Hidden Dangers: Why Online Sellers Must Have Product Liability Insurance
Selling online has never been easier. With platforms like Shopee, Lazada, and social media, entrepreneurs are building thriving e-commerce businesses from home. But while sales and shipping may be digital, the risks are very real—especially if a product causes injury or damage.
That’s why Product Liability Insurance is essential, even for small online businesses. Whether you’re selling skincare, gadgets, or kitchen tools, you could be legally liable for product defects—even if you didn’t manufacture them.
Let’s explore why every online seller needs product liability protection.
What Is Product Liability Insurance?
Product Liability Insurance is a type of commercial insurance that covers claims of bodily injury or property damage caused by products sold, distributed, or supplied by your business.
It protects online sellers by covering:
- Customer injury from defective products
- Damage caused by faulty or unsafe goods
- Legal defense costs and compensation payouts
- Related expenses like investigation fees
Even if you’re a reseller or dropshipper, you can still be held accountable for the products you sell.
Why Online Sellers Are at Risk
Many sellers wrongly believe that liability falls solely on the manufacturer—but in Malaysia, the entire supply chain can be held liable, including:
- Manufacturers Importers
- Wholesalers
- Retailers and e-commerce sellers
Common risks include:
- Allergic reactions to cosmetic products
- Short circuits or fires caused by electronic devices
- Choking hazards from toys
- Spills or leaks damaging customer property
Real Example: A local seller delivered an unbranded power adapter that caught fire, damaging a customer’s laptop. The buyer sued, and the seller paid for the damages—without any insurance to assist.
Key Takeaways
- You are legally responsible for the products you sell—even online
- Liability insurance protects your business, brand, and finances
- One defective item can lead to a lawsuit and destroy your e-commerce venture
Don’t wait for a claim to find out you’re exposed. Get protected before it’s too late.