You’ve built your reselling business from a side hustle into something real. Maybe you’re doing $3,000 a month. Maybe $10,000. You’ve got inventory worth thousands sitting in your spare room, garage, or storage unit.
Then you ask yourself the question most resellers eventually face: “What happens if something goes wrong?”
A fire destroys your inventory. A customer claims your product injured them. A package causes property damage. Your stored goods get stolen.
Without proper insurance, any of these could wipe out everything you’ve built. Let’s talk about what protection actually makes sense for resellers and when you need it.
Why Most Resellers Ignore Insurance (And Why That’s Risky)
The most common reasons resellers skip insurance:
“I’m too small to worry about it.” Even small operations have risk. $5,000 in inventory destroyed means $5,000 lost—significant for most people.
“It’s just a hobby.” The IRS and insurance companies disagree if you’re making consistent profit. You’re running a business whether you call it one or not.
“Nothing bad has happened yet.” That’s how risk works. The people who get hit hardest are often those who never thought it would happen to them.
“Insurance is too expensive.” Many reseller insurance options cost $200-500 per year. That’s less than the profit from a few good flips.
The Four Types of Risk Resellers Face
Understanding risk categories helps you identify what coverage you actually need.
1. Property Risk (Your Inventory)
Your inventory represents tied-up capital. If it’s damaged or stolen, you lose:
- The cost you paid for items
- The potential profit from those items
- Time spent sourcing and listing
Examples:
- House fire destroys your inventory room
- Storage unit gets broken into
- Water damage in your garage
- Theft during transport
2. Liability Risk (Customer Claims)
When you sell products, you can be held responsible for harm they cause.
Examples:
- Customer claims clothing caused allergic reaction
- Electronics malfunction causes injury or property damage
- Child chokes on small part from toy you sold
- Customer falls during pickup at your home
3. Business Interruption Risk
Events that prevent you from operating.
Examples:
- Platform suspension while dispute is resolved
- Health issue prevents you from working
- Disaster makes your workspace unusable
4. Legal/Compliance Risk
Issues that require legal defense or result in penalties.
Examples:
- Copyright infringement claims
- Accused of selling counterfeit goods
- Product recall liability
- Tax audit defense
Understanding Homeowner’s/Renter’s Insurance Limitations
Many resellers assume their home insurance covers their inventory. It usually doesn’t—at least not adequately.
The Business Use Exclusion
Most home policies exclude or severely limit coverage for items used in a business. Read your policy carefully. Common language:
“We do not cover property used primarily for business purposes.”
That vintage clothing waiting to be listed? Business property. That electronics inventory? Business property. Your home policy might pay $0 if it’s destroyed.
The Dollar Limits
Even if business property isn’t fully excluded, there are usually sublimits:
- Maximum $2,500 for business equipment
- Maximum $1,000 for business inventory
- No coverage for inventory stored off-premises
If you have $10,000 in inventory, these limits leave you massively underinsured.
The Liability Gap
Home liability coverage typically doesn’t extend to business activities. If a customer sues you over a product you sold, your home insurance company may deny the claim entirely.
Insurance Options for Resellers
Here are the main coverage types relevant to reselling businesses:
Business Personal Property Insurance
Covers your inventory and business equipment against damage or theft.
What it covers:
- Inventory at your home
- Inventory in storage units
- Equipment (scales, cameras, computers)
- Supplies and packaging materials
Typical cost: $200-600/year for $10,000-$50,000 coverage
Where to get it:
- Commercial insurance carriers (Hartford, Hiscox)
- Specialized reseller insurance (NEXT Insurance, Thimble)
- As an endorsement on your home policy (limited options)
General Liability Insurance
Covers claims that your business caused bodily injury or property damage.
What it covers:
- Customer injury claims from products sold
- Property damage caused by products
- Legal defense costs
- Medical payments for minor injuries
Typical cost: $300-800/year for $1M coverage
Where to get it:
- Business insurance providers
- Often bundled with property coverage (BOP policy)
Product Liability Insurance
Specifically covers claims arising from products you sell.
What it covers:
- Injury caused by defective products
- Property damage from product failures
- Legal defense for product claims
- Settlements and judgments
Why resellers need it: You might think “I didn’t manufacture it, so I’m not liable.” Wrong. As a seller, you’re in the chain of distribution and can be held responsible even for manufacturer defects.
Typical cost: Often included in general liability or available as enhancement
Business Owner’s Policy (BOP)
Bundles property and liability coverage at a discount. This is usually the most cost-effective option for established resellers.
Typical includes:
- Business personal property
- General liability
- Business income interruption
- Equipment breakdown
Typical cost: $400-1,200/year depending on coverage levels
Inland Marine Insurance
Covers inventory while it’s being transported.
What it covers:
- Items in your vehicle during sourcing
- Inventory in transit to storage
- Items being shipped to customers
When you need it:
- Regularly transporting high-value items
- Moving inventory between locations
- Sourcing trips with significant purchases
Typical cost: $200-400/year as standalone or included in BOP
When Do You Actually Need Insurance?
Here’s a practical framework based on your business size:
The “Hobby” Stage ($0-500/month revenue)
Risk profile: Low Minimum recommended: Check your home policy’s business exclusions Optional: Umbrella liability policy (useful beyond reselling)
At this stage, your exposure is limited. Focus on growing the business, but be aware that home insurance won’t fully protect you.
The “Side Hustle” Stage ($500-3,000/month revenue)
Risk profile: Moderate Minimum recommended: Business personal property coverage for inventory Optional: Basic liability coverage
You likely have $5,000-$20,000 in inventory at any time. A total loss hurts seriously. Property coverage is worth the investment.
The “Serious Business” Stage ($3,000-10,000/month revenue)
Risk profile: Significant Minimum recommended: BOP policy (property + liability) Optional: Product liability enhancement, inland marine
At this level, you’re running a real business. You have meaningful assets to protect and enough activity that liability exposure is real.
The “Full-Time” Stage ($10,000+/month revenue)
Risk profile: High Minimum recommended: Comprehensive BOP, product liability Consider: Business interruption, professional liability
You’re depending on this income. A major loss—inventory, lawsuit, or business interruption—could be financially devastating without proper coverage.
How to Get Covered: Step by Step
Step 1: Inventory Your Risk
- List all inventory locations (home, storage, etc.)
- Estimate total inventory value
- Consider your product categories (electronics vs. clothing have different risk profiles)
- Think about your selling volume and customer touchpoints
Step 2: Check Your Existing Coverage
- Read your homeowner’s/renter’s policy completely
- Look for business exclusions
- Note any sublimits on business property
- Ask your agent directly about business activity
Step 3: Get Quotes from Multiple Sources
Start with these options for reseller-friendly coverage:
- NEXT Insurance - Easy online quotes for small businesses
- Hiscox - Often reasonable for online sellers
- Hartford - Good BOP options for small business
- Thimble - Flexible, short-term options
- State Farm, Allstate, etc. - Your current carrier might offer business policies
Step 4: Compare Coverage, Not Just Price
Cheapest isn’t always best. Compare:
- Coverage limits (how much will they pay)
- Deductibles (how much you pay first)
- Exclusions (what’s not covered)
- Claims process reputation
Step 5: Consider a Business Endorsement on Home Policy
If your inventory is at home and values are modest, some insurers offer a “home business endorsement.” This adds business property coverage to your existing policy.
Pros: Simple, often cheaper Cons: Limited coverage, may not include liability
Step 6: Get It In Writing
When you buy coverage, get a declarations page showing:
- Covered locations
- Coverage amounts
- Deductibles
- Named insured (you or your LLC)
- Effective dates
Keep this document accessible. You’ll need it if you file a claim.
The LLC Question: Does It Help With Insurance?
Many resellers form LLCs, partly for liability protection. Here’s the truth:
What an LLC does:
- Creates legal separation between personal and business assets
- May protect personal assets if someone sues your business
- Provides credibility with vendors and platforms
What an LLC doesn’t do:
- Protect your inventory from damage/theft
- Prevent lawsuits (you can still be sued)
- Eliminate the need for insurance
The verdict: An LLC is worthwhile as you grow, but it’s not a substitute for insurance. Many successful lawsuits “pierce the corporate veil” of small LLCs anyway.
Claims: What to Expect
If something goes wrong, here’s how to handle it:
Document Everything
- Take photos/video of damage immediately
- Save receipts for everything you claim
- Get police reports for theft or vandalism
- Keep records of your inventory (spreadsheets, software)
Report Promptly
Most policies require quick notification. Don’t wait to see if something “resolves itself.”
Be Honest and Complete
Insurance fraud is a crime. Be truthful about what happened and what you lost.
Prepare for Depreciation
Insurance pays actual cash value (what items are worth now) or replacement cost, depending on your policy. Don’t expect to get paid retail prices for used goods you bought wholesale.
Keep Records Going Forward
The best claim is one you can prove. Maintain organized inventory records with costs, pictures, and locations.
Common Insurance Mistakes Resellers Make
Mistake #1: Underinsuring Inventory
You have $30,000 in inventory but insure for $10,000 to save money. When you file a claim, you only get 33% of your loss even if the policy pays out fully.
Mistake #2: Not Updating Coverage
Your business grew from $5,000 to $25,000 in inventory, but your coverage didn’t change. Update annually at minimum.
Mistake #3: Assuming Everything Is Covered
Not reading exclusions. Many policies exclude certain categories (liquids, perishables, recalled products) or events (flooding, earthquakes).
Mistake #4: Storing Inventory Improperly
Your policy might require certain security measures (locks, climate control) that you’re not maintaining. Violation can void coverage.
Mistake #5: Not Having Proof of Inventory
After a total loss, you need to prove what you owned and its value. Without records, claims become difficult or impossible.
Checklist: Reseller Insurance Readiness
Use this checklist to assess your current situation:
Inventory Assessment
- [ ] I know the total value of my inventory
- [ ] I have records/photos of my inventory
- [ ] I know where all inventory is stored
- [ ] I’ve estimated my maximum potential loss
Current Coverage Review
- [ ] I’ve read my home/renter’s policy
- [ ] I understand the business exclusions
- [ ] I know the sublimits that apply to me
- [ ] I’ve confirmed liability coverage scope
Business Insurance Status
- [ ] I have/don’t have business property coverage
- [ ] I have/don’t have liability coverage
- [ ] My coverage matches my current inventory value
- [ ] I’ve reviewed my policy in the last 12 months
Risk Management Practices
- [ ] I maintain inventory records
- [ ] I have secure storage for high-value items
- [ ] I use proper packaging to prevent shipping damage
- [ ] I have a plan for business interruption
The Bottom Line: What Should You Do?
Right now:
- Check your home policy for business exclusions
- Estimate your current inventory value
- Assess whether a major loss would significantly hurt you financially
If you have significant inventory value ($5,000+):
- Get quotes for business property coverage
- Consider a BOP policy for combined protection
- Don’t procrastinate—coverage is cheap compared to total loss
If you’re a full-time reseller:
- Comprehensive coverage is non-negotiable
- Work with an insurance professional who understands small e-commerce businesses
- Review coverage annually as your business grows
Insurance isn’t exciting. It doesn’t make you money. But it protects the money you’ve made and the business you’ve built. One bad event without coverage can end everything you’ve worked for.
The best time to get covered was before you needed it. The second best time is right now.