TikTok and Etsy sellers are being urged to check whether their insurance includes product liability cover, as a single faulty item could wipe out the earnings of a side hustle.
The two platforms have a combined 20 million plus merchants, many using them to sell homemade or imported goods. Insurance expert Chris DeCarolis of Coverage Axis warns that overlooking this cover could expose small businesses to significant financial risk.
Why product liability matters
Product liability insurance protects businesses against claims that a product they made, sold or supplied caused illness or injury, according to UK Government business guidance. It also notes that manufacturers, and sometimes others in the supply chain, can be liable where an unsafe product causes personal injury, death or damage to private property.
DeCarolis said: "Product liability insurance is important because the financial risk does not end with refunding the price of an item. If somebody claims that a product injured them or damaged their home, the seller could also face compensation demands and legal costs."
He added: "A business may earn only a few pounds from one sale, but one serious claim could wipe out everything a small side hustle has earned."
Home-based sellers need to check policies
The warning applies to sellers of candles, cosmetics, toys and electrical accessories, where a faulty product could lead to injury or property damage. For those running small businesses from home, a standard household policy should not be assumed to provide protection for commercial product claims.
UK Government-backed guidance recommends checking exactly what a policy covers, including exclusions, limits and conditions. DeCarolis urges sellers to look specifically for the words "product liability" in their policy and establish whether their individual products, imported goods and online sales channels are covered.
Legal responsibilities beyond insurance
Insurance cannot replace legal responsibilities over product safety. The Office for Product Safety and Standards says businesses that make, import, distribute or sell consumer products in the UK are responsible for ensuring they are safe and comply with relevant labelling requirements.
For businesses in Great Britain, the General Product Safety Regulations 2005 require consumer products to be safe under normal or reasonably foreseeable use. Government guidance says serious offences can result in a fine of up to £20,000, imprisonment for up to 12 months, or both.
For anyone turning TikTok or Etsy sales into a business, checking this before the next order could be a worthwhile precaution.
