Do Etsy Sellers Need Insurance?

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Many people love the idea of turning their handmade hobby into a side hustle. Opening an Etsy shop is one of the best ways to make that dream come true. However, there are certain things to consider before starting your journey selling handmade products. One item to consider is the need for insurance.

Do Etsy Sellers need insurance? The short answer is no; an Etsy seller is not required to have insurance to sell through Etsy. However, it is always a good idea when starting a new business or side hustle to assess the need for insurance.

Although Etsy doesn’t require sellers to carry insurance, it may still be a smart business move to purchase insurance for your small business. In addition, Etsy has other terms and conditions for selling on their site that you need to follow.

This post is for informational purposes only and contains affiliate links, see my disclosures here.

Should You Choose To Have Insurance?

As the saying goes, sometimes it’s better to be safe than sorry. Unfortunately, we live in a litigious society. Although the likelihood of a claim being filed against you or your business may be small, if a claim ever was filed against you, the results could be devastating. So if you’re in a position to be able to afford insurance for your Etsy business, it’s probably a good idea to get that added protection. It may help you sleep better at night!

What are the types of insurance available?

There are several types of insurance that an Etsy seller or handmade product seller should consider. Most small businesses, not just Etsy shops, can benefit from the kind of coverage and protection these policies provide.

  • General Liability insurance covers claims made by others for bodily injury, damage to property, or personal injury.
  • Product Liability Insurance covers the legal costs associated with any claims of bodily injury or damage caused by your product.
  • Business Property Insurance protects business property, including equipment and inventory.

Limitations of Homeowners Insurance

Many new business owners erroneously assume their personal insurance policies will cover them if their business is sued or suffers a loss. However, your homeowners policy typically doesn’t include any business-related claims or loss of inventory. For example, if your home was destroyed by fire and all of your product inventory with it, your homeowners insurance policy would most likely not cover the loss of equipment or inventory stock to your business. Or if a customer comes to your home to pick up a product and has a fall, if they are injured, the injury will most likely not be covered by your homeowners policy.

In some cases you can add additional endorsements to your existing homeowners policy to cover these types of scenarios. This is often called an incidental business endorsement. Check with your current insurance company to determine if they sell this type of endorsement and what exactly it would cover.

How Much Will Small Business Insurance Cost?

The cost of insurance can range widely depending on the type of coverage you need, your location, and the variety of products you sell. Plan to spend anywhere from $25 to $125 a month on your small business insurance.

Thankfully it’s easier than ever to get a quote on business insurance. Many small business insurers have an online quote feature, with the ability to speak directly to an agent regarding your insurance needs. My favorites are The Hartford and Hiscox. Both specialize in small business insurance and make getting an online quote easy and fast. You’ll just need to answer a few questions about your business. You may want to get multiple quotes to compare coverage and cost. You can also call the insurance company you use for home and auto insurance for a quote.

Other Rules For Selling On Etsy

Even though Etsy doesn’t require you to have insurance, there are other Etsy rules you need to follow. Here are the primary “Dos and Don’ts” of selling on Etsy.

  • You can sell handmade items, vintage items, or craft supplies on Etsy.
  • Some use of manufacturing is allowed. For example, if you design T-shirts, you can have them printed by a manufacturer, but you must describe your process and disclose your production partner in your shop information section.
  • Use your own original photos.
  • Be transparent and honest about your business and products.
  • No spam or harassing other users.
  • Avoid copyright infringement.
  • Respect customer privacy.
  • If you have multiple shops, you must disclose that fact.
  • You must be responsible for customer service.
  • You are not required to have a business license to sell on Etsy, but you must follow any applicable laws that pertain to you and your business. These could vary by product and state.
  • Create shop policies that you and your customers abide by.

The above is a basic list of the things you agree to when you sign up for Etsy. You will want to read the full page of terms and conditions before signing up for this platform. Make sure you follow all of the rules set by Etsy. 

Final Thoughts

Etsy is a vast platform and has millions of followers, which means millions of potential customers. Etsy can be a great place to start a side business or turn your hobby into your dream job. Make sure you read all the site’s rules and regulations and consider obtaining insurance for added peace of mind.

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