Guide

Insurance for resellers: what you could lose without it

A fire, a theft, a customer injury or a lost package can cost far more than a year of coverage. This guide explains the main types, with invented numbers to show how it works.

General information only, not legal or tax advice. I am not a lawyer, a CPA or an accountant. Flipfiled does not prepare tax returns or give legal advice. This page explains what government sources say. Rules, rates and fees change, so confirm with the agency. The dollar examples are made up to show the math.

Flipfiled is not an insurance agency and does not sell insurance. Loss amounts and deductibles below are invented to show how coverage works. Policy limits are cited from NAIC and Triple-I. Premium figures are one online broker’s medians and are not quotes. Talk to a licensed insurance agent for real quotes and coverage terms.

The short version

• An LLC can limit some personal liability, but it does not repair a fire, replace stolen stock or pay a customer’s medical bills. Insurance does. See what an LLC does and does not do.
• A standard homeowner’s or renter’s policy gives little coverage for a business run from home. Regulators and the Insurance Information Institute describe about $2,500 for business property and typically no business liability.
• Carriers include limited coverage on some shipments; for anything worth more, you buy extra.
• If you hire an employee, Illinois requires workers’ compensation insurance. See hiring help.

The main types of coverage, in plain English

Which of these you need, and what each policy excludes, is a question for a licensed agent. Policy wording decides what is covered.

Is inventory covered by a homeowner’s or renter’s policy?

Mostly not, or only a small amount. Here is what the sources say:

• The National Association of Insurance Commissioners (NAIC), the group of state insurance regulators, says business property and liability are “typically excluded from a traditional homeowners policy,” and that many renters or homeowners policies limit office equipment replacement to $2,500. It tells home-business owners to ask their insurer whether business-related stock or inventory kept at home is covered, and what happens if a visitor is injured. Source: NAIC: Working from home and your insurance coverage (opens in a new tab).
• The Insurance Information Institute (Triple-I) says a typical homeowners policy covers only $2,500 of business equipment, which is usually not enough. For as little as $25 you can raise it to $5,000. Some insurers go up to $10,000 in $2,500 steps. It says a liability endorsement on a homeowners policy is typically available only to businesses with few business-related visitors. Source: Triple-I: Insuring your home-based business (opens in a new tab).
• The NAIC also warns that failing to tell your insurer about a substantial home business may lead to a denied business claim or a non-renewed policy.

I could not open an actual policy form, so I cannot tell you whether goods held for sale count toward that $2,500 limit in your policy. The NAIC raises inventory as something to ask about, which is the point: get the answer in writing from your insurer or agent before you stock up.

What a separate business policy can add

Each benefit below comes from the cited source. Whether your policy includes it depends on the policy.

Limits of a BOP: the U.S. Chamber and Chubb say a BOP (business owner’s policy) generally does not include workers’ compensation, commercial auto, errors and omissions, flood or earthquake, or employee theft. They also say BOP limits are usually lower than standalone policies. Sources: Chubb (an insurer) (opens in a new tab); U.S. Chamber of Commerce (opens in a new tab).

Selling from home, a rented storefront, or a building you own

The right policy depends on where the stock and the customers are. This table summarizes what the sources say. An agent can tell you what applies to your policy.

Sources: Triple-I and NAIC (home); City of Houston Business Solutions Center (opens in a new tab) (tenant contents and cost: “tenant coverage usually costs less than building coverage because it covers only contents”); Insureon on renter versus landlord coverage (opens in a new tab); Chubb (opens in a new tab) (BOP covers building, equipment and inventory). The lender-requirement note is general; I did not find a source for it, so ask your lender. The Illinois Department of Insurance has a consumer page on commercial property (opens in a new tab) with definitions.

The price figures are medians of policies bought or quoted through one online broker (home-based (opens in a new tab) and retail (opens in a new tab)), which has a commercial interest. They are not rates for any insurer or for your business. Premiums vary with profession, limits, deductibles, location, employees and claims history. Treat them as a starting point for quotes.

If you are opening a storefront, read the storefront licensing and zoning guide too.

Two terms that change what you get back

The Illinois Department of Insurance defines actual cash value as replacement cost less depreciation, and replacement cost as the cost to repair or replace with like kind and quality without subtracting depreciation. Coinsurance means you agree to insure the property for a certain percentage of its value, and a deductible is what you pay per claim before the insurer pays. For inventory, ask how the policy values it: at your cost, at its resale price, or something else. Source: Illinois Department of Insurance (opens in a new tab).

Shipping and carrier coverage

The U.S. Postal Service says Priority Mail Express, Priority Mail and USPS Ground Advantage include up to $100 of insurance when the shipment has an applicable tracking barcode. Other mail classes do not include standard insurance. Extra shipping insurance is available up to $5,000, priced by declared value and starting at $2.80. To make a claim, keep your mailing receipt and proof of value, and file within 60 days of mailing (for damaged or partly missing contents, file immediately). Included coverage is capped at $100 when you pay retail or commercial prices. Source: USPS: Insurance and extra services (opens in a new tab).

Platforms and other carriers have their own terms. Read them before you rely on them.

Example 1: a fire or a burst pipe

An invented reseller sells from home and keeps $15,000 of inventory (at cost) in a spare room. A burst pipe ruins all of it. The limits below come from the sources above. The deductible is assumed.

What this shows: the cheap endorsement helps, but it still leaves most of the loss with you. The business policy costs more each year, and one loss pays for years of it. It also depends on the policy covering that cause of loss. Water damage, for example, is often limited or excluded in some policies, and flood is generally a separate coverage. Ask an agent. The BOP price is one broker’s median and could be far from what you would be quoted.

A rented storefront with the same $15,000 of stock would look similar, except that the landlord’s policy would not cover it and the broker’s retail BOP median is $1,136 a year ($5,680 over five years). For a building you own, the loss could also include the building itself, which is why owners buy property coverage that includes it.

Example 2: a customer is hurt

A buyer comes to your home to pick up a $120 lamp and falls on your steps. Suppose the medical bills are $25,000. If your homeowner’s policy excludes business activities, you may be arguing with your insurer while the claim is against you personally. A general liability policy is designed for claims like this, and its limits and exclusions would decide what it pays. Having one does not mean every claim is covered.

Example 3: a lost package

You ship a $450 handbag with Priority Mail and no extra insurance. The package is lost.

The extra insurance price starts at $2.80 and grows with value. USPS publishes the exact price for the declared value you choose. The buyer may also expect a refund while you wait on a claim.

What an LLC does not do

An LLC is a legal structure. It does not replace insurance, and it does not protect you from your own negligence or from debts you personally guarantee. Ask an attorney how it applies. See what an LLC does and does not do and LLPs and series LLCs.

Shopping for coverage

1. List what you own: inventory value at cost, equipment, and where each is kept.
2. List what you do: ship, sell at markets, host pickups, hire help.
3. Get quotes from more than one licensed agent or insurer.
4. Compare limits, deductibles and exclusions, not just price.
5. Keep the policy and receipts with your business records.
6. Update coverage when inventory grows.

Questions for an insurance agent

• What is the limit for inventory, and does it include stock at markets or in transit?
• Is it valued at cost or at retail?
• Does liability coverage apply to customers at my home, storefront or pop-up?
• Is stock kept at home covered, and up to what limit? What if it is in my car or at a market?
• Is inventory paid at replacement cost or actual cash value?
• What are the exclusions?
• If I hire someone, what does workers’ compensation cost?

I am not an insurance agent, CPA or attorney

This page is general information, not insurance, legal or tax advice. Coverage depends on the policy you buy, so read it and ask a licensed agent. Checked Oct 30, 2026.