Wayfair Dropship Insurance 101
Wayfair has taken the world of ecommerce by storm. With over 19 million customers, they’ve become the largest retailer of furniture and home goods. Their brand-fluid drop ship marketplace has made it easy for consumers to find the exact style they’re looking for, and for independent vendors without a well known brand to enter the game. The drop ship model makes it relatively easy to get started, with no storage, listing or handling fees required up-front. The one thing you will need to have in place before you can get started selling on Wayfair is your insurance policy. In this article, we’ll go over the insurance Wayfair requires, what it covers, where to get it, and why it’s important.
The Wayfair Insurance Requirement
Wayfair has several types of contracts, the two most common being for designers and for Drop Ship vendors.
Designers’ contracts merely state that they must maintain the insurance required by law. For example, businesses with employees may be legally required to carry Workers’ Compensation.
Suppliers’ contracts require General Liability Insurance with a per-occurrence limit of $1 million and an aggregate limit of $2 million, listing Wayfair LLC as additional insured and Certificate Holder. They also specify that you can reach the $2 million aggregate limit with an umbrella liability policy. You’re required to have an expiration date at least three months in the future.
Get the Wayfair Insurance Policy, starting at $250/year!
The Wayfair Policy is only available to businesses registered in the United States. To register your business in the US, visit Bizfilings.com.
Let’s Break it Down:
General Liability Insurance
General Liability protects you in the event that your products cause bodily injury or property damage to consumers.
- Per Occurrence Limit: Your insurance policy will pay out a maximum of $1 million per incident
- Aggregate Limit: Your Insurance policy will pay out a maximum of $2 million in total.
Umbrella (Excess) Liability Insurance
This can be used to extend the limits of your other coverages. For example, a $1 million General Liability policy + a $1 million Umbrella Liability policy would cover your $2 million aggregate limit requirement.
Additional Insured
This is an endorsement meaning that your policy extends to Wayfair. It also gives them access to updates on your policy should you change or cancel your coverage.
The additional insured language on your certificate of insurance will need to be exact. For example, Wayfair requires you to list “Wayfair LLC” as opposed to “Wayfair, LLC.”
Certificate Holder
Listing Wayfair LLC as certificate holder allows them to receive information and updates on your policy, like early cancellations.
The certificate holder language should read:
Wayfair LLC
Copley Place, Suite 7000
Boston, MA 02116
Sample Certificate
This is an example of what your certificate will need to look like. If it looks overwhelming, don’t worry! Every element in the sample COI is included in the Wayfair Policy already.
Supplemental Coverage
Your insurance requirement may vary depending how high your sales are, but typically Wayfair requires less coverage than its competitors (like Target+ or Walmart). However, regardless of your contract requirements it’s important to consider the coverages that will best protect your business should anything go wrong. Typically, you can cover up to $2 million in damages, lawsuits and hospital bills for under $30/month – definitely worth the investment. These are the most helpful insurance coverages for Wayfair Vendors:
This will cover damages that take place while you or your products are in a vehicle. For example, if a truck crashes carrying goods from a factory to a warehouse, or you’re in an accident while en route to one of your facilities.
Though the name can be misleading, Cyber Liability insurance is really about data. If you’re storing customer data, like addresses, contact information, or credit card numbers, Cyber will protect you in the event that your database gets hacked.
Riders
Riders add extra protection to your existing insurance policies for specific incidents. Ask your broker about adding riders for:
- The inventory in your home/warehouse
- Protecting your inventory while you are transporting it
- Hired and non-owned auto coverage
Where Do I Get It?
The Wayfair Vendors’ Policy
The best way to know you have the exact coverage that Wayfair requires is to select a pre-built policy. That way you know you’ll have the right coverage, limits, endorsements, and additional specifications on the first try. Click below to purchase a policy created specifically for Wayfair’s requirements.
The Wayfair Policy is only available to businesses registered in the United States. To register your business in the US, visit Bizfilings.com.
If you already have a broker or agent or want to purchase the coverage elsewhere, make sure you’re specific about your business and your requirements.
Here’s an example of what to say to an agent:
“I am selling finished goods online at Wayfair.com. I need a General Liability policy of at least 2 million in the aggregate, and 1 million per occurrence. Part of my requirement is that Wayfair LLC is added as additional insured. Wayfair allows us to meet the 2 million aggregate limit with umbrella liability insurance.”
To get a quote as quickly as possible, be prepared to answer the following questions:
- Do you private label or manufacture your own goods?
- Are your products imported from out of the country?
- Do you have a physical location?
Get the Wayfair Policy, starting at $250/year:
Selling on Multiple Marketplaces?
Most e-commerce vendors find success by selling their products on multiple platforms. Learn about the requirements for other top marketplaces:
