The short version
- A genuine one-person shop with no staff is not legally required to hold public or product liability insurance - there is no law that requires either for a sole trader working alone.
- The one insurance that is legally required kicks in the moment staff are hired: Employers' Liability Insurance, at least £5 million of cover, the moment anyone who isn't a close family member is employed - with a real fine, up to £2,500 a day, for trading without it once required.
- eBay itself does not require sellers to hold any insurance - a genuine difference from Amazon, which contractually requires commercial liability insurance once a seller's gross proceeds exceed £4,000 in a month.
- "Not required" is not the same as "no risk" - a reseller can still be held liable for a defective product causing injury or damage, even without having manufactured it themselves.
- The genuine decision is a risk judgement, not a compliance checkbox: how much real harm a specific category could realistically cause, weighed honestly against the modest cost of covering it.
What is actually a legal requirement, and what isn't
Checked 26 September 2026: for a genuine one-person shop with no staff, there is no law requiring either public liability or product liability insurance - a seller can legally trade without either, and plenty of small sellers do. The one insurance that is a genuine legal requirement is Employers' Liability Insurance, and it only applies once staff are actually hired - anyone who isn't a close family member counts, and the Employers' Liability (Compulsory Insurance) Act 1969 requires at least £5 million of cover from that point, with a fine of up to £2,500 a day for trading without it once it applies. For a genuine solo operation, that specific requirement simply does not switch on.
What eBay actually requires, and how that compares to Amazon
eBay does not require sellers to hold any form of liability insurance to sell on the platform - a genuine, specific difference worth knowing precisely because the opposite is sometimes assumed. Amazon runs a different policy: once a seller's gross proceeds on Amazon.co.uk exceed £4,000 in any single month, Amazon's own seller agreement contractually requires commercial liability insurance, regardless of what UK law itself demands. A seller moving between platforms, or assuming eBay's rules mirror Amazon's, is worth correcting on this specific point - the two platforms genuinely differ here, not just in general tone.
Why "not required" does not mean "no risk"
eBay's own user agreement is explicit that eBay itself carries no responsibility for the safety or performance of anything listed or sold through it - the full risk sits with the seller, insured or not. Under UK consumer protection law, a business that supplies a defective product can be held liable for harm it causes even without having manufactured it - reselling, rather than manufacturing, does not remove that exposure. None of this is affected by whether eBay or the law happens to require insurance; the underlying risk of a genuinely faulty product causing real injury or damage exists independently of any registration requirement, and stays exactly the same size whether or not it happens to be insured against.
The precise legal mechanism that actually creates a reseller's own exposure
Checked 27 September 2026, directly against Section 2 of the Consumer Protection Act 1987: primary liability for a defective product sits with the producer, but subsection (3) creates a genuine, separate route to a mere supplier's own liability. If someone harmed by a defective product asks a supplier - a reseller, in this context - to identify the actual producer or importer, and the supplier fails, within a reasonable time, to either name that person or say who supplied the product to them, the supplier itself becomes liable for the damage. This is worth reading precisely because it turns record-keeping into a genuine legal safeguard, not just good practice: a dropshipper who can promptly and accurately name the actual supplier behind a specific sale, when asked, generally avoids taking on liability that would otherwise sit with the producer. A dropshipper who cannot - because records were never kept, or a supplier relationship was too informal to trace a specific batch back to its source - can end up personally liable for exactly the kind of harm this piece has been describing, not because they made anything, but because they could not point to who did.
The actual judgement worth making, honestly
Since neither eBay nor the law forces the decision either way for a genuine one-person shop, what is left is a real, specific risk judgement rather than a compliance checkbox: how much genuine harm could a specific category realistically cause if something did go wrong, weighed against the modest ongoing cost of covering it. Upholstered furniture and glass and mirrors both carry genuine injury potential if something is structurally wrong with a specific item - a collapsing shelf bracket, a shattering mirror - in a way a lower-risk category simply does not, and that honest difference is worth weighing specifically rather than applying one blanket answer across an entire catalogue regardless of what is actually in it.
What genuinely changes the answer, as a shop grows
The honest answer above is not fixed forever - specific, concrete changes are worth watching for, each one shifting the calculation in a real way rather than a vague sense of "getting bigger." Taking on a first member of staff, even part time, switches Employers' Liability from irrelevant to a genuine legal requirement overnight. Selling on a marketplace with its own contractual insurance threshold, such as Amazon's £4,000-a-month trigger, changes the requirement regardless of what a seller's own eBay activity looks like. And a catalogue shifting toward genuinely higher-risk categories - more electrical items, more structural furniture - changes the honest risk calculation even where no external rule forces the question at all.
What this actually means to do about it, practically
The practical response to the mechanism above is not complicated, and much of it overlaps directly with the traceability duty already worth keeping under UK product safety law: a clear, accessible record of which supplier and which batch a specific sold item actually came from, kept for a genuinely useful length of time, not reconstructed from memory under pressure once a request has already arrived. This does not need to be complicated or expensive - a simple, consistently updated record linking each order to its actual supplier is enough to answer the kind of request Section 2(3) describes promptly and accurately, which is the entire difference between staying outside the liability this section creates and being drawn into it simply for lacking a record that would have taken moments to keep in the first place. A seller genuinely unable to answer such a request, because a supplier relationship was too informal or too poorly documented to trace, is in a meaningfully worse legal position than one who can - regardless of whether either seller actually did anything wrong with the product itself.
Roughly what this actually tends to cost, for scale
It is worth having at least a rough, honest sense of the real cost involved, rather than leaving "the modest cost of covering it" as an entirely abstract phrase. Several UK insurance brokers publicly advertise public liability cover with a £1 million limit, for a low-risk online seller, in the region of roughly £100 to £200 a year - not a fixed or guaranteed figure for any specific shop, since a genuine quote depends on the actual products sold and the specific insurer asked, but a useful rough anchor for weighing against the risk being covered rather than treating the whole question as an unpriced unknown. A specific, genuine quote from a broker, run against a specific catalogue's own real risk profile, remains the only way to get a number worth actually relying on.
A worked example
A shop selling exclusively small, low-risk accessories - candle holders, soft furnishings with no structural load - carries a genuinely different risk profile from one selling wall-mounted shelving and large mirrors, where a manufacturing fault could realistically cause real injury if it failed in a customer's home. Both are legally free to trade without insurance. The honest question for the second shop specifically is whether the real, if unlikely, cost of a genuine claim - and the cost of simply defending one, even a claim that ultimately fails - is worth avoiding for the price of a policy, not whether the law or eBay happens to require it either way.
Where this stays a personal decision
Sellhelm has no view on which categories a specific shop should carry, and does not track insurance status - this stays entirely a seller's own judgement, made with real facts about a specific catalogue's actual risk profile rather than either assuming insurance is unnecessary because it isn't mandatory, or assuming it must be needed because "business insurance" sounds like a standard box to tick. A specific broker, quoting against a specific catalogue, is the only way to get a genuinely useful answer to what it would actually cost.
Questions people ask
Is business insurance legally required to dropship on eBay?
Not for a genuine one-person shop with no staff - there is no law requiring public or product liability insurance in that situation. Employers’ Liability Insurance becomes legally required only once staff are hired.
Does eBay require sellers to have insurance?
No. eBay does not require sellers to hold any liability insurance, which differs from Amazon, where commercial liability insurance becomes contractually required once gross proceeds exceed £4,000 in a month.
Can I be held liable for a faulty product even though I didn’t manufacture it?
Yes. UK consumer protection law can hold a reseller liable for harm caused by a defective product, even without having manufactured it themselves - reselling doesn’t remove that exposure.
Which product categories carry the most real insurance-relevant risk?
Categories with genuine structural or injury potential if something is faulty - wall-mounted furniture, glass and mirrors, upholstered items with fire-safety requirements - carry more realistic risk than small, low-risk accessories.