Product liability insurance - where/how to get cover? Baffled and frustrated - help please!

[TeaPlease]

Hi all. My first post, hoping someone can help.

I've bought a 'premium' site, copy of The Auto Merch. I'm in the UK, intending to sell into the USA only to start with (without nexus, this seems easier to start than worldwide or even UK and EU, given various VAT difficulties that seem to contradict what AliDopship say - I've spoken to several tax specialists).

However... product liability. It seems insane to attempt this business without it. So, I've been calling insurance companies. Umpteen calls later and I'm no further ahead — it seems that insurers won't quote for one or more reasons:

(1) Dropshipping - full stop.
(2) Sourcing products various suppliers in China in the dropshipping model, as opposed to working with a limited number like you would to bulk order white label products, do quality control checks, and sell through Amazon FBA or similar.
(3) USA - too litigious, won't cover it at all, or will only cover if less than ~20% of the business turnover is in the USA.

So far, I've spoken to all of these, to no avail:

* British Insurance Brokers Association (BIBA): 0370 950 1790
* PolicyBee: They use Hiscox, and were pretty sure they wouldn't cover products in this situation)
* TradeX: Awaiting callback.
* InSync: Can't help, can only cover USA when it is up to 20% of turnover.
* Crendon Insurance: Awaiting callback.
* Real Insurance/USA Protect: Can't help because their insurers aren't interested where the products and suppliers are so varied. Small white label range yes, dropshipping a wider range no.
* Clifford Brown & Grimsey: Can't help, but dug out details for a specialist that might — which turned out to be Policy Bee...
* Simply Business: Can't cover dropshippers but referred me to Galaghers.
* Galaghers: Won't cover dropshippers.
* Direct Line: Won't cover dropshipping business model but referred me to Cowens.
* Cowens: Their panel of insurers won't cover products sourced mainly from China.
* Towergate: Their panel of insurers won't cover products sourced mainly from China, and USA as the target market is also a problem.

So, how on earth is anyone running a business of this kind? Between VAT complexities and non-availability of product liability insurance, I can't get started with the business and am starting to tear my hair out and wonder if I have completely wasted my time and money on this whole proposition.

There seem to be businesses that are operating in this model successfully, so why can't I find the way through? Am I totally overcomplicating things somehow? Have I just not found the right insurers (who, then)? Insights appreciated!

 

[Radana]

From my perspective, insurance is a necessity, no matter what company you have and in what industry you are working. Insurance is a sort of rescue net in case something terrible happens. Personally, I am pretty prudent with my money, especially after speaking with a friend who works as a wealth manager specialist. So if I were you, I would get that insurance. Trust me, one day, you can save your business because of it. Hope you will find my message helpful, and I wish you, mate, the best of luck.

 

[TeaPlease]

From my perspective, insurance is a necessity, no matter what company you have and in what industry you are working. Insurance is a sort of rescue net in case something terrible happens. Personally, I am pretty prudent with my money, especially after speaking with a friend who works as a wealth manager specialist. So if I were you, I would get that insurance. Trust me, one day, you can save your business because of it. Hope you will find my message helpful, and I wish you, mate, the best of luck.

It sounds like you agree that it is crazy to operate without the insurance — thanks for confirming that. Given the problems I've outlined, I don't know how people here are actually able to get insurance and operate in the USA.
In my case I've abandoned the notion that I should sell to the USA and other parts of the world, to start with UK only (as my business is in the UK). For UK only I have now been able to get a sensible quote. It has cost me a lot of time to get this far.
It all seems pretty misleading when AliDropship sell you a website under the strong impression that it is the simplest thing to sell anywhere in the world, when it just isn't like that given the tax and insurance challenges.

 

[danumo]

AliDropship does not tell you all you need to know, after all it varies by country, ethic and risk profile of the individuals.
They do have a lot of other offerings for you (if) once you realize it's not really working for you. $$$$

Perhaps you need to reshape this in your head and communicate it differently, and not so detailed. There are plenty of businesses which send from wholesale warehouse/depot to customers Why call it dropshipping? A lot! of items are being produced in China and shipped across the globe, the country of origin should be an objective (in most cases), also be open to other countries like India, or where ever you find a good supplier. You just happen to start with China. You buy products in new condition and sell them to others, how these products get to the customer is a minor detail. Buying and reselling for a profit is not new.
Other people doing the same can live in other countries than you, with other laws and requirements.
Then, in your case you should think about when "liability" kicks in. What could possibly go wrong? What are items where something could go wrong and what is that? You may feel more comfortable starting with low-risk items until you can afford the cost.

Forming an LLC/Ltd gives some protection.

I wish you good luck with your purchase.
If the store does not work find out (learn) why and fix it yourself, do not pay someone else.
Be in for the long run.

 

[TeaPlease]

AliDropship does not tell you all you need to know, after all it varies by country, ethic and risk profile of the individuals.
They do have a lot of other offerings for you (if) once you realize it's not really working for you. $$$$

Perhaps you need to reshape this in your head and communicate it differently, and not so detailed. There are plenty of businesses which send from wholesale warehouse/depot to customers Why call it dropshipping? A lot! of items are being produced in China and shipped across the globe, the country of origin should be an objective (in most cases), also be open to other countries like India, or where ever you find a good supplier. You just happen to start with China. You buy products in new condition and sell them to others, how these products get to the customer is a minor detail. Buying and reselling for a profit is not new.
Other people doing the same can live in other countries than you, with other laws and requirements.
Then, in your case you should think about when "liability" kicks in. What could possibly go wrong? What are items where something could go wrong and what is that? You may feel more comfortable starting with low-risk items until you can afford the cost.

Forming an LLC/Ltd gives some protection.

I wish you good luck with your purchase.
If the store does not work find out (learn) why and fix it yourself, do not pay someone else.
Be in for the long run.

Thanks for your input and good wishes.

Yes, the specifics vary by country etcetera — but the general impression they give of "if you have a company already, then just set up payment processors and you're good to go" is plain misleading, given that you have to figure out all the tax insurance complexities first (or ignore them and take a giant risk).

My question was somewhat detailed because generalised questions yield generalised answers that don't help.

For liability, there doesn't even have to be anything wrong with the product — even spurious claims have to be defended, and cost time and money. So it's a bad idea to be uninsured.

Yes, Ltd company gives some protection as one could shut down the company in the face of a legal challenge and costs — but I don't want to start a whole other company just to take a punt on this, and I wouldn't be happy to shut down the rest of my operations under my existing company.

I've decided to target the UK only — this limits the overall tax complications to something manageable, and I can actually get insurance for this. Quite a difference from the 'sell anywhere, no problem' impression that ADS give, but at least it may still turn out to be worthwhile in the end.

 

[aribmass]

Oh, God! 11 insurance brokers and none was able to help you or guide you in any way? That's a shame! I honestly understand your frustration, and I can only relate to how crazy it is to operate without any kind of insurance.
By the way, you could try checking this website out https://www.doughroller.net/. I know they offer various suggestions regarding several types of insurance. Not entirely sure you'll find what you're looking for, but it's worth a shot. And, fingers crossed that they'll come back to you soon.

 

[TeaPlease]

Thanks @aribmass. As I say, I decided to target UK only in the end, and managed to get a sensible insurance quote. I hope to start trading in the next few weeks, at last.

 

[RichardSmithe]

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