Wayfair Insurance Explained – What You Need To Know

Unfortunately, there is a lot of misleading and incorrect information out there regarding Wayfair Insurance for online retailers in Canada so we prepared this post entitled “Wayfair Insurance Explained”. Our goal is to help educate and inform the Canadian online retailing community and ultimately protect your personal and business assets as there are real risks associated with selling on Wayfair and being an online retailer of any/all products.

This post is a bit different than others we’ve written as it’s primarily a list of frequently asked questions about Wayfair Insurance from a leading online retailer that also administers one of most informative Facebook groups for Canadian online retailers. The following Q&A are real questions and answers from that group…

Commonly Asked Questions about Wayfair Insurance for online retailers in Canada…

Q. I read that sellers on Wayfair need to have $1 million in commercial general liability coverage, are you able to provide that for both Canada and US?

A. Yes. Provided you have a Canadian legal entity or are a Canadian citizen with a Canadian mailing address our brokerage ALIGNED Insurance can place commercial general liability insurance for CDN, US and Global sales and we help many online retailers with this already.

Your Wayfair Insurance policy will have to include an aggregate limit of $2 million and list Wayfair as an additional insured. Wayfair also stipulates that you carry the legally required insurance policies in your jurisdiction. Contact an ALIGNED broker to find out what those policies are and for information on other policies like Cyber Liability & Privacy Insurance, Property Insurance and Product Recall Insurance that should be included in your Wayfair Insurance plan.

Q. Can you insure me if I’m a sole proprietor or do I have to have a corporation?

A. Yes.  To be insured or insurable, you don’t have to have a corporation.  A policy can be placed under your personal name or for a legal entity.

Q. I’ve read about people getting Wayfair Insurance from a US-based company, but they have to have a US mailbox.  That seems kinda sketchy to me, does that make sense if I’m a Canadian?

A. We’ve unfortunately heard of this scam too and it’s not just sketchy…it’s fraudulent and misleading.  To be legitimate, insurance for a Canadian legal entity or sole proprietor in Canada must be, and can only be, purchased from a licensed insurance company in Canada and placed by a licensed insurance broker in the province the client lives or is incorporated in.  Contact the Insurance Bureau of Canada for questions or confirmation of the same https://www.ibc.ca

Not only does purchasing Wayfair Insurance in this way not provide you with any enforceable insurance coverage, doing so may also get you banned from selling on Wayfair.

Q. Are Canadian Wayfair Insurance policies actually enforceable if I’m selling into the US? Absolutely. 

A. Properly written policies can include North American or Worldwide territory clauses and if desired, can even cover suits filed in the US and Canada or just in Canada.

Q. I sell children’s toys, can I still get Wayfair Insurance coverage?

A. Yes. This category is considered high risk and the premiums are higher, but provided appropriate QA and product testing documentation is available, we have yet to encounter a product we can’t secure coverage for.

Q. In which provinces do you provide Wayfair Insurance?

A. We have licensing in all provinces except Quebec.

Q. What if I sell a mix of items like retail arbitrage, online arbitrage, and wholesale? Can I still get coverage? 

A. Yes. We just need to have a breakdown of the annual revenue from each type of retail, the products or product categories and % split between Canadian, US and Global sales in order to get the Wayfair Insurance plan that’s best for you.

Q. If I get sued in the US, how does Wayfair Insurance protect me?

A. Most suits are brought in the jurisdiction where the company or person has assets so it’s rare that a Canadian online retailer would be sued in the US but we do structure our policies to cover suits brought in the US in case it does happen.  Coverage for legal fees, defence costs and settlements or judgments against you can be covered with a Wayfair Insurance plan.

Q. Would my home insurance cover say my inventory if the house caught fire?

A. This is an important question. If you are selling on Wayfair, you are essentially running a business out of your personal residence. If you haven’t disclosed this to your insurer, the insurance company can fully deny your claim in some cases.  All business activities or inventory stored in a home should be formally reported to your home insurer.  Some will require you to provide evidence of separate commercial general liability and/or property insurance for your business assets in the residence.  We can assist with both as our Wayfair Insurance packages are customizable to your specific needs.

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