TikTok and Etsy users urged to make vital check or face 'wipe out of everything'

Social media has changed the world in more ways than one, but something often overlooked is the soaring popularity of using these platforms to launch small businesses and sell products online. TikTok and Etsy stand as two of the biggest hubs for this, with a combined 20 plus million merchants using these marketplaces, usually as side hustles to get some extra income.

But there’s something these sellers regularly overlook that could expose them – particularly if they make or import goods themselves. Insurance expert Chris DeCarolis, of Coverage Axis, is urging these small business owners to check whether their cover includes product liability insurance. This warning applies to sellers of candles, cosmetics, toys and electrical accessories, where a faulty product could potentially lead to injury or property damage.

The UK Government’s business guidance confirms that product liability insurance can protect businesses against claims that a product they made, sold or supplied caused illness or injury. It also says manufacturers, and sometimes others in the supply chain, can be liable where an unsafe product causes personal injury, death or damage to private property.

DeCarolis said: “Product liability insurance is important because the financial risk does not end with refunding the price of an item. If somebody claims that a product injured them or damaged their home, the seller could also face compensation demands and legal costs.

“A business may earn only a few pounds from one sale, but one serious claim could wipe out everything a small side hustle has earned.”

That distinction could be particularly important for people running small businesses from home, as a standard household policy should not simply be assumed to provide protection for commercial product claims. UK Government-backed business guidance recommends checking exactly what a policy covers, including exclusions, limits and conditions.

There is another check sellers need to make before putting products in front of customers: insurance cannot replace their legal responsibilities over product safety. The Office for Product Safety and Standards says businesses that make, import, distribute or sell consumer products in the UK are responsible for ensuring they are safe and comply with relevant labelling requirements.

For businesses operating in Great Britain, the General Product Safety Regulations 2005 require consumer products to be safe under normal or reasonably foreseeable use. Government guidance says serious offences can result in a fine of up to £20,000, imprisonment for up to 12 months, or both.

DeCarolis is therefore urging sellers to look specifically for the words “product liability” in their policy and establish whether their individual products, imported goods and online sales channels are covered. For anyone turning TikTok or Etsy sales into a business, checking this before the next order could be a worthwhile precaution.