What insurances to we need to cover our online retail business which exports interiors and accessories into France and Switzerland?

Question

We are retailing interiors/accessories to the ski chalet market, specifically Switzerland and France through our website www.chalet-shop.com. We hope to start trading within the next few months. We are a limited company and registered for VAT. We will be selling to private individuals, UK registered companies, Swiss companies and French companies. We have a high level of experience of our target market and are aware of the VAT issues. Our question is what type of insurance will cover us? We don’t intend to hold stock over and above a value of £1000 as we will be drop-shipping. We will however be responsible for all delivery. As it is online retail, we will receive payment up front before placing orders with our suppliers.

Answer

Hello Sally,
You don’t have to have any insurance if you don’t judge the risk to be very high – it is your choice.

I would recommend having transit insurance to cover the goods whilst they are on the move and until they reach their intended destination. That way should they be lost or damaged in transit you will have some recompense for their value. If you do take out this insurance remember to cover the cost of transport as well as the cost of the goods themselves because you would presumably have to send replacement items to your customer.

If you rely on standard terms and conditions from a freight agent or haulage agent you will find that if you try to claim on them for damage or loss, the amount you can claim is very small as their professional terms and conditions e.g. BIFA terms dictate the amount you can claim based on a small amount per kilo.

It is the same for courier companies.

As you are taking payment up front you do not need insurance against non payment.

If you would like to discuss the above in more depth please contact me and I will be happy to help.

Regards,
Susan

Answer

Hi Sally,

The type of insurance you need will depend entirely on the terms of sale. if the purchaser is buying CIF then they will need to arrange the insurance from their end. However, if you are offering insurance as part of the package there are two ways of coing about this:
1. Purchase extra insurance from the carrier.
2. Set up your own annual open cover covering all shipments automatically to a maximum value of, say, £1,000 or less. Settlement Basis will be invoice value so this will include your profit element as well, unlike the normal replacement cost frequently provided. The cost of the insurance policy will depend on the estimated annual value of the sendings or estimated turnover. Cover for All Risks of Physical Loss or Damage is standard though insurers are likely to apply an excess of between £50-£100 each ane every claim.

The other insurance you will need, if you have not already got it set up is Product Liability insurance. this would normally form part of the overall combined insurance package set up for the company.

Hope this helps. Please feel free to contact me any time you want to discuss the matter further.
Cheers
Craig

Answer

Sally,
I would certainly advise you to look at product liability insurance. I have provided a useful link below for you to understand the implications:

https://www.gov.uk/product-liability-and-safety-law

Also, although not directly related to your question, the fact that you will be selling directly to the public, you might like to review your returns policies and consumers’ rights on returning goods at your expense! The link I have provided is for the UK but will almost certainly comply with EU practices on distance selling regulations.

http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft913.pdf

Regards,
Richard England

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