Ecommerce Insurance Australia: Do You Really Need It?

You started selling online. Maybe crochet blankets on Etsy, or candles through Instagram, or a small Shopify shop run from the kitchen table. Now something has made you look up insurance. A market wants proof of cover. A shop asked if you have it. Or you sold a baby toy and had a quiet moment of worry.

Do online ecommerce stores need business insurance in Australia?

No Australian law requires it. In practice, most online sellers arrange it voluntarily for their business coverage.

Two reasons. Markets, shops and wholesale customers ask for proof of cover before they will deal with you. And if something you sold injures someone, they can come to you. That starts at your first sale, not at a certain size. Ecommerce insurance is not one product either. It is a small set of covers, and which ones make sense depends on what you sell.

upcover arranges ecommerce insurance and cover for crafters and makers across Australia, as a Corporate Authorised Representative of an AFSL holder.

Two very different kinds of  sellers trade, so here is where each one sits. Most readers are in the first three rows, and this guide answers those first.

The last two rows are covered at the end, under advanced sellers, so skip ahead if that is you.

Do I need insurance for a small online store?

For most online sellers, insurance is not something the law forces you to buy. There is no rule that says you must have it before your first sale. But three things often make it necessary anyway.

Someone asks for proof. Markets, shops that want to stock you, and event organisers often ask to see a certificate before they let you trade.

You sell a physical thing. If a product you sold hurts someone or damages their property, they can come to you. That starts with your first sale, not when you hit a certain size.

You are the business. If you trade as a sole trader, your own money and assets sit behind the business.

Three quick examples

A crochet scarf. Low risk of harm. Your bigger worries are a customer collecting from your house, or your stock getting damaged.

A crochet baby toy. Higher attention. Small parts, eyes, ribbons and anything a baby could pull off change the picture completely.

An imported phone charger. Highest of the three. Electrical items can cause burns or fires, and importing brings extra responsibility.

Same shop, three very different levels of risk. That is why there is no single answer.

What ecommerce insurance might an online seller need?

Start with what you actually do. Ecommerce insurance is a mix of covers rather than a single policy, and this is the short version.

Two words worth knowing, because they get mixed up.

Public liability may respond to injury or damage caused by your activities. Someone trips over your parcels. Your stall collapses.

Products liability may respond to injury or damage caused by something you sold. A candle burns a table. A toy comes apart.

In Australia these two are usually sold together as one policy. Check both are on your paperwork. For more, see public liability vs products liability.

Do handmade and crochet businesses need insurance?

This is where being handmade matters more than being small.

Crochet clothing, blankets and homewares

Lower risk, but not zero. Think about wool allergies, care instructions that stop a jumper being ruined, and anything sewn on that could come loose. Your everyday exposures are often the boring ones. A customer picks up an order at your house. You drop parcels at the post office. Both are public liability moments.

Baby items, toys and plush

Read this bit twice if you make amigurumi, comforters, teethers or dummy clips. Two things happen at once. Safety rules for children's products are stricter, covering small parts, cords, ties and sleep items. And many handmade insurance policies will not cover toys or baby items at all. Some specialist insurers say no to plush toys, teethers and dummy clips outright.

That does not mean you cannot get cover. It means you should ask about your specific products before you scale up, not after. Selling platforms have also tightened their own rules on children's and baby items, so check your platform's current policy too.

Candles, soaps and skincare

These carry burn and allergy risk, so insurers look at ingredients, labels and instructions. Some categories are treated differently from ordinary craft.

Digital patterns and downloads

If you only sell PDF patterns, there is no physical product to hurt anyone. Products liability matters less. What matters more is copyright, refunds and the customer details you hold.

The point of these four: makers are not one risk. What you make decides what you need, and whether anyone will cover it.

Making toys or baby items? Ask upcover about your products before you order more stock.

Does my home insurance cover my online business?

Usually not in the way you would hope, and it is one of the most common gaps for home-based sellers. Home and contents policies are written for a home. Once you run a business from it, some things change. Do not assume you are covered, and do not assume you are excluded either. Ask.

Five questions worth putting to your home insurer:

1. Is my business stock covered? Boxes of yarn or finished goods in the spare room may not count as household contents.
2. Is my equipment covered? A sewing machine or laptop used mainly for the business may be treated differently.
3. What if a customer comes to collect? That is a business visitor, not a guest.
4. What if couriers come daily? Regular business traffic can matter.
5. Do I need to tell you at all? Often yes. Not telling them can affect a claim later.

The usual answer is that home insurance handles the home, and business cover handles the business. Some insurers can add limited business items. Many cannot.

Does it matter if I sell on Etsy, Shopify, Amazon or eBay?

Yes, but not in the way most sellers expect. The platform does not take over your responsibility for the product. You are still the seller. What changes is where your stock sits, what the platform's rules require, and how much of your income depends on an account you do not own.

Etsy

Etsy's Purchase Protection is not insurance. Etsy says so itself in its Australian policy: it is not an insurance policy, warranty or guarantee. It covers certain order problems, on eligible transactions, and Etsy can change or withdraw it.

So it may help with a lost or damaged order. It will not help if a product you sold injures someone.

Shopify or your own website

The platform runs your shop. Everything else stays with you: the product, the stock, the customer service, and the data. Worth checking your checkout tool, any plugins you have added, and where your stock is actually kept.

Amazon

Product responsibility stays with you. If you send stock into Amazon's warehouses, your goods are sitting somewhere your own policy may not cover. Some sellers in some categories are asked to hold liability cover, and those rules change, so read the current seller agreement for your store.

eBay

eBay's protections mainly deal with the transaction. You still handle delivery proof, refunds and any claim about the product itself. Postage cover is not the same as products liability.

Instagram, TikTok and Facebook

Selling through social media does not change your product responsibility. It adds two things: claims you make in posts or that influencers make for you, and the risk of someone taking over your ad account.

These are not the same thing

What if my account gets suspended?

Honest answer: an ordinary business policy generally will not pay you because a platform suspended your shop. Insurance responds to damage, injury and claims, not to a commercial decision by a platform. What helps instead is practical. Sell in more than one place. Keep your own customer list. Make sure your business name matches your account name. Keep copies of your product and compliance records off the platform.

Who pays if a parcel is lost or damaged?

You usually do, at least to start with, and this catches new sellers out. Your customer bought from you. If the parcel does not arrive, that is your problem to fix with them, even though the carrier lost it. Then you try to recover from the carrier.

Four things that make this easier:

1. Tracking on everything. Without proof of delivery you have almost no position.
2. Photos before you post. Especially for fragile or expensive items.
3. Know the carrier's limit. Most include a small amount of cover as standard, and let you buy more. Check what the standard amount actually is.
4. Keep packaging evidence. If a claim is denied because of poor packaging, photos help.

Postage cover pays for the parcel. It does nothing about a product that hurts someone. Two separate things.

What if I also sell at markets or pop-up stalls?

Almost certainly, because the organiser will ask for it. Market organisers commonly require public and products liability before giving you a stall, and will want a certificate of currency. Some markets have their own cover, but it may only protect the organiser, not you. Ask what it actually covers before you rely on it.

Three things go wrong at markets more than anywhere else:

Setting up and packing down. Gazebos, weights and trestle tables in the wind.

Someone trips. Cords, boxes, your display, the edge of your rug.

Damage to a neighbour's stall. Your setup falls into theirs.

For the details, see market stall insurance in Australia and the market stall checklist.

What is usually not covered under business insurance for ecommerce?

Every ecommerce insurance policy is different, so treat these as questions to ask rather than rules.

• Replacing the faulty product. If your product injures someone, that claim may be covered. Making a replacement for the customer is generally your own cost.
• Refunds and returns. Normal business costs, not insurance.
• Slow sales. Insurance does not cover a quiet quarter.
• A platform suspending you, as above.
• Ordinary shipping delays.
• Stock kept somewhere you did not mention. If your policy names your home and half your stock is at your mum's place, say so.
• Problems you already knew about. Disclose them when you apply.
• Product types the policy excludes. Toys, baby items, cosmetics and electricals are the common ones.

How much does ecommerce insurance cost, and what do you need for a quote?

There is no single price for ecommerce insurance, and anyone quoting you one without asking what you sell is guessing. What moves the price, in order:

1. What you sell. A crochet scarf and an imported electrical item are not the same risk. Online store insurance is priced on the product far more than on your follower count or your turnover.
2. Whether children use it. Baby and children's products get more attention.
3. Where stock is kept, and how much of it.
4. Whether you import.
5. Where you sell to. Overseas buyers, especially in North America, can change the price or the answer.
6. Markets and pop-ups, because you are dealing with the public.

Small handmade policies are usually one of the cheaper business costs you will have. Many can be paid monthly. If your products are in a category insurers are careful about, the quote may need a person to look at it rather than being instant.

What if you get it wrong?

Worth saying, because this is the worry behind the price question. Cover is not a decision you are locked into. Policies run yearly, and most can be adjusted as the business changes. The more expensive mistake is the other way around: holding a policy that describes the business you started, months after you added a new product, a market stall or an overseas order.

Seven things to have ready

• What you make or sell, in plain words
• Where your products come from
• Where you keep your stock
• Which platforms you sell through
• Roughly what you expect to sell this year
• Which countries you sell to
• Any complaints, claims or product problems so far

That is enough for a real quote. Get a quote through upcover with those to hand. Availability and terms depend on the insurer accepting the risk.

When it is worth talking to a person

Some situations are worth a conversation rather than a form. Importing. Baby or children's products. Candles, cosmetics, food or anything electrical. Selling overseas. Using Amazon's warehouses or a third-party warehouse. A wholesale customer demanding a specific limit. Or a claim or product problem in your past.

Advanced: Insurance for importing, dropshipping and running a marketplace

This part is for sellers who have moved past a home shop and need more from their  business insurance. Skip it if that is not you yet.

If you import or put your own brand on products

Importing goods, or selling them under your own brand, can make you responsible in Australia as though you made them. The factory being overseas does not move that responsibility away from you. So five questions matter:

1. Which country does the product come from?
2. Who checked its safety and labelling?
3. Do you hold test reports or certificates?
4. Can you identify the supplier and the batch?
5. What happens if it needs to be recalled?

That last one deserves a note. If a product has to be recalled, there are reporting deadlines with the ACCC measured in days, not weeks. Liability cover may respond to harm the product caused. Getting the product back is usually a separate arrangement, so ask about it before a big order.

Imported stock in transit needs marine cargo cover. Your product's policy generally will not respond to a container that goes overboard.

If you dropship

You are the seller even though you never touch the goods. That leaves you carrying the customer's problems while having the least control over the product. Insurers ask about it closely, and about who checks safety and labelling.

If you run the marketplace itself

Different business, different cover. Your exposure is less about the goods and more about the platform: listings, seller checks, outages, and the representations you make about other people's products. Two things to know. If you hold or move money for buyers and sellers, that raises questions about payment rules and crime cover, and it is worth getting legal advice. And if you hold stock in your own warehouse rather than only listing, product safety obligations move closer to you.

Australian regulators have long paid attention to marketplaces, and several large platforms have signed the ACCC’s voluntary Product Safety Pledge, which was strengthened in 2026 to widen its monitoring and takedown commitments. If you run a platform, that is the standard an insurer will compare you against.

Running a platform? Start at online marketplace insurance.

How can upcover help online sellers?

The common problem in this sector is not people skipping insurance. It is people covered for the business they started, months after the business changed. You added a baby item. You started importing. You took a market stall. Any of those changes what your policy needs to say.

Quick and simple. Handmade goods, ordinary retail products, Australian sales and stock at home can often be arranged online for eligible businesses.

Worth a conversation. Toys and baby items, candles and cosmetics, electricals, imported stock, overseas sales and anything with a past claim are better handled by a person who can ask the right questions.

upcover is a digital-first insurance broker helping Australian small businesses get the right insurance without the paperwork or phone queues. upcover arranges cover for crafters and makers, ecommerce businesses, market stalls and sole traders, including public and products liability, cyber and marine cargo cover.

• 70,000+ Australian businesses covered
• 4.9/5 customer rating
• Instant Certificate of Currency on policy confirmation for eligible policies, which matters when a market wants proof by Friday

More reading: do I need public liability insurance, public liability for sole traders, and cheap small business insurance options. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

Frequently asked questions

Do I need ecommerce insurance if I only sell a few items a month?

There is no rule that says you must. But the risk starts at your first sale, not at a certain income. And if a market, shop or wholesale customer wants to work with you, they will usually ask for proof of cover first.

Do handmade sellers need product liability insurance?

If you sell a physical thing you made, that is where product risk sits. Handmade does not mean lower responsibility. It often means you are the maker in law, with no factory behind you to share it.

Can I get insurance for handmade toys or baby items?

Sometimes, it depends on the product and the insurer. Some handmade policies exclude toys, plush, teethers and dummy clips completely. Ask about your specific items before you order more materials or list them.

Does my home insurance cover my online business?

Usually not fully. Home policies are written for households, so business stock, business equipment and customers visiting can all sit outside them. Ask your home insurer what applies, and tell them you run a business from home.

Does Etsy's Purchase Protection count as insurance?

No. Etsy states it is not an insurance policy, warranty or guarantee. It helps with certain order problems on eligible transactions. It does not respond if a product you sold injures someone.

Who pays if a parcel goes missing?

You do, in the first instance, because your customer bought from you. You then try to recover from the carrier. Tracking, photos before posting and knowing the carrier's included cover all make that easier.

Do I need insurance to sell at a market?

Almost always, because the organiser will ask for it. Market organisers commonly require public and products liability and want to see a certificate of currency. If the market says it has its own cover, check whether that protects you or only them.

What does online store insurance cost for a small shop?

It depends mostly on what you sell rather than how much you sell. Handmade policies are often among the cheaper business costs, and many can be paid monthly. Products involving children, food, cosmetics or electricity usually cost more or need a person to review them.

What if I start importing stock?

That changes your position. Importing can make you responsible as though you made the product. Tell your broker before the first shipment, because it affects both the cover and the price.

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_{This article is general information only. It does not take into account your objectives, financial situation or needs, and is not personal advice. It is not legal, product safety or consumer law advice. Consumer guarantees, product safety rules, recall obligations and platform policies are set by regulators and platforms and change over time, so check the current position before relying on any summary here. Insurance market observations describe common practice rather than universal rules, and cover, limits, inclusions and exclusions vary between insurers, so read the relevant policy wording, schedule and any Product Disclosure Statement where applicable before deciding whether a product suits you. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078, and arranges insurance with selected insurers and underwriters rather than the whole market.}