Liability insurance for a webstore

[Tonearm]

My store is online-only, sells physical products, and is pretty typical. I'm shopping for liability insurance, but online research in this department is very difficult. I'm really not getting anywhere. Does anyone use an insurance company for a liability policy that they like?

I'm also wondering what specific types of attributes a liability insurance policy should have for a webstore like mine. I know I need Non-Owned Auto because my employees drive back and forth to the post office in their own cars. Anything else I should make sure is included?

[jecasc]

Go to an independent insurance broker, one you pay yourself and who is not paid a commission by the insurance company.

It's nearly impossible to find offers for company liability insurances online, because there are too many factors to be taken into account: What kind of products do you sell, how harmful can the products be to customers, are the products imported or produced by yourself and you are responsible for product liability or do you only sell products that are produced in your country or imported by others. Because this means the product liability usually lies with the importer or manufacturer and you would only be liable for things like mis-selling. Are you selling only national or international and how much do you sell and so on.

Offers for company liability insurances are usually custom-tailored and there are no off the shelf offers. So I'd really pay the money for an independent broker, it will save you a lot of money in the long run.

[Tonearm]

Thanks jecasc. Should I just get a list of independent brokers in my (relatively rural) area and pay a visit to each one to see who can offer the best price?

Should I not be too concerned about which insurance company I end up with through the broker, and only pay attention to the rate and the terms in the contract?

So I'd really pay the money for an independent broker, it will save you a lot of money in the long run.

Does this mean they're more expensive than an agent who is affiliated with an insurance company?

[jsinger]

Is your online business held in a corporation? Incorporating would offer a high degree of protection if your operation is structured correctly. Talking with a lawyer might be a good start.

How many online sellers have been sued for product liability (I presume that's what your talking about). I would think very, very few.

Do you have Workman's Compensation coverage already in case an employee gets hurt?

[jecasc]

Does this mean they're more expensive than an agent who is affiliated with an insurance company?

No, the difference is this: If you go to an agent affiliated with one company, he will of course only offer you a contract for this company. Or even if its a broker that offers contracts from different companies, he might be inclined to present you the insurence that pays the highest commission and not the one suited best for your needs. And of course the commission for the agent is always implicitly added to your insurance rates.

So in the long run it's better to go to an agent you pay yourself, one who does not work on commission. This means you will have to pay for his advice but the amount for the commission will not add up on your insurance rates.

Of course you can also go to different insurance companies and compare the offers yourself.

You should compare rates and terms and if you have an offer you think is ok, you could do a little check on the internet about the insurance company.

And like jsinger suggested: Limiting your liability by choosing a fitting legal form for your company is always a good idea. The more dangerous the goods, the more important to choose a form of corporation where you are not personally liable but the liability is limeted to the company.

[arubin]

We got sued by someone who injured themselves on a piece of exercise equipment we sold. It was a dropshipped item from a major manufacturer that we didn't touch, but that doesn't keep someone from filing a suit. It does happen :(
Our insurance handled it.

[Tonearm]

Is your online business held in a corporation? Incorporating would offer a high degree of protection if your operation is structured correctly.

I've heard that an LLC is an excellent choice and I think I'll be converting my sole proprietorship to an LLC at the same time that I buy this insurance.

So in the long run it's better to go to an agent you pay yourself, one who does not work on commission. This means you will have to pay for his advice but the amount for the commission will not add up on your insurance rates.

I didn't know about this type of agent. So they sell advice and insurance? You pay for their time in giving advice, and then you can buy insurance from them too? Are they just called "independent brokers"?

We got sued by someone who injured themselves on a piece of exercise equipment we sold. It was a dropshipped item from a major manufacturer that we didn't touch, but that doesn't keep someone from filing a suit. It does happen :(
Our insurance handled it.

Man, that's crazy. I was really only after liability insurance for the Non-Owned Auto coverage since no one seems to sell it separately from General Liability, but after reading this I'd like to have Product Liability too.

[dpd1]

arubin... What was the outcome of the suit, if you don't mind me asking.

[arubin]

The insurance company handled the legal details so I don't know exactly, but I don't believe the insurance company had to pay out.

[dpd1]

OK... I was going to say, sounds ridiculous to me.

[Tonearm]

Does anyone know more about the type of independent brokers that jecasc was talking about? I'm wondering how to find them. Are they just called "independent brokers"? I've never heard of an insurance broker charging for their advice.