Why do online crafts sellers need insurance?

In many cases, people have left stable jobs to pursue their passion for crafts and to make a living out of selling their creations at makers markets around the country and via online shops on e-commerce giants such as Amazon, Etsy, and Shopify, as well as on the seller’s own website and social media channels.

Do online sellers need insurance?

In the UK, there are very few insurance policies that are mandatory by law. Many online e-commerce platforms do not require sellers to carry insurance to trade, but that doesn’t mean it isn’t a good idea to ensure you and your crafts business are covered.

Whether you're selling crafts on your own website or a third-party platform, it is advisable to ensure you have some protection in case something goes wrong.

Whether you're a jewellery maker, cake maker or candle maker crafting products yourself or you sell other artist’s crafts or a designers clothing, if someone buys something from you, they’re your customer, and if they make a complaint, you have to deal with it.

You may sell an item in perfectly good faith, but if there is a defect with any part of the item then you could be held liable. Insurance will help to protect you in case a claim is made against you if your customer alleges a product you sold to them caused them harm, and it will support you with legal costs if they take you to court and potentially cover any compensation that is awarded to your customer.

Points to be aware of when you’re selling online

Before you sign up to sell your goods online it is important to make yourself fully aware of the terms of service for each platform you intend to use for your sales.

Being based in the UK doesn’t mean you cannot be subject to the laws and legal systems of other countries. Prime examples are, Shopify is governed by Canadian law, whereas Etsy is governed under Irish law. Therefore, you need to make sure your insurance policy has the correct geographical areas included in it, and that your policy covers you if the third-party e-commerce website you sell on isn't UK based.

Even if your website only sells the products and you don’t physically see or handle those products (e.g.: you sell an item via your website created by another craftsperson) you still have a responsibility to the buyer because they are your customer, not the customer of the other craftsperson whose product you sold. If you purchase a product from an online shop, who do you go to if there’s a problem? The person who sold you the item, not the manufacturer who originally made the item.

You may also want to consider insurance for when goods you have sold are in transit in case a product goes missing or sustains damage on its way to the customer.

What can go wrong when you sell products online?

1. You inadvertently break the law

If you’re not fully conversant with online trading laws, you could find yourself in hot water if you’re not careful. You can start to get to grips with the rules for online distance selling by reading the governments guide to online and distance selling for businesses.

You must ensure you give your potential customers detailed information (pre-sale and post-sale) about your terms of service including cancellation terms and delivery costs. If you fail to do this, it can be considered a criminal offence. The Which guide to Consumer Contracts Regulations is an important reference that you should read prior to selling online.

2.You breach data protection rules

Before you sell online it is important to put a privacy policy in place, which can clearly be accessed by your potential customers on your website and other online sales channels. You should also acquaint yourself with the General Data Protection Regulation (GDPR), which came into force in May 2018, as you’ll need explicit consent from your customers before you can share their data with third parties.

You must also be careful when it comes to taking card payments from customers. For ease and to avoid potential non-compliance issues, it can be best to use renowned third-party payment systems such as Worldpay or PayPal. If trading in the UK, ensure the payment system you opt for uses UK/EU data protection standards.

You can find out more about your data protection responsibilities on the Information Commissioner’s Office (ICO) website.

3. You are scammed by sophisticated cyber criminals

The world is now reliant on the internet for most of its commerce functions. As a result, there are more cyber criminals than ever, and most of them are very sophisticated when it comes to digital skills.

Therefore, it is important to ensure you are protected if you’re an online seller. If you think you’re too small to be a target, think again. Small targets are typically the most vulnerable as they don’t have the security of a large online organisation.

A cyber breach could have serious financially and operational implications for your business, such as accepting fraudulent payment for your goods, or cyber criminals hacking into your systems and stealing your sensitive data about your business, your employees, and your customers.

The risks of a data breach are not confined to immediate monetary loss, but also include:

• Loss of trust from existing clients = loss of future ongoing revenue
• Damaged reputation = takes longer to win new business and recover
• Negligence claims from clients = damages and compensation payments to clients
• Potential penalties/fines = significant revenue loss.

The fact that you are selling online from a ‘virtual’ store still means you are exposed to ‘real’ risk. But do not fear, you can protect your online venture with our Online Retailer (eCommerce) Insurance.

What insurance will you need to feel protected when you sell online?

The insurance/s you’ll need to protect your business and your customers will depend on your business model, including how much of your trade is online and how much is at crafts fairs, whether you only sell your own products or if you also sell the products of other craftspeople.

Here are some of the insurance options that can help protect your business:

Public liability insurance (PL) – This policy covers you for accidents or third-party property damage that you are alleged to be responsible for. You may base your online crafts business from an office in your own home, but if you entertain customers and/or suppliers on your premises then you may need PL in case there is an accident.

Product liability insurance – This type of insurance protects businesses from legal costs associated with a personal injury or damages claim, caused by a product your business has manufactured or distributed and typically comes with a public liability insurance policy.

Stock insurance – Even if you mostly sell your products online, your business is still as real as any high street store. Without the right cover in place, your business finances could be at risk if the unexpected happens, such as your stock being damaged or stolen.

You might even want to consider ‘goods in transit’ insurance, whichwill provide cover for:

• Theft whilst in transit
• Damage caused by an accident during transit
• Loss during transit
• Damage caused during transit.

Cyber insurance – will cover your business if you suffer a data breach during the period of insurance and covers a cyber response service and the cost of notifying third parties and/or employees of an actual or suspected data breach. As a policyholder you will also benefit from access to a cyber response helpline manned by information security experts, as well as covering you for:

• The costs of restoring data and equipment
• Informing clients of a data breach
• Assistance in the event of a ransom demand
• Loss of your net profit
• Your legal defence costs and damages you are liable to pay to other parties.　

Employers’ liability insurance (EL) – Employers’ liability insurance will protect you if an employee makes a claim because of a work-related injury or illness. The policy covers legal costs incurred in defending the claim as well as any compensation payments due.

Why choose Markel for your insurance?

When you’re looking to protect for your business, insurance is the best place to start, and you’ll want an insurer you can trust. That’s where we come in.

Here are just some of the reasons why it makes sense to choose Markel for your cover.

We put customers first
Our customers are at the heart of what we do, which is reflected in the excellent feedback our customers have given us on Feefo.com.

Great value cover
Because we offer tailored ecommerce insurance policies, you’ll only pay for the cover you actually need. And our pricing is transparent too, so you won’t be hit by unexpected fees.

Quick and easy quotes
You can get an online quote from us in as little as 90 seconds via our online form.

Legal advice when you need it
We provide a 24/7 legal helpline run by experienced solicitors to all our customers. Our policies also grant access to our online Law Hub where customers can access business templates and information.

Over 25 years’ experience
We have over 25 years’ experience of providing comprehensive business insurance protection to UK businesses. Our experience means we understand your needs and can tailor our policies to suit you.

Protect your online business. Find out more about our Online Retailer (eCommerce) Insurance and get a quick online quote in as little as 90 seconds.