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TOPIC: Insurance for Dropshipping ??
#1506
kaiwan (User)
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Insurance for Dropshipping ?? 5 Months, 1 Week ago Karma: 1  
Hi,
I am planning to open up a dropshipping toy store but have 1 major concern due to which I am not losing motivation. I have all my suppliers based in China. There are 2 things that constantly worries me:

1) How do I make sure the chinese toys I select are not IPR infringed ?

2) How do I save myself from being sued in case the customer gets harmed by any product due to manufacturing or design fault. Since the suppliers are based in china, I would be the one facing the consequences. I tried approaching a few insurance companies for product liability insurance but they don't support this business model

Can u please help ?
 
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#1507
mike (Moderator)
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Re:Insurance for Dropshipping ?? 5 Months, 1 Week ago Karma: 9  
Hello Kaiwan
This is a question that has been asked before and it is a very good question. Please be aware that this is NOT LEGAL ADVICE. If you require legal advice you must seek that from a qualified professional.

My recommendation is to ask an Insurance broker and seek legal advice. They will know what you require to protect yourself from litigation. You are right to protect yourself and take this seriously.

If you are importing any sort of product from any country, not just China, you should have a sample sent to yourself before offering for resale. You should also monitor quality on a regular basis.

Be aware that although the toy sector can be very lucrative it can also have high risk due to the end-user (children). Many people stay away from this sector for that reason.

I hope this helps.

Mike
 
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#1508
kaiwan (User)
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Re:Insurance for Dropshipping ?? 5 Months, 1 Week ago Karma: 1  
Thanks Mike
 
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#1514
cosmic (User)
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Re:Insurance for Dropshipping ?? 5 Months ago Karma: 0  
Hi Kaiwan,

I joined this forum to ask this very question. I am in the middle of setting up a drop-shipping business, also importing from Aliexpress. The main reason I've chosen to set it up this way is that Shopify + Oberlo seems like a beginner friendly way to set up my first store. However, I'm willing to change formats or product lines if this doesn't work.

My store also will sell toys (circus & juggling equipment, yoyos etc). My research has told me there is a good market for this but I'm having issues sourcing product insurance. Have you had any luck since posting here 5 days ago?

I have spoken with two brokers - both are making inquiries for me, but both have expressed hesitation (that the insurance could be expensive and have specific product or supplier limitations). I am surprised because clearly people *do* drop-ship into Australia, and they must have product insurance. Have I just happened to choose one of the few industries it is really difficult to insure?

If my brokers give me a good quote, I'll post back here with info so you can contact them yourself.

Next week I will also be contacting Armstrong Brokers, because I've heard that someone importing got insurance from them, through QBE. I will also contact QBE directly. I have no idea what kind of import business that was though.

Hopefully I can post back in the next few days with more helpful info. In the meantime, if you've had any luck yourself, please share who was willing to insure you.

Mike (site admin) - who in Australia generally insures people who sell online in Australia, but import from Asia? There must be someone who offers product insurance for this.

Thanks.
 
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#1515
mike (Moderator)
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Re:Insurance for Dropshipping ?? 5 Months ago Karma: 9  
Hello
I did a quick search on Google and found these people. This is not an endorsement of their services, just a demonstration of how easy it is to find resources.

www.onlinesellersinsurance.com.au

I would also suggest speaking with your accountant and if you do not have an accountant, you should get one. You are going to need one if you are going to build a serious business.

Mike
 
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#1516
cosmic (User)
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Re:Insurance for Dropshipping ?? 5 Months ago Karma: 0  
Hi Mike

Thanks for that. It seems the website you linked deal primarily with Amazon businesses, not just all drop shippers. I will still contact them though and see whether they consider other platforms. I understand that your point was, it's easy to find insurers using google. I hadn't had any luck though so thank you.

With my research today I have found that the issue with insurers seems to be that I wanted to import products from China, where the manufacturing standards aren't as tight. If I import from USA instead, this issue may not exist (that's a tip for the original poster too).

Thanks for the tip re: getting an accountant.
 
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Last Edit: 2018/03/19 12:16 By cosmic.
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#1517
mike (Moderator)
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Re:Insurance for Dropshipping ?? 5 Months ago Karma: 9  
Thanks Cosmic
There are some insurance issues around dropshipping as you are not viewing the items and checking quality before delivery. Importing from China is OK so long as you have quality control in place. There are QC agents on the ground in China. You can also Google them as well.

Importing the products should not bring about these issues with insurance.

Mike
 
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#1520
kaiwan (User)
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Re:Insurance for Dropshipping ?? 5 Months ago Karma: 1  
Thanks for your input cosmic.

Up until now, I have just approached Total Asset Insurance where they gave me a form to fill with basic business details and send it back to them. The Insurance broker there told me it might take a few days for him to look at different options and get back to me. I am still waiting on that.

Will let you know the status as soon as I hear something back.

Please let me know how your thing goes..

Thanks
 
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#1521
cosmic (User)
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Re:Insurance for Dropshipping ?? 5 Months ago Karma: 0  
Hi Kaiwan

Thanks for the update.

I spoke with Aon Insurance Brokers. They went to 5 insurers but none would cover me due to too high risk. I was advised the risk would be actually considered higher if I imported toys from USA instead of China; something to do with special import agreements being needed when importing from USA. They said they could go directly to an underwriter but I'd be looking at approx $6500 a year premium.

I have also gone to Marsh Brokers. They thought they had found someone to cover me, but wanted me to change the business so I handled the stock. I explained that the nature of a drop shipping business was this doesn't happen. They went away saying they had to keep looking. I'll let you know how that goes.

I won't have time to ring more people today but I'll be straight onto it tomorrow. I think that Mike's advice to find an insurer who specifically covers drop-shippers is going to be the key. A lot of insurers seem very confused by the business model.

Good luck; let's keep updating each other how we're going.

Cosmic.
 
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#1523
cosmic (User)
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Re:Insurance for Dropshipping ?? 5 Months ago Karma: 0  
Hi Mike,

I've done a search online for dropshippers + Australia + product insurance (and some variations of that). I am having trouble finding product insurers who specialise in drop-shippers. I know normally it's annoying to have someone ask these questions on a forum, where the answer is just "google it yourself", but I'm genuinely having trouble. I've found a lot of articles about drop-shipping, and a few forums like this one where people ask the "do I need product insurance" question (the answer seems to be YES, wherever it's asked), and the "where do I get it?" question, in which case the answer is always "go to a broker".

Can you please help me? You said you found it easy to find insurers who do this and it shouldn't be an issue. I'm not sure if it's my google search settings or search terms, but if you're able to google some insurers who do this and post their weblinks here I'd appreciate it.

Also, being a drop-shipper yourself, who do you use for product insurance Mike? How about other drop-shippers you've connected with over the years?

I'd like to hear from anyone else in this community if you wish to answer as well - who does product liability insurance for drop-shippers in Australia?

Thanks.
 
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