business insurance for an etailer: liability and product

[earth-friendly]

Does anyone have any recommendations for liability insurance and product insurance for an internet business?
I sell different types of food products on my site, and I'm concerned that someone could have an allergic reaction to something. I've heard that people could sue the manufacturer, but also everyone else involved in the process, including the retailer.

As far as product insurance, I do stock a significant inventory of one product in a fulfillment house, and they ship it out for me. I'd like to get that product covered for damage, in case anything happens to it at the warehouse. The fulfillment house said that I am responsible for that.

I've also heard that it's good to get ecommerce insurance, which covers things like problems that result from your site getting hacked. Any suggestions for that?

Thanks!
-Lori-

[jpf]

If your manufacturing - you really need to talk to a full line insurance firm (often small business insurance can be tacked onto your home insurance).
If your not manufacturing - but reselling some else's product - they have majority of the liability (your is typically limited to there cost of the product - which you could possibly get your own cost back from the manufacture).
If your having custom product manufactured FOR you by a 3rd party - you need to figure out who is responsible and for which areas.

Using a on-line Credit Card Processor - will limit you from CC fraud and hacking. If not - then using a SSL certificate with a fraud guarantee would be suggestible - but just cover you in certain areas and only to a certain level. If you hosting your own CC verification or offline -then any SSL guarantee does not cover any of that.

Your best to figure out what you may be lible for - speak to an incorporation lawyer (to limit your liability in case of being sued for any reason. As well as get privacy policy and other related policies written) and a full line insurance firm.

$100,000 I would say is a MIN for any liability insurance -but 250,000 to 1 million (or more) is better - depending on what your doing.

Most companies I deal with have 1/2 to 10 million - only a few have more

[earth-friendly]

Thanks for the info!
I don't manufacture my own product, I resell other peoples' products.
I sell food products, so it's possible that someone could have an allergic reaction to a food product I carry. I know the manufacturer is the main one responsible, but I've heard that people will sue everyone involved in the process, including the retailer.
Do you have any companies you would recommend, for product liability insurance? I've been going crazy searching online. I tried to fill out a form to get quotes online, but they were asking for information about my building structure. I don't want to insure a building, I just have an internet business.
Thanks!
I was thinking that $1-2 million would be a good amount of coverage, but I'm not really sure.
So, any suggestions on good insurance companies to try? Thanks very much!

[jpf]

Seaming how I am not sure where you are (Near Highland Park?) - but start with the Yellowpages. This is not insurance that should be gotten via a form and paid online. You really need to speak with a reputably local firm that know the local laws that is underwritten by a national or international major firm.

I have a 2 and a 5 million though Mercer (major international company) - ie: Mercer Insurance Group - Products & Policies
but was taken out though another local company that shopped my need around.

[earth-friendly]

ok, thanks. Good advice. There was a local person who I tried to get insurance through a while ago. He came up with a possibility, but said that for every single vendor whose product I carried, I would need them to put me on their policy. I have 1 main vendor who I do lots of business with, and they had put me on their policy. But for some of my other vendors, I only do a small amount of business with them each year, and I can't imagine they'd be willing to put me on their policy. So I never pursued it. But I think I need to call this person again, and push harder, and have him keep trying. I've got to do this already!
Thanks again!

Has anyone else had this issue come up? Do you have to be on the insurance policy of all your vendors, in order to get product liability insurance?

Thanks!
-Lori-

[jpf]

ok, thanks. Good advice. There was a local person who I tried to get insurance through a while ago. He came up with a possibility, but said that for every single vendor whose product I carried, I would need them to put me on their policy.

Great - so if I have say a DOLLAR store with 100,000's of products that I resell - I have to contact each manufacture for every single item and get me put on there policy. NOT! I KNOW this IS NOT the NORM. This person has NO IDEA of how a real business works. If they are manufacturing things to your specification then I can see this - else NOT!

I have 1 main vendor who I do lots of business with, and they had put me on their policy.

Great - most companies will not do this - specially if they have 100's or 1000's of customers - often changing policies cost MONEY - specially to add or remove customers so often - unless there could be major liability issue or lot$ of $ involved. Typically only done when your business is totally or mostly reliant on a manufactured item under there own "Store Brand" name. You get a MUCH better pricing cause there is no "name brand" marketing and often the manufacture info is not attached or associated on the product - then the "Store Brand" is often responsible/liable - unless there is a liability agreement.

But for some of my other vendors, I only do a small amount of business with them each year, and I can't imagine they'd be willing to put me on their policy. So I never pursued it.

I know many will not. But getting a copy of there company policy for warrenty/garrantee etc..... would be okay in many situations. But then really depends. I am sure if I sell a Intel CPU (retail box) and it burns down the house. As long as I did everything legal (did not taper with it) - Intel would have the full liability on that. Your limited (if anything) to the cost of the item it self. I am sure they would sue Intel - as to file and pursue small claims on myself for $200 to "replace a house" will not go very far.

But I think I need to call this person again, and push harder, and have him keep trying. I've got to do this already!

Not! This is not a person who seams to want to help you or does not know manufacturing or business liability. A good agent will ask questions and shop for you for a solution. Him saying 'get put on there policy' means he does not want to work to gain your business (most are the owners themselves or are paid commission or bonus driven).

Thanks again!

Has anyone else had this issue come up? Do you have to be on the insurance policy of all your vendors, in order to get product liability insurance?

Thanks!
-Lori-

There is no straight answer here and information that is presented is in not way to be consider legal (or other definitive) advice. Every business is unique and may have it own issues.

Like I said - get a 'local' lawyer (to find out what is actually you may be liable for and to reduce it. As well as maybe to write a vendor liability agreement if needed) and an insurance agent that specializes in small business to assess and to (get a free quote for it - then shop it around) insure any risks (if there is any at all to worry about).

This is the stuff that business consultants figure out and get paid good dollars for (been there - done that!). You can do most of the leg work your self - but not by sitting in front of the monitor.


Good Luck