Do You Need Business Insurance to Sell on Etsy or eBay UK?

Meera started making bath bombs at her kitchen table in Leicester as a way to unwind. Within a year her Etsy shop had 400 sales and a five-star rating, and she’d never once thought about insurance — why would she, for a hobby? Then a customer messaged a photo of a red, blistered rash and the words “what was in this?” Meera’s stomach dropped. It turned out fine; the customer had a known allergy and let it go. But that night Meera typed the question thousands of sellers type every week: do you need business insurance to sell on Etsy or eBay in the UK? Here’s the honest answer, with real 2026 prices.

Insurance for Etsy and eBay Sellers at a Glance

Required by UK law?	No — unless you employ someone outside your close family (then employers’ liability is compulsory)
Required by Etsy or eBay?	No — both recommend it but don’t check
The policy that matters most	Product liability (usually bundled with public liability)
Typical cost	From about £5.40 a month; most small sellers pay £60–£150 a year
Highest-risk products	Cosmetics, soap, candles, wax melts, food, toys, children’s items
HMRC trigger	Tell HMRC once trading income passes £1,000 in a tax year

The Short Answer: No Law Says You Must — But

Let’s clear up the legal question first, because it’s simpler than the forums suggest. There is no UK law that says you need insurance to list a product on Etsy, eBay, Vinted or Amazon Handmade, and none of those platforms will ask you for a policy number. The single exception is employers’ liability: the moment you pay someone who isn’t close family to help pack orders, you legally need at least £5 million of cover or face a fine of up to £2,500 a day. Our employers’ liability guide explains the rules. For everyone else, insurance is a choice — which is exactly why so many sellers skip it, and why the ones who get a claim wish they hadn’t. “Not required” has never meant “not needed”.

The One Policy That Matters Most: Product Liability

If Meera’s customer had needed hospital treatment, the claim would have landed on Meera personally — her savings, her car, her home — because a sole trader is the business. Product liability insurance exists for precisely that moment. It pays the compensation and the legal costs if something you sold injures someone or damages their property: a candle that cracks its glass and scorches a table, a necklace clasp that a toddler swallows, a bath bomb that triggers a reaction. Almost every insurer sells it bundled with public liability in one policy, and it’s the cover that turns a “hobby with income” into something that can survive a bad day. We’ll cover product liability insurance in depth in a dedicated guide.

Which Products Turn a Hobby Into a Risk

Not every Etsy shop carries the same risk, and insurers know it. At the bottom of the ladder sit prints, digital downloads, stationery and knitted scarves — hard to hurt anyone with a greetings card. In the middle come jewellery (nickel allergies, small parts), clothing and homeware. At the top are the products that already come with legal duties before you sell a single one. Candles and wax melts must carry CLP hazard labels. Cosmetics, soap and bath bombs legally need a Cosmetic Product Safety Report from a qualified assessor and must be notified to the Office for Product Safety and Standards before sale. Food sellers must register with their local council at least 28 days before trading. If your product is on that top rung, insurance isn’t a nice-to-have; it’s the cost of doing it properly — worth knowing before you pick a niche from our list of online business ideas.

Craft Fairs, Markets and Couriers: Where Public Liability Comes In

Picture Meera at her first Christmas market. Her stall, her fairy lights, her trailing extension cable — and a shopper who trips over it and breaks a wrist. That’s a public liability claim, and it’s the reason nearly every market organiser, council and craft-fair venue asks for a certificate before they’ll give you a pitch, usually for £1 million to £5 million of cover. Public liability also covers the courier who slips on your icy path collecting parcels, or the customer who collects in person and knocks over your display. The good news is that it’s cheap — our guide to public liability insurance costs shows what different sellers actually pay, and online sellers sit near the bottom.

Your Home Insurance Probably Won’t Cover Your Stock

Here’s the trap that catches sellers who think they’re covered. Most home insurance policies exclude business activity outright. That means the £2,000 of silver, fabric or packaging in your spare room isn’t covered if a pipe bursts, and the customer who collects an order and slips on your stairs isn’t covered either. A simple fix is a stock and equipment add-on to your business policy, or a dedicated home-business policy. If you’re running a business from home, that article walks through what your home insurer needs to know and what can void your cover.

What It Actually Costs in 2026

This is where most sellers relax. Because a part-time Etsy shop is low-risk and low-turnover, the premiums are among the cheapest in business insurance. Simply Business’s figures for January to June 2026 show product liability from £5.40 a month — £64.78 a year — with craft insurance from £6.42 a month and online-retailer cover with £2 million of public liability from £8.59. Those “from” prices apply to the cheapest 10% of customers, so budget £60 to £150 a year for a typical small seller, and a little more if you add stock cover or sell the riskier products above. Meera now pays £7 a month for £2 million of public and product liability plus £1,500 of stock cover. For a wider look at cheap options, see our guide to the cheapest business insurance for sole traders.

The HMRC Side: The £1,000 Allowance and What Platforms Now Report

Insurance is one half of “doing it properly”; tax is the other, and the rules changed recently enough to confuse people. Under gov.uk guidance, if your total trading income across all platforms passes the £1,000 trading allowance in a tax year, you must tell HMRC and register for Self Assessment. Selling your own unwanted clothes or furniture isn’t trading, so that’s normally tax-free. Separately, since January 2024 platforms like Etsy, eBay and Vinted have had to report sellers who make 30 or more sales or roughly £1,700 in a year, with the first reports sent in January 2025. That’s a reporting threshold, not a tax bill — but it means HMRC can now see who’s trading. If you’ve crossed £1,000, our guide on how to register as a sole trader takes ten minutes to read.

Selling to Northern Ireland or the EU? Read This First

One more thing that quietly changed. Since 13 December 2024 the EU’s General Product Safety Regulation has applied to consumer goods sold into the EU and Northern Ireland. For a seller in England, Scotland or Wales, that means appointing an EU- or NI-based “responsible person” and adding their details to your products and listings before you can ship there. Plenty of small Etsy sellers simply switched off EU and Northern Ireland shipping rather than deal with it, and that’s a legitimate choice. Insurance doesn’t make you compliant with any of this — but an insurer will ask whether your products meet the rules, and if they don’t, a claim can be refused.

The Bottom Line

Meera’s rash scare cost her nothing but a sleepless night, and that’s the point: the next one might not. Insurance for selling on Etsy or eBay in the UK isn’t a legal box to tick, and nobody will stop you trading without it. But for around £7 a month, product and public liability means a single allergy, a single cracked candle jar, a single trip at a craft fair can’t undo a year of work. Sort the legal basics for your product type, tell HMRC once you pass £1,000, get a quote this week — and then go back to making things. Our complete guide to small business insurance has the rest.

Frequently Asked Questions

Is insurance a legal requirement to sell on Etsy in the UK?

No. There’s no law and no Etsy rule requiring it. The only legal exception is employers’ liability insurance if you employ someone who isn’t close family.

How much does Etsy seller insurance cost in the UK?

Product liability starts from about £5.40 a month, and most small sellers pay £60 to £150 a year for £1 million to £2 million of public and product liability cover.

What insurance do I need to sell handmade candles or cosmetics?

Product liability is strongly advised. Candles also need CLP hazard labels, and cosmetics legally require a Cosmetic Product Safety Report and notification before you sell.

Does my home insurance cover my Etsy stock?

Usually not. Most home policies exclude business stock, equipment and business visitors, so you need a stock add-on or a home-business policy.

When do I have to tell HMRC about Etsy or eBay sales?

When your total trading income across all platforms passes the £1,000 trading allowance in a tax year. Selling your own personal items normally doesn’t count as trading.

Disclaimer: This article is general information, not legal, tax or financial advice. Prices are insurer guideline figures for 2026 and vary by product type, turnover and cover level. Check current gov.uk guidance and speak to an FCA-authorised insurer or broker before buying cover.