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06-03-2020, 13:39   #1
fishy21
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Drop shipping Insurance

Hi all,

I’ve just started a drop shipping business and I’m seeking product liability insurance.
I understand that ultimately the product liability lies with the product manufacturer but as these are based in China they can be difficult to track down so I’m trying to protect myself.

Most of my customers are based in the US and any of the specialist companies there will not insure me as im not based there.

All advice welcome.
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07-03-2020, 15:17   #2
ironclaw
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Whilst not advocating operating without insurance, the reality is you are an Irish business (I assume) selling Chinese products into the American market. The cost of suing you, or your manufacturer, would be absolutely staggering. No lawyer in the US would take the case unless they could hook you for millions and even then, they would have to take the case in Ireland if you had binding arbitration as part of your terms and conditions of sale. It gets even more complicated if you are an Ltd company as you are effectively shielded by being sued by that company.

Long story short, unless you are a large business, have a US presence or sell high-value items, the chances of being sued are effectively nil.
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12-03-2020, 10:07   #3
fishy21
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Quote:
Originally Posted by ironclaw View Post
Whilst not advocating operating without insurance, the reality is you are an Irish business (I assume) selling Chinese products into the American market. The cost of suing you, or your manufacturer, would be absolutely staggering. No lawyer in the US would take the case unless they could hook you for millions and even then, they would have to take the case in Ireland if you had binding arbitration as part of your terms and conditions of sale. It gets even more complicated if you are an Ltd company as you are effectively shielded by being sued by that company.

Long story short, unless you are a large business, have a US presence or sell high-value items, the chances of being sued are effectively nil.
thank you that really helps and gives me some relief
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17-03-2020, 20:25   #4
TheCostumeShop.ie: Ronan
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Almost no chance of you getting product insurance unless you have thoroughly vetted the suppliers and got your testing certs checked, in order and verified.



The business model of buying things on AliExpress and reselling is full of pitfalls, especially the sell first, buy later model. Not only can you risk your customers health but also its easy to infringe on Patents, trademarks etc. That doesn't matter to the people in China, but to the reseller your at major risk. Even if you have a limited liability company, you could loose the limited liability by not taking appropriate responsibility to keep your customers safe.



Most drop shippers i've met from China rely on the if I get sued I'll declare bankruptcy defence and have no assets to loose.


Re the other comment about people not being willing to sue in the US, absolutely not the case - in the US many lawyers offer no win no fee. And if you don't mount a defence they will steam roll over you. So you'd have a criminal conviction in the US if you ever went there. They do this on a numbers basis, if 1 out of 10 pays a settlement the lawyers still make money. This is why dodgy drop shipping sites have no contact us details.


There's a reason why insurance is a massive problem to Irish Businesses.
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