Dropshipping business insurance Dropshipping business insurance

Dropshipping is a traditionally hard-to-insure industry amongst online retailers, but we offer cover for retailers using hands-off, third-party inventory and fulfilment.

Be quote confident. We'll beat the price of any like-for-like quote. T&Cs apply.

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Do you need insurance for dropshipping?

The dropshipping model of online retail comes with its own set of unique risks, many of which are subtly different to the risks associated with other forms of online retail.

Superscript's online retailer insurance offers protection that many other insurers simply cannot cover, particularly for businesses using dropshipping. Some of the key features of our dropshipping online retailer insurance include:

• Up to £5million of product liability cover for the items you sell

• Cover for imports from across the world, including China

• No itemised product list required, as long as you don't sell anything from our excluded items list

• Cover for businesses using third-party logistics (3PL)

• Add cover for your products while out for delivery with a UK courier

• Add or remove covers and adjust your limits, with no extra fees

• Cover for selling to customers in the USA, up to 25% of your turnover

• Cover for dropshipping by meeting one of two conditions

Be quote confident

We're big on fairness. So if you find a lower price for a comparable quote, we won't just match it – we'll go one better and beat it.

So even better than apples to apples, apples to better apples. We're talking Galas to Braeburns.

As you'd expect, T&Cs apply.

What types of insurance does a dropshipping business need?

Public and product liability insurance

A must-have for businesses that sell physical products online, public and product liability insurance protects you from third-party claims (for instance by a customer, a supplier or a member of the public) of accidental injury or property damage as a result of your business activities or the products you sell.

You can choose from a limit of either £2 million or £5 million for your combined public and product liability cover.

Cyber insurance

Cyber and data security should be the primary concern of online and e-commerce businesses. Sensitive customer data makes e-commerce businesses one of the main targets for cyber attacks.

Our cyber insurance is a truly innovative product designed with digital businesses in mind. Your cyber cover also includes media liability (which protects content that you publish online) and an award-winning breach response package (with legal, PR and IT forensic support) for no additional fee.

Employers' liability insurance

Employers' liability (EL) cover is a legal requirement for most UK companies that employ people, even if you only employ temporary, contractors or part-time staff. It includes protection for teams who work from home or travel for business anywhere in the world and covers your liability in the event that an employee makes a claim against the business.

With Superscript, you'll benefit from £10 million of employers' liability cover for up to 25 employees.

Electronic and portable equipment cover

If your e-commerce business relies on equipment to get the job done, such as a laptops, phones and tablets or a camera for photographing your latest products, electronic and portable equipment cover can protect these items from damage, loss or theft. You can enjoy a limit of up to £10,000 of cover with a limit of £2,500 for a single item.

Goods in transit cover

As a dropshipping business, you would not normally be fulfiling the delivery of product to your customers, meaning that your insurance would not cover the products while in transit with a third-party courier.

However, you can opt to include an additional cover for up to £5,000 for products whilst out for delivery with a UK postal or courier service.

Accident and sickness cover

Accident and sickness insurance comes in three parts to cover workers aged between 16-69.

Firstly, it’s designed to provide financial support for up to 50 weeks if you or an employee goes on long-term sick leave. It can also provide financial assistance for up to 180 nights if you, or an employee, were hospitalised.

And finally, a lump sum benefit of up to £50,000 can be paid out if you or an employee suffers a serious injury or up to £25,000 in the unfortunate event that an insured person dies.

Once you've completed a quote, you'll be able to view a summary of cover. Please always refer to your policy documents for full details around exclusions, terms and limits of your customised cover. Read our guide to understanding your policy documents.

What do you need to do in order to be covered?

Because, as a dropshipper, you likely don't hold your own stock in a warehouse or fulfil the delivery of the products to your customers, so in order to be covered you'll need to:

Physically inspect a sample of at least 5% of the stock of all the items listed for sale on at regular intervals and keep records of this

And/or

Maintain rights of recourse against a UK or EU-based manufacturer or wholesaler for all products you sell in relation to faults and safety issues

What products can't be insured?

Unfortunately Superscript can't offer you cover if you sell any of the following items:

  • Live animals
  • Any products that need to be medically prescribed
  • Products that don’t meet health or safety requirements in the United Kingdom
  • Any product that's sale is subject to legal age restrictions in the United Kingdom
  • Products you know to be faulty or unsafe
  • Second-hand electrical goods
  • Vehicles, aircraft or watercraft (or components of them)

Not a dropshipping business?

Are you an online retailer who holds their own stock in a UK warehouse or third-party logistics warehouse? Or do you deliver your products to your customers directly?

If so, you would not be classed as a dropshipping business but you can be covered by Superscript's online retailer insurance product which can offer you protection for your stock, goods-in-transit, business equipment and your liability to customers and members of the public.

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How do insurance claims work?

The below is a good guide to the process and timescales you can expect when you need to make a claim under your policy.

If you’re ever unsure whether you can or should claim, it’s best to get in touch and we can let you know.

1

Notify us of the claim

Contact us by email at claims@gosuperscript.com, by 24/7 freephone on 0800 772 3059 or by logging in to your customer portal.

Ideally this should be done as soon as possible and within 30 days of you becoming aware of anything which you think may be covered by your insurance.

A good indicator of whether or not to let us know is if there’s an issue which may require a payment to be made on your behalf.

2

We'll get on the case

We’ll acknowledge your claim within 24 hours, and sometimes in as little as 30 minutes! This means you’ll receive email confirmation of your Superscript claims reference and contact information should you need to speak to us.

We will then reach out to you within 48 hours to request any extra information we need to progress your claim.

We’ll keep you updated on the next steps as the claim progresses.

3

A decision is made

We’ll let you know if your claim is successful or not. At Superscript, if your claim isn’t covered, we will always try to point you in the right direction and support you as best we can in getting back to normal.

Read about the most common reasons claims aren't paid.

If your claim is successful, once we have all the documents we need, we will aim to settle claims such as accidental damage, theft and lost equipment within 5 working days.

Dropshipping insurance frequently asked questions

What is online retailer cover for dropshippers?

Online retailer insurance is designed to protect businesses that sell products online or have an e-commerce platform from claims that could cause them financial loss. There are a few types of cover that are relevant for online retailers, including product liability, business interruption and cyber insurance. The types of claims covered include accidental injury or property damage to a member of the public, theft or damage of your business equipment such as phones or laptops, as well as downtime or fines due to data breaches.

Do I need business insurance for my online dropshipping business?

Most business insurance isn't legally required. The only exception to this is employers' liability, which is legally required for every business that has employees who aren't their immediate family.

While not legally required, many businesses choose to buy covers as a duty of care and to protect their business. This includes product liability, public liability, business equipment and business interruption to protect their online retail company from potential claims that could arise.

What is covered by public and product liability for dropshipping online retailers?

Your public liability insurance will cover your liability for paying legal and compensation costs in the event of a claim made against your online retailer business by a member of the public (including customers) if they are injured – or their property damaged – by your business's activities.

Your online retailer insurance from Superscript includes both public liability and product liability cover, meaning that you're also covered if a member of the public is injured – or their property damage – by the products you sell, even if you did not manufacture them yourself.

Is dropshipping insurance the same as online retailers insurance?

In a sense, yes. As a dropshipping business, you can be covered under Superscript's online retailer insurance product. However, if you do not own your own inventory or fulfil your deliveries yourself, then you'll need to abide by certain conditions in order to do so. In order to be covered as a dropshipping business you will need to:

  • Physically inspect a sample of at least 5% of the stock of all the items listed for sale on at regular intervals and keep records of this.

And/or

  • Maintain rights of recourse against a UK or EU-based manufacturer or wholesaler for all products you sell in relation to faults and safety issues.

Are there any products that cannot be insured as an online retailer?

Unfortunately Superscript are not able to offer you cover if you sell any of the following items:

  • Live animals
  • Medical devices or pharmaceuticals, or any products that need to be medically prescribed
  • Products that don’t meet health or safety requirements in the United Kingdom or that cannot otherwise legally be sold in the United Kingdom
  • Any product that's sale is subject to legal age restrictions in the United Kingdom (including but not limited to e-cigarettes/liquids, fireworks, knives, axes, crossbows, weapons, solvents, butane)
  • Products you know to be faulty or unsafe or you know are subject to a product recall or safety notice
  • Second-hand electrical goods
  • Vehicles, aircraft or watercraft (or components of them)

Will my products be covered while in transit?

As a dropshipping business, you would not normally be fulfiling the delivery of product to your customers, meaning that your insurance would not cover the products while in transit with a courier.

However, you can opt to include an additional cover for up to £5,000 for products whilst out for delivery with a UK postal or courier service.

Can I be covered for selling via online marketplaces?

In short, yes. Our online retail insurance can cover you for selling via an online platform like Amazon, eBay, Esty, Shopify or many others. We can even ensure you are covered above and beyond Amazon's minimum insurance requirements.

Does my insurance cover selling products to customers in the USA?

Under the terms of Superscript's online retailer insurance, you can have up to 25% of your turnover coming from sales to the USA and Canada and still be covered. However, a higher excess of £2,500 applies to claims related to business in North America.

What does "rights of recourse against a UK or EU-based manufacturer or wholesaler" mean?

In order to be covered as a dropshipping business, you'll be asked whether you can agree that you can:

"Maintain rights of recourse against a UK or EU-based manufacturer or wholesaler for all products you sell in relation to faults and safety issues".

By “maintaining rights of recourse”, we mean:

(1) the supplier of your products is either UK or EU-based; and

(2) in your contract with them, you have not waived your right to enforce common law liabilities and responsibilities through the UK or European court system.

If you cannot agree with this statement, then you can still be covered for dropshipping as long as you physically inspect a "sample of at least 5% of the stock of all the items listed for sale on at regular intervals and keep records of this (inspection)".

The content on this page was updated on 14/12/2022 and applies to policies first purchased on or after this date. If you have an existing policy bought prior to this date, please see your policy documents for specific details of your cover.

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