Do I Need Insurance for My Etsy Store?

(A master class in mastering, and selling, your craft)
Written by Sara East
Written by Sara East

Insurance doesn’t have to be boring. That’s why we hired Sara East to be our BA insurance writer. Maggie specializes in making mundane subjects hella-entertaining.

Reviewed by Paige Murray
Reviewed by Paige Murray

Paige Murray is Principal Broker and co-owner of Aspen Insurance Services, Inc. She has more than 30 years experience in Medical Malpractice Insurance, Professional Liability Insurance, Property & Casualty Insurance, Life & Disability Insurance, and Employee Benefits.

Small business owner packing product in boxes, preparing it for delivery.

So maybe you’ve got a natural knack for craftin’ and your friends won’t stop asking for a set of mittens for their cats, too. If so, then you may be looking at Etsy as a way to earn some extra money and share your artistry with the world outside your book club.

Etsy, the online eCommerce site with amazingly crafty finds, has grown and grown over the last several years. In fact, there are now more than 1.93 million sellers on the site who cater to 33 million buyers each year. And now it’s your turn.

But you can’t just dive in headfirst. You need to know what you’re in for and be prepared for some things that you never could have imagined. That’s why we rounded up some helpful info about selling on Etsy and how to keep your crafty store protected and thriving.

Does Etsy Require You to Have Business Insurance?

In a word: No. But you absolutely need it. Etsy doesn’t require you to have business insurance in order to sell your products, but being prepared and protected is a must if you want to keep your store from going under. Master your Etsy store and protect it properly, so you can focus on the crafting part.

Etsy, and most other marketplaces for that matter, are set up so that they aren’t responsible for something that goes wrong with your product. And that means it’s up to you to protect yourself should something go wrong. 

Should I Get Insurance for My Etsy Store? 

Even if your wallet is telling you no, good business practice will tell you yes. Anytime you're selling products to other people, you’re at risk. People can, and will, sue businesses for just about anything, especially if you sell something that could potentially harm someone. Heck, even scented soaps can cause a harmful rash and an irate customer. 

The proper insurance coverage can protect you from the following:

  • Property damage
  • Customer injuries
  • Illness caused by your product
  • Flaws in design and manufacturing
  • Data breaches


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Options for Etsy Store Insurance

Etsy doesn’t offer any sort of platform-specific insurance options to their clients, but there are a few insurance policies you can get from almost any commercial carrier that are right for online sellers, like:

What Happens If I Don’t Get Insurance?

Technically, nothing will happen if you don’t get insurance, but a lot could happen. And without the right protection, you’ll be putting yourself at major risk.

“Insurance makes sure that you protect your personal assets, especially if you’re not incorporated, when your whole personal estate is up for grabs if you make a business mistake and don’t have insurance.”

Paige Murray, principal insurance broker

So before you go skipping out on purchasing insurance, ask yourself if selling a few crafty items on Etsy without insurance is worth everything you own.


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What Else Do I Need to Be Successful on Etsy?

Insurance protection is only one part of being successful on Etsy. There’s quite a bit more to it. But with the right protection in place, you’ll be more comfortable focusing on the other things you need to do to see success, like:

  • Understand what can be sold on Etsy: The site only accepts handmade items created by the seller, vintage items that are at least 20 years old, and craft supplies. 
  • Purchase a business license: Every state has their own laws regarding business licensing. Whether you’re selling as a hobby or a full-time career, you’ll want to look into what’s required of you.
  • Accurately represent your company: When you’re replacing a store with an online business, you take away the clients’ ability to see something in person. Accurately showing and detailing your products will lower returns, unnecessary waste and shipping costs.
  • Encourage reviews of your products: Sites like Etsy thrive on customer reviews. Every time you provide a positive exchange with a customer, ask them to leave you a review.
  • Read Etsy’s seller policy: It’ll give you a closer look at all the legal tips and tools you need to be prepared and successful.

You don’t need a massive 500+ page business plan or super-successful company to start selling items on Etsy. In fact, it’s the perfect place to test the waters for how your product will do in an online space.

Your insurance needs will most likely be minor as you begin, but as your store grows and you’re seeing more success, a much more comprehensive set of policies will definitely help protect your shop. Be sure to talk with your insurance agent about your current needs and future goals so they can help get you into the right policy for you to grow with. And once that’s taken care of, you’re free to focus on the more important things, like all those kitten mittens you have to knit. 

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