go wrong when selling products online and which business insurance policies can help, read our article ‘Why do online crafts sellers need insurance?’ here.