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Do You Need Liability Insurance Covering The Items You Sell On Ebay?



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Hi Terry,

I have been getting your newsletter for some time now. I find the information very informative.

I see that you sell used toys. Do you carry liability insurance in case a child gets hurt on a toy you sell to their parents?

It is amazing to me that most ebay sellers do not know what liability insurance is. They think that I was referring to shipping insurance.

There was a workshop done on eBay awhile ago. It was done by a lawyer and he suggested incorporating. I really don’t want to do that right now….I am not a big enough seller to cover the costs of being a corporation. He also suggested liability insurance. I am having trouble finding an insurance company that will cover an eBay seller. I have a business rider on my homeowners insurance policy. It covers my inventory and has liability for selling clothing. I wanted to add toys but my agent does not think they will cover me. My liability amount is only $300,000. The lawyer doing the workshop suggested a $1,000,000. I have been on the discussion boards on eBay but no one has it or does not know what it is.

Thanks so much,

Jennifer

* * * * *
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First of all, I am not an account, lawyer, or insurance agent. For specific advice you need to talk to your professional advisors.

I don’t sell toys for children to play with, I sell used items to adults who collect them, but I asked a lawyer about the need for liability insurance to cover injuries as a result of purchases made on eBay.

She told me it was unlikely anyone could successfully sue me for injuries resulting from the toys I sell on eBay.

Sure some of the older toys could cause cuts becuase they are just bent and painted sheetmetal, if they are used as designed they shouldn’t be dangerous. With the exception of injuries caused by dropping a heavy item – I once lost a toe nail because a train engine fell out the bottom of a box and landed on my foot, It would be pretty hard for an injury to result.

I do make an exception in the case of toy train transformers. Any transformer I sell is either sold with the power cord cut off as parts or carefully repaired to original specifications using OEM replacement parts.

The lawyer also told me adding disclaimers to my auctions – words such as “sold for parts or repair,” or “sold as a collectible not for use by children,” or even “sold as is” would also help remove any potential liability.

Talk to a lawyer you have a relationship with. Specifically a lawyer who is not trying to impress you with his knowledge or scare you into paying for his fees.

Terry

PS about incorporating. My accountant said it almost never makes sense for a business without employee making less than $30,000 a year to incorporate. He also said most businesses making over $50,000 a year will benefit from incorporating.


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