In the US, product liability cases are on the rise. The UK and the EU governments have joined the bandwagon by approving the EU Representative Actions Directive. Such consumer protection laws also apply to a global marketplace like eBay, which serves 180+ countries with 1.5 billion live listings. As governments are taking a conscious step toward protecting consumer rights, an eBay seller should invest in protecting their interests against potential liability lawsuits with eBay seller insurance.
Why Do You Need eBay seller Insurance?
Presently, eBay does not require its sellers to buy liability insurance. So, eBay seller insurance is not mandatory for you to sell on eBay. However, when it comes to grievance redressal, eBay will hold your funds till the issue is resolved or deduct the disputed amount from your eBay seller account. If the issue escalates, the buyer can sue your business. eBay does have a Seller Protection Policy in place that protects eBay sellers from issues that eBay calls “outside your control.”
It is also important to note that in its User Agreement, eBay clearly states:
“In addition, to the extent permitted by applicable law, in no event will eBay….be liable to you or any third party under any claim at law or in equity for any consequential damages or losses (including, but not limited to, loss of money, goodwill or reputation, profits, other intangible losses, or any special, indirect, or consequential damages), and all such damages or losses are expressly excluded by this agreement whether or not they were foreseeable or eBay was advised of such damages or losses.”
Due to the limited nature of the Seller Protection Policy and the business policy of eBay UK, more often than not, the onus to protect an eBay business falls squarely on the eBay sellers. You have to ensure that you can pay for the product liability claims. Otherwise, disgruntled customers can bring your budding business to a grinding halt.
A rapidly growing number of eBay sellers around the globe already invest in eBay seller insurance to safeguard their business. So, if you are an eBay seller, you should know the various categories of insurance products available to you and how they can protect your business interests.
eBay Seller Insurance: What Are Your Options?
If you are an eBay seller, these insurance options are necessary to run your business smoothly on eBay. Depending on the product you are selling and the geographies you are catering to, you can choose insurance products that work best for you.
- Cargo Insurance
Shipping insurance changes from one logistics partner to another. Some services may offer you insurance over small packages but not high-value items. If a buyer does not receive their product or receives it in a damaged condition, a refund would be deducted from your seller’s account. These issues are increasingly prevalent due to the global supply chain crisis.
When you get a third-party eBay seller shipping insurance or cargo insurance, you are protected against all transit risks. Your coverage extends to:
- Packages delivered around the globe
- Loss due to actions of the logistics partner
- Rejected deliveries
- Damage to reputation or loss of profit due to damaged deliveries
Moreover, a local eBay insurance provider will always be available for your questions. It will also help expedite the eBay claim process.
- Cyber Liability Insurance
On eBay, all your product listings, orders, customer data, and even payments are processed online. Given the digital nature of the information, any exposed vulnerabilities offer hackers an opportunity to exploit and steal. The online theft may include stealing your login credentials, email contents, bank or PayPal account details, and more. They can also hold customer data as leverage to extract ransom from you.
In such a case, cyber liability insurance comes in handy. It covers multiple cybercrime scenarios, including:
- Loss of personal data
- Cost of ransom, lost data, or system breakdown
- Cost of loss of business due to breach
- Settling lawsuits arising from the breach
For every online business, cyber liability insurance should be strongly considered.
- Commercial Property Insurance
You may be running your eBay business from home, but your home insurance won’t protect you against business risks now, will it?
Commercial property insurance is a must for an eBay seller like you. If there is any damage to any equipment or loss of business inventory due to fire, flood, or any other mishap, your homeowner’s insurance will not cover it. In fact, your homeowner’s insurance may not even process loss to your residential assets because you were running a business from home.
So, it makes good business sense to buy commercial property insurance. An eBay business insurance will help insure multiple aspects of your business, including:
- Loss of business inventory
- Damages to structure, furniture, electronics, or other office supplies
- Cost of regenerating business records and other securities
- Loss of money
- Commercial General Liability Insurance
Whether you are a manufacturer or a reseller, it’s your responsibility to ensure that your products perform as advertised and intended. In case your product causes injury to an unsuspecting buyer or their personal property, it can result in a lawsuit that can kill your business. Businesses opt for commercial general liability insurance precisely to prevent such a situation. It covers:
- Reimbursement for injury at your place of business or due to your product
- Reimbursement for property damage due to your business operations
- Cost of false advertising (when a buyer accuses you of misrepresenting a product)
- Cost of lawyers, payment towards damages, and lawsuit settlement awards.
- Product Recall Insurance
You may get information that your product is causing injuries or maybe generally harmful to your buyers. If that’s the case, then a sensible business decision is to recall the product. Product recall insurance will come in handy when faced with such a decision. It will include:
- Expenses related to messages to customers, payroll costs, and disposal costs
- Cost of replacing old products with new, safer ones
- Losses due to recall and old inventory
- Reputation costs include PR costs, advertising, and other marketing expenses
The cost of firefighting later would anyway be higher than the cost of replacement today.
Forewarned is Forearmed
For an eBay seller, as with any business, a liability claim is an eventuality, not a mere possibility. It has nothing to do with your business ethics, customer service commitment, or product quality. Some situations are not under our control, and an eBay claim may arise out of any vulnerable business situation. Covering every vulnerability source is crucial to business sustainability. A liability eBay protection plan for your business is one of the pillars to keep your business running.
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