Insurance for business (credit card, liability insurance, lawsuit, agent)

[Rapture]

Does anyone know if you need insurance for a retail online business? If most of the items are dropped shipped, wouldn't the manufacturer be responsible for most if not all liability?

[jhlcomp]

Not necessarily because who are the customers buying from? You, right?

Example, we run an on-line business that caters to the smart home market. People buy products from us that were manufactured by Company XYZ. If there is a problem, they send the product back to us and we in turn have to send it back to Company XYZ for replacement.

You still need insurance if someone wants to sue you for a faulty product and they will also sue the manufacturer.

I am not saying I am right about all of this, but this is how we run our business.

[Ronzou]

Originally Posted by jhlcomp

You still need insurance if someone wants to sue you for a faulty product and they will also sue the manufacturer.

Actually you wouldn't need to worry about this either.

Most businesses today will make you read an agreement, and click that you understand and accept it.

And most of the time places put in there that they are not responsible for faulty products that you receive, they are simply a middle man, providing a place to sell these items to you.

However, most businesses want their customers to comeback to them so they have a return policy.

Just write an agreement that says they have this many days to return faulty products, and if there is an item that is used or something else, that there is no express warranty on these items and if they do not work they you acknowledge that you are buying an item marked "AS IS" and they claim direct responsibility for these items as they may or may not be tested before hand.

And as the question you asked, if the SHIPPER drops the products they are directly responsible for what has happened. My brother ordered something and UPS ran over his box RAN OVER HIS BOX!?!?!? HOW CAN YOU RUN OVER A SUBWOOFER?? Anyways, it was a big hassle, but he did manage to get UPS to pay for the damage they caused. i.e. They replaced the/gave him the money for their mess up.

[Rapture]

Thanks for the information.

My concern isn't a returned item and I do have a return policy. The issue is, if someone buys something from me, receives it and then gets hurt using the product.....can they sue the manufacturer and me? I know brick & mortar stores have liability insurance but do I need it?

Better example...on one of my sites I sell beach chairs. They are dropped shipped by a third party. If someone orders from me, receives the chair, falls off and gets hurt, can I be liable?

[golfgal]

Originally Posted by Rapture

Thanks for the information.

My concern isn't a returned item and I do have a return policy. The issue is, if someone buys something from me, receives it and then gets hurt using the product.....can they sue the manufacturer and me? I know brick & mortar stores have liability insurance but do I need it?

Better example...on one of my sites I sell beach chairs. They are dropped shipped by a third party. If someone orders from me, receives the chair, falls off and gets hurt, can I be liable?

You shouldn't be held liable but in today's society you just never know. I would get some business liability insurance because the other thing you can get with a policy like this is business interruption coverage so if say you have a tornado and you can't use your computer for several weeks, do you have a way to recoup that lost income? At the very least you should have an endorsement on your homeowners policy stating that you run a business out of your home and get a personal liability umbrella policy.

[Rapture]

Thanks.
Any idea how much they would raise the home owners insurance?

[golfgal]

Originally Posted by Rapture

Thanks.
Any idea how much they would raise the home owners insurance?

I don't know, not very much. It really depends on who you use and where you live. Also, business policies are not all that expensive. Call your agent. The few dollars it costs now is a lot less then paying out a lawsuit later.

[Ronzou]

Originally Posted by Rapture

Thanks for the information.

My concern isn't a returned item and I do have a return policy. The issue is, if someone buys something from me, receives it and then gets hurt using the product.....can they sue the manufacturer and me? I know brick & mortar stores have liability insurance but do I need it?

Better example...on one of my sites I sell beach chairs. They are dropped shipped by a third party. If someone orders from me, receives the chair, falls off and gets hurt, can I be liable?

Put a note inside that says, "If you manage to get hurt by using this product you deserve every bit of the pain you are experiencing because you are a moron."

Places still put in there liability agreements that say something on the lines of, "If something happens while using this product we claim no responsibility for any injuries sustained by the use of this product, you acknowledge this and agree to these conditions buy using this product, and any injuries sustained herein are the fault of the user and not A) The person/company who sold the product B) The person/company who made this product."

Or something like "The user of this product claims all responsibility for any and all injuries sustained from use or misuse of this product, we claim no responsibility for anything that happens at the fault of the user."

Basically just say to them if anything happens because you use this product it's your fault no one elses.

[DT Distributing]

If you are strictly online insurance is really not that important. However if occasionally have people walking in or stopping by then you might want to get liability just in case someone gets injured at your location.

It if very important to have a well written “terms and conditions” listed on your website. You have basically say that all warranty issues will be handle under the manufactures warranty and that use of the product is at their own risk. You have to write about the return policy and defects.

Now depending on what you are shipping out, it is highly important to insure every product that you ship out. Usually UPS, Fed Ex, and other shipping carriers will charge extra for this insurance for each package that you ship out. This insurance is good for lost packages, and damage packages. Basically on a $2,000.00 package I might pay $3.00 extra to insure it at that amount. It is well worth it, however UPS will try everything in their power to not pay for the item they damage. So you basically have to package the item very well and you have to make sure once the item arrives damaged that the customer keeps all boxes and items how they received it. Or UPS will *********.

Being an online company one of the biggest concerns is not insurance but, credit card charge backs and fraud. It is very important to ask for the security code on the credit card and that you only ship the item to an authorized address that is only file with the credit card company. Try not to ship items out to addresses in which the billing address does not match the shipping address, unless it is added to the credit card as an alternative shipping address. This will help protect you from friendly fraud. Also once you ship an item out, make sure you have a tracking number and signature for this will also protect you from credit card charge backs and fraud. As long as you follow these rules your chances to fight a charge back is very high and most likely you will win and receive your money back.

The good news is that a customer can try to sue you for a faulty product, but if you have a well written term and condition it will be hard for them to get anything out of you. Usually the liability is held under their own fault or with the manufacture.

[Snaily]

Dude....so much of what was said on this post was just wrong. If you have questions of possible liability ask a lawyer.