The Essential Guide to Insurance for Etsy Sellers (2024)

Insurance Basics

As an Etsy seller, have you ever considered the financial risks you’re exposed to without proper insurance? From product liability claims to property damage, the potential pitfalls are numerous and could spell disaster for your business.

With the proper insurance, your business is protected. Without it, you could be held liable for any damages or injuries caused by your products.

Do You Need Insurance to Sell on Etsy?

In a word, no. There is no requirement to have insurance when selling on Etsy. However, it’s important to note that just because it’s not required, doesn’t mean you shouldn’t have it. 

Not having insurance coverage can leave your online business vulnerable to liability claims for bodily injury or property damage, no matter what platform you’re selling on. It’s a risk that small business owners should not take lightly.

So, while you don’t need insurance to sell on Etsy, having a business insurance policy that covers product liability is a smart move to ensure the protection of your business.

For more information on how much insurance you might need, check out our guide on how much product liability insurance you need.

Etsy Feature

What About Etsy’s Purchase Protection Programme?

Yes – Etsy does provide some form of seller protection with their Purchase Protection Programme. But, not the kind of protection you may have been hoping for.

The program is there to help qualified sellers resolve eligible cases. If eligible, Etsy may cover buyer refunds for orders up to $250 USD. Cases include:

  • Listing accuracy disputes – protection is provided if the orders match the listed description and photos against a contrary buyer’s claim
  • Support for sellers’ first eligible damaged item case – and once annually thereafter  

However, the program also states:

“The Etsy Purchase Protection programme for sellers is not an insurance policy, a warranty, nor a guarantee … Etsy reserves the right to change, suspend, or discontinue the programme at any time, for any reason, and we will not be liable to you for the effect that any changes to the programme may have on you.”

In short, Etsy may cover some refund claims made against your Etsy store. However, this is not guaranteed and will not cover any claims that include property damage or bodily injury caused by your product – underlining the importance of product liability insurance for your Etsy store. 

Why Do Etsy Sellers Need Product Liability Insurance?

hand made weaving

As an Etsy seller, you’ve probably asked yourself, “Do I really need insurance to sell on Etsy?” 

The answer is a resounding yes

Selling on Etsy without insurance is a risky business move that could potentially cost you a lot of money.

Imagine this scenario: You’ve created a fantastic new beauty product that complies with all legislation and has been rigorously tested. However, a customer experiences a skin reaction after using your product. Or, consider a hair care product you sell that unexpectedly turns a customer’s hair pink. 

These are just two of a whole host of issues that could arise when selling products on Etsy – cases in which you could be held liable for any damages or injuries caused by your products if your customer chooses to make a claim. 

That’s where product liability insurance comes into play to protect you against any claims that your product has caused damage or injury to a third party. It’s your safety net to cover legal defense and any compensation payment to the claimant if your product is found to be at fault. 

Etsy doesn’t provide any support to sellers throughout the claims process. So as a business owner, it’s your sole responsibility to ensure you have the right type of insurance to protect your Etsy shop.

What’s the Best Business Insurance for Etsy Sellers?

When it comes to protecting your Etsy business, there are several types of insurance policies you should consider:

Commercial General Liability Insurance

General Liability Insurance is a must-have for any small business owner – online or offline. 

It covers your Etsy business against claims for anything from bodily injuries and medical expenses to tangible damages like someone’s physical property, and intangible damages such as guarding one’s reputation against claims like libel or slander. 

Commercial Auto Insurance

If you use a vehicle to conduct any part of your business, such as delivering your products, then Commercial Auto Insurance is essential. It provides coverage for any accidents or damages that occur while using your vehicle for business purposes.

Workers’ Compensation Insurance

If you employ a team, then Workers’ Compensation Insurance is crucial. It covers medical expenses and a portion of lost wages should any employee face an injury or fall sick while at work. 

Commercial Property Insurance

You can sell three main types of products on Etsy: handmade goods, vintage items, and craft supplies. For the majority of Etsy sellers, this requires equipment and operating out of their own business premises to create and manufacture those products. 

Commercial Property Insurance protects your business property, including your inventory, equipment, and the location where you run your business, from damage or loss.

Cyber Insurance

Cyber Insurance

In today’s digital age, Cyber Insurance is increasingly important. It protects your business from financial losses from cyber threats or data breaches.

But no two sellers are the same. So, your specific insurance needs will vary based on your business operations and risk exposure. It’s important to assess your business risks and choose the right insurance policies to best meet those needs.

How Much Does Etsy Insurance Cost?

Given that Etsy doesn’t mandate any type of insurance, how can you know how much the right amount of coverage will cost?

To put it simply, the cost of insurance for your Etsy shop depends on multiple factors: type of product, risk level, volume of sales, and more. 

A product in a lower-risk category will incur a lower premium compared to a product considered high-risk. A bonus for a number of Etsy sellers is that handmade crafts tend to lean towards the lower end of that spectrum.

Other factors that come into play include:

  • The equipment and property involved in your business operations
  • The size and income of your business 
  • Policy specifics such as deductibles

Assureful’s Commercial General Liability policies are specifically designed for online sellers, taking the stress out of finding the right coverage, at the right price. 

From getting your quote and receiving your policy documents to auto-adjusting your premium every month, we’ve got you covered.

No obligation quote.
Policies can be canceled at any time, with 30 days’ notice.

The Pitfalls of Most Traditional Insurance for Etsy Sellers

Running your dynamic online business requires dynamic solutions – including your insurance. 

While the world of eCommerce is continually growing and changing, traditional insurance hasn’t yet adapted to sufficiently meet the needs of thriving eCommerce businesses. 

Restrictive Annual Projections 

Traditional insurance applications often rely on yearly projections, a flawed system that can leave Etsy sellers open to liability claims if underinsured, or out-of-pocket by obtaining coverage above their needs.

To add to this risk, most traditional insurance models often include upfront annual payments or high-interest premium financing – adding unnecessary strain on your cash flow.

Complex Processes

Lengthy forms and analog procedures can make obtaining the right level of cover highly difficult and time-consuming – not at all in line with the fast-paced nature of eCommerce. 

That’s why we developed Assureful, a smart insurance solution for Etsy sellers that addresses these challenges.

Introducing Assureful: Etsy Liability Insurance – The Smart Way

Say goodbye to the limitations of traditional insurance and say hello to Assureful, the insurance platform designed specifically to serve the needs of eCommerce sellers. 

Pay-as-you-Sell Model

Premiums are based on actual monthly sales, not yearly projections, for accurate coverage that scales with your business, and adjust every month – all on autopilot. 

Check out our full post for more on how pay-as-you-sell insurance works. 

We’re Not A Broker, We’re The Underwriter

Assureful provides coverage directly, with claims managed by our trusted claims administrator. We bring you better privacy and more tailored solutions for your business, without sharing your information with multiple providers. 

Free Quotes & Auto Adjustments

Say goodbye to lengthy application forms. Assureful’s AI technology allows you to access automated, free quotes for your Etsy seller insurance by directly connecting your seller accounts. 

Full Compliance with Major Platforms

Selling on multiple platforms? Assureful’s General Liability Insurance covers all major eCommerce platforms and is compliant with major marketplaces like Etsy, Amazon, and Walmart.

Product Liability Insurance for Etsy Sellers: The Only Way to Sell With Confidence 

Running an Etsy shop without proper insurance is a risky proposition. From product liability claims to property damage – the potential pitfalls are numerous, especially as your business grows.

Don’t leave your business vulnerable. Ensure peace of mind with Assureful’s pay-as-you-sell Commercial General Liability Insurance. Get your no-obligation quote today and protect your Etsy business – and your peace of mind – with the smart insurance solution it deserves.

Save on Etsy Insurance

No obligation quote.
Policies can be canceled at any time, with 30 days’ notice.

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