This was posted previously elsewhere on DP in error. I would like to learn what others with web stores are doing regards product liability insurance. In my case, all products will be dropshipped. Is only the product maker liable for damages or is the internet seller also liable? Are you protecting yourselves and, if so, to what dollar limits?
You can certainly be held liable for a product you sell - even if it is dropped shipped. A good attorney will name everyone in the suit. The manufacturer will more than likely be the main target, but your money is as good as theirs. If you had a site that sold something to a minor - say alcohol - then you, not the manufacturer would more than likely be the target. It really depends on what you are selling, whom you are selling it to, who collects the money, etc. You can buy insurance, but the price really depends on the product. I have several $2 million dollar general liability policies and they run under $2K a year each but the risk factor for the product is extremely low. I would guess something like the sale prescripition drugs would be very hard to insure from a traditional insurer - and very expensive if you did so. You can also put the business in an entity like a LLC or Corp, and this may be a less costly method. Nothing is a 100% guarantee, but a good asset protection attorney could work out the best plan for your particular situation.