If you’re running an online shop, even as a small side project, the question tends to come up sooner or later: do I actually need insurance for this? You’re not in a physical shop, you don’t have staff, and everything’s handled from home. It feels low risk. But things can still go wrong.
Let’s say something you sell ends up causing harm. That could mean someone getting hurt, reacting badly to a material or ingredient, or having their property damaged. Even small items can lead to big problems if they’re faulty or used the wrong way.
Product liability insurance
This is probably the big one.
If something you sell causes injury or damage, you could be liable. Even if you didn’t make the product yourself, you could still be responsible, especially if you’re drop-shipping or reselling imported goods.
Under UK product safety law, sellers are expected to ensure the items they supply are safe and compliant, even if they come from elsewhere. GOV.UK guidance here.
Product liability insurance protects you against claims like this. You might never need it. But if you do, the legal and compensation costs could be huge, and without cover, you’re on your own.
Public liability (sometimes)
You might not think this applies if you only sell online, but if you ever host in-person events, such as craft fairs, pop-ups, or market stalls, you’ll likely need public liability insurance too.
Some Etsy sellers, for example, start online and then expand into local markets or Christmas events. Most venues require traders to have their own cover in place. And if someone gets injured at your stall or your stand damages their property, it’s you they’ll come after.
Even if you only pack and ship orders from home, consider whether customers ever visit you in person. If so, you’re potentially liable there too.
Business contents or stock insurance
Most people assume their home insurance will cover this. It usually doesn’t.
Standard home insurance policies tend to exclude business activities or commercial stock. If you’ve got hundreds of pounds’ worth of handmade stock, or you keep inventory at home, you may need to add business contents cover, or take out a policy that includes it.
Some online sellers don’t hold stock themselves (e.g. print-on-demand), but if you do – and especially if it’s seasonal or bespoke – replacing everything out of pocket after a fire or theft could be brutal.
It’s worth reading the small print on your home insurance and checking with your provider. In many cases, they’ll ask you to declare any business use and may charge extra or decline cover.
Employers’ liability (if you have help)
If you employ anyone — even casually, or temporarily – you may legally need employers’ liability insurance. That includes friends and family, even if they’re paid informally.
Under the Employers’ Liability (Compulsory Insurance) Act, most UK businesses with staff are required to have cover. The HSE explains the full rules here.
So, if your partner helps with packing orders and you pay them, technically, you could need cover.
It’s one of those things people often overlook when running a tiny shop from home, but the fines for getting it wrong are hefty.
Cyber insurance (for bigger setups)
Not essential for everyone, but if you’re handling lots of personal data, taking payments directly (not just via PayPal or Etsy’s checkout), or you’re running a branded Shopify site, it’s worth thinking about cyber risks.
Cyber insurance can cover incidents such as hacking, data breaches, and business interruption if your site experiences downtime. It’s probably overkill for hobby sellers, but if you’ve built a decent customer base and store income is meaningful, it may be worth a look.
Shopify offers some security tools as standard, and platforms like Etsy manage customer payments for you, but once you run your own backend (e.g. WooCommerce), the risks shift onto your shoulders.
So, do I legally need insurance to sell online?
No, not in most cases. There’s no law requiring an Etsy or eBay seller to have insurance, unless they have employees.
But the second you start selling products to the public, you’re exposed to risk. And platforms don’t cover you. Etsy makes this clear in its seller protection FAQ, and Shopify says the same. You’re responsible for compliance, product safety, and handling any issues or claims.
Even marketplaces that offer seller support aren’t offering you legal defence or compensation cover. That’s what insurance is for.
What kind of sellers benefit most from insurance?
It’s not just full-time e-commerce businesses. The ones who often get caught out are:
- Part-time or seasonal sellers who don’t see themselves as “proper” businesses
- Makers and crafters using Etsy or Not On The High Street
- People reselling branded goods or drop-shipping from overseas
- Anyone doing food, skincare or candles (which carry more safety risk)
- Folks who’ve grown quickly and haven’t updated their insurance since they started
If you’re turning over money and selling to strangers, especially with physical goods, you’re running a business, whether you think of it that way or not.
Where to get cover
Most mainstream small business insurers will offer product liability and public liability as standard. Some also bundle in stock cover or offer optional extras depending on what you sell.
🛡️ Qdos offers flexible cover for online sellers from just £4.58/month, with options for liability, contents, and legal protection. Get a quick quote online here.
Qdos self-employed insurance from £4.58/month
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