#347 – The Secrets of E-commerce Insurance: From Difficult-to-Insure Products & Horror Stories with Ashlin Hadden
In episode 347 of the AM/PM Podcast, Kevin and Ashlin discuss:
02:25 – How Did Kevin Meet Ashlin?
02:33 – Insurance For Amazon Suspensions & Why It Failed
04:48 – Getting Thousands Of Leads For E-com Insurance
07:45 – Insurance Is Not A Boring Topic, Here’s Why
09:09 – Difference Between General Liability & Product Liability
11:25 – Be Careful When Finding Amazon Seller Insurance Online!
12:48 – What Do I Do When You Get Sued?
14:10 – How A Seller Got A $42,000 Claim From Insurance
15:39 – What Products Are Really Difficult To Insure?
17:36 – Can My Insurance Cover Multiple Marketplaces?
18:15 – Insurance “Horror Stories” From Amazon Sellers
19:30 – Which Insurance Covers My Warehouse Inventory?
24:02 – “Insurance Is There For Catastrophic Events”
25:09 – How Do Insurance Agents Make Money?
26:12 – Why Ashlin Loves The Amazon-Selling Community
28:19 – Talking About The Key man/Key person Life Insurance Policy
31:13 – Worker’s Compensation Insurance
34:18 – Sellers Need Cargo Insurance
34:59 – Business Personal Property Insurance
35:34 – You Should Ask Your 3PL About This
37:44 – Is There A Lost Amazon Shipments Insurance?
38:26 – What Is A Certificate Of Insurance?
40:13 – The Biggest Insurance Claim In Ashlin’s Time
40:46 – Sellers Need To Do Their Due Diligence
42:05 – Insurance For Cyber Security?
44:09 – Commercial Auto Insurance
45:44 – How To Reach Out To Ashlin Hadden
48:12 – This Week’s Golden Nugget Of Advice From Kevin King
Transcript
Kevin King:
Welcome to episode 347 of the AM/PM Podcast. We’re just wrapping up the Billion Dollar Seller Summit in Puerto Rico today. We’ve got a VIP dinner tonight. We’ve got some cool presentations and stuff going on today. But that doesn’t stop the podcast from continuing on. And I’ve got an awesome guest this week. It’s Ashlin Hadden. Ashlin is someone who’s really passionate about helping e-commerce sellers. She loves what she does. And we’re going to be talking about insurance. Yeah, I know. You’re like, OK, stop the hit pause right now. It’s going to be boring. Actually, she’s got some really cool stories and some really good tips on some things you probably haven’t thought about.
Kevin King:
So I hope you enjoy this episode. And don’t forget this summer I’m debuting the Billion Dollar Sellers newsletter. It’s 100% free for listeners of this podcast. So be sure to go to billiondollarsellers.com and put in your email address and name to get on the beta list so you can be one of the first to get this brand new newsletter. It’s going to be chock full of advice and tips and strategies and hacks for e-com and Amazon sellers. billiondollarsellers.com. Ashlin Hadden, welcome to the AM/PM Podcast. How are you doing today?
Ashlin:
I’m doing great. How are you doing, Kevin?
Kevin King:
It’s always good to see you because you always have this big smile on your face. It always cheers up my day. You’re like, I’m always so serious. And you’re always just happy. Everything is good. Even though behind the scenes I know it’s probably like you’re dealing with this client and that client and this thing. How’s everything going for you?
Ashlin:
Things have been really, really well. Slowed down for the next couple of months and really just diving into some of the new changes and enjoying some time at home with my kiddos. So it’s not been too bad the last couple of months. So excited to spend the summer a little bit lower key.
Kevin King:
Awesome. So I think we first met. I think I first knew your name. Maybe it’s 2015, 2016? Everybody was freaking out back then because Amazon was shutting down accounts, as they still do. But they were shutting down accounts and it was really messing with people. POA weren’t always working and people didn’t know what to do. It wasn’t a sophisticated system with all these agents and all these people that help you now. And all of a sudden there was something, people were saying, Lloyd’s of London is offering insurance for if your account gets shut down, they will pay you, I forget what it was, up to a million bucks or two million bucks or something like that, some amount of lost sales and everything. I was like, holy cow, this is freaking awesome.
Kevin King
I remember Manny and I from Helium 10 talking about, we’ve got to check into this. And so we checked into it and it turns out it was you behind the scenes there. You had something going on with Lloyd’s in London and you just kind of burst onto this scene. What was that back then? I signed up for it. I paid like five grand or something for it. I never had to use it because I heard stories afterwards where they had all these little reasons where they don’t have to pay you out. So what was that back then?
Ashlin:
Yeah, so back in the day when I first started into the e-comm space, I just got phone call after phone call from sellers saying, hey, I’m getting suspended from Amazon for no reason. I’m not doing anything wrong. And they were like, I need your help. And I was starting to do the general liability and product liability, but the biggest pain point was suspensions. So I was like, well, I really need to work on finding a solution for the suspensions.
Kevin King:
So before this, just to back up a second, you were just an insurance agent and people just happened to find you to actually ask you for e-comm stuff or did you decide, hey, I’m going to go after this?
Ashlin:
One of my personal lines clients came to me. So I was doing their home auto and life insurance and he came to me and said, hey, I sell online. I need this insurance. And I had no idea that there was even third-party sellers online. I just thought Amazon sold everything. So he came to me and he was like, I need this insurance. So I was working with him and a couple of other clients doing that first. But then after he posted my information in a Facebook group, then it went from two or three clients doing e-comm to thousands of people contacting me about e-commerce insurance. And it was just the overlying theme is, yeah, we need this liability insurance, but really what I’m scared about is being suspended.
Ashlin:
And it hit me one day when someone says, I roll over in the morning and before I kiss my wife good morning, I check my phone to see if I’m suspended. And I was like, that’s just crap. Like what a way to live. And I knew that there wasn’t any type of product out there currently that we could help with. So I was like, let’s see if we can create something. So one of my broker friends put me in contact with Lloyd’s of London and we started this policy, but I was young, dumb and didn’t really know a whole lot about what I was doing. And I never got a contract of exclusivity with Lloyd’s of London. So I thought I was building this policy. It was going to be me and only me.
Ashlin:
And then this other company comes in and they’re selling it and I’m selling it and they’re telling people one thing and I’m telling somebody the other thing. And then in this application, Lloyd’s asked a question about inquiries. So it was, have you ever been suspended? Yes or no. Have you ever had an inquiry? Yes or no. Well, nobody knew what an inquiry was. So when things happened and there was claims, they use that as an excuse not to pay out a claim. They said that, hey, these people lied on their applications. We’re not going to pay the claim.
Ashlin:
So the very first claim I ended up paying out of pocket because it was my name. You know, this is what I told people it would do and it didn’t do what it was supposed to do. And I felt like it was my duty to pay the claim even though it was declined from the carrier. So I paid the claim and I was like, I’m done. If this is not doing what I’m telling people it’s supposed to do, I’m not selling it anymore. So I backed out and I stopped selling it. The other company was still selling it and then it went belly up after I stopped. So it wasn’t exactly what we hoped it would be, but we tried. And we’re going to do it again. We just got to figure out the right way to do it and the right carrier who’s going to do it the right way.
Kevin King:
Do you know if they actually ever paid out anything on that or do they always find a reason not to?
Ashlin:
I don’t know because I backed out. I wasn’t going to put my reputation behind it if it wasn’t going to do what they said it was going to do. So I’m sure they had to have because they stopped doing it. They weren’t profitable. So I’m sure they paid out some. I just don’t know what.
Kevin King:
Insurance is always, a lot of people are like, Kevin, you got a podcast with someone about insurance, this boring stuff. Give me some sexy marketing. How can I make some money? Man, I’m just going to fast forward through this episode. No, don’t do that because we’ve got some cool stuff I’m sure we’re going to be talking about. We have some really sexy claims stories too. Ashlin always has really fascinating stories about claims and about crazy stuff that’s happened that you’re not going to want to miss out on. When it comes to insurance and e-commerce, a lot of people are like, they don’t understand it. Someone says, hey, you got to have insurance. And they’re like, okay, I’ll call my State Farm agent and get some insurance. That’s one type of insurance that they might be able to help you out. But there’s different types. There’s product liability. There’s general liability. And there’s specialists that specialize in those. And you have to go to certain agents to get them. And Amazon for the longest time has required this. I remember when I first started selling eight, nine years ago as an FBA seller, they said, if you sell more than $10,000 a month for three months in a row, you have to have a liability policy to us. They never really enforced that until, I remember like maybe a year or two years ago, they actually started notifying people. And now they’re getting quite a bit more serious about that because of some incidents that’s happened and just to protect themselves. So what’s the difference between general liability and product liability? Because you need actually both.
Ashlin:
Yeah. So Amazon requires that you have both. And the new rule is that once you hit the $10,000 in one month, that’s when they’re requiring you to show proof of insurance.
Kevin King:
That’s gross sales, not what you get paid.
Ashlin:
Yeah. Right. It doesn’t matter if you’re wholesale or private label or doesn’t matter what you’re doing. Nope. You could be selling a toothpick and they don’t care. Like once you hit that tooth or that 10,000, they require that. So it’s always been in the terms of service that you have it. Now they’re saying, hey, once you hit that amount, you need to send me a certificate of insurance. And if you don’t, then they send you the nasty gram. And then we are seeing people get suspended. So we can talk about the certificate of insurance later. But what they’re saying you need is a general liability with product liability. And so general liability is really what you do or say as a business. It’s going to cover you putting up a listing or you hopping on someone else’s listing. And let’s say you sell chopstick and you say this chopstick is going to make your lips look sexy and voluptuous. And someone buys it and says, this is crap. This is false advertisement and they sue you. That’s general liability. Well, that’s what you do or say as a business. Now, let’s say that chopstick breaks you out. You have an allergic reaction. You go to the E.R. That’s product liability. That’s what your products do to harm someone else or harm someone else’s personal property. So what you do or say as a business is general liability. What your products do to harm someone else is your product liability.
Kevin King:
And Amazon requires, was it a $1 million or $2 million?
Ashlin:
$1 million. You have to have a million of both.
Kevin King:
A million of both. But there’s a huge difference in the price between the two. General liability, in my experience, has typically been $500 to $700 a year. Maybe a little bit cheaper. Just depends on where you go. That one’s not too bad. But then the product liability, though, is based on what you’re selling, how much you’re selling, how long you’ve been selling, where you’re selling it.
Ashlin
Where you source it from.
Kevin King:
And that can be thousands or tens of thousands of dollars, right? Depending on your product, right.
Ashlin:
So one of my biggest things is when you go online and you’re going on to Amazon’s preferred provider list or you’re Googling insurance for Amazon sellers, there’s a lot of companies out there that will say, we’ll insure you for $24.99 a month or whatever. You’ve got to be careful because some of those things aren’t exactly what Amazon wants. Yes, it might be general liability, but it sure isn’t going to cover product liability. So again, that’s kind of where we said you go to your local state farm. Well, if your state farm agent isn’t versed in e-commerce, he might sell you that $24 a month policy that you think you have coverage, but you really don’t have the right coverages. So you need an agent who knows what you’re doing but doesn’t do what you do. I always say that. Like, I know what you know, but I don’t do what you do.
Kevin King:
A lot of people are like, that’s just a big thing. I mean, my product, it’s not going to hurt anybody. I’m selling, you know, something that’s not going to hurt anybody. And it just seems like a waste of money. Why am I paying $5,000,000 a year for product liability insurance because I’m selling a couple million bucks? So they don’t do it. But I look at it as like, yeah, you’re paying $5,000,000 a year, and maybe you’re going to pay that for the next 10 years and nothing ever happens. You paid $50,000, but then on year 11, boom, somebody makes some crazy, ridiculous claim about something. If someone sues me for my toothpick, like in your example, you know, it stabbed me and caused me to bleed, I get sued, I get served a lawsuit, and then what do I do? Do I call my insurance company and say, hey, guys, deal with this?
Ashlin:
You can call me and then we call the carrier.
Kevin King:
So I get served the lawsuit, and then I call you, not my attorney, but I call you.
Ashlin:
Correct.
Kevin King:
Okay.
Ashlin:
And you know, insurance companies don’t like to pay claims, right? Everybody knows that. So they hire the best darn attorneys to get you out of the lawsuit. Your example is very, very close to an example that we actually had. We had a seller that was just reselling. Not private label, they were not responsible for the product, nothing. Let’s call it the toothpick. They were selling toothpicks. And somebody bought them on Amazon. It was fulfilled, FBA. USPS shipped it to their house. The guy opens the door, trips over the box, breaks his hip, and breaks his clavicle. Well, he sues Amazon, he sues USPS, and he sues our third-party seller. So our third-party seller has, again, nothing to do with it, but they have to defend you. Like, you can’t just pick up the phone and say, sorry, I didn’t have anything to do with this. You know, can you drop me off a lawsuit? No, you still have to go through the proceedings. And it was over $42,000 in legal fees just to get this guy’s name dropped from the lawsuit. He did nothing. My client did nothing wrong and had to spend, well, if he didn’t have insurance, it would have cost him $42,000 in legal fees. But since he had a policy, he calls me, we call his carrier, we start a claim, and the carrier handles everything else. His policy was $700 a year. First-year selling, within the first nine months, really, of selling, and he had a $42,000 claim. What you say about I don’t sell anything risky, you still can be pulled into a lawsuit. You can say, hey, I have an LLC. Cool. Pick up the phone and call your LLC. See if they’ll defend you. There is nobody there to pick up the phone. Like, I’m so happy you have an LLC, and that might protect your assets, you know, from an actual judgment, but they will not defend you. The biggest thing you’ll use this policy for is the legal defense.
Kevin King:
So I remember when COVID hit, and I was doing a company called Germ Shark. We got into that business with wipes and hand sanitizer, and we had to get insurance. I mean, these are dangerous goods. You know, they can explode. They’re going on the skin. You know, there was a lot of problems with some of the ingredients people were using at the time. And I remember we went out there and priced it, and it was crazy. And then you worked some magic to actually get us a reasonable price on this. And what are some products that are difficult to insure, like adult products or hazardous products?
Ashlin:
That’s a really good question. Yeah, I have a list. On the body, so any type of topicals, any type of lotions, anything that’s going on the skin. In the body, so anything, of course, that’s ingested, your food, your nutraceuticals, those kinds of things. For a child, anything made for a child is going to be high risk. I don’t care if it’s a bib or a blanket. Anything made for a child is automatically going to be high risk. For a pet, anything that goes with water. So that can be canoes, little baby pools, life jackets, things like that, and exercise and outdoor equipment. So on the body, in the body, for a pet, for a child, outdoor equipment, anything to do with water, and exercise equipment right now.
Kevin King:
Those are going to cost you more or just be harder to get?
Ashlin:
More
Kevin King:
Okay, cost you more.
Ashlin:
Both. So it’s going to cost you more, and then it’s going to be harder to insure. Most standard carriers, which is like your low risk carriers, won’t touch those types of products if you are the brand owner. Now, if you are just reselling, it’s a little bit easier. But if you’re the brand owner of any of those types of products, it’s going to go what we call surplus lines, which is just a high risk carrier. So you’re going to look at it a little bit more expensive.
Kevin King:
I know it’s not just Amazon that’s requiring this stuff, though, too. In the office products, I sell calendars, and I have to, for Calendars.com, the big company that has all the kiosks in the malls and stuff at the holidays. They don’t make me provide product liability, but I have to provide general liability. And if you’re going into Walmart or any retail, you’re going to have to have this stuff. So it’s not just Amazon.
Ashlin:
You don’t have to have separate policies normally. As long as you have the same EIN and you’re filing the same taxes per the entity, typically we can do one policy and cover multiple platforms. So if you’re selling on Amazon, eBay, Wayfair, Jet, and you’re moving into Bed, Bath & Beyond and you have a kiosk, as long as that’s all through the same entity, typically we can make one policy and extend liability to all of them. So again, that’s why you need an agent that knows what you’re doing and not have to have six different agents all over the country who have no idea what the heck they’re doing.
Kevin King:
Have you heard a horror story out there of someone that didn’t have insurance and something happened to them selling on Amazon?
Ashlin:
Yeah. So we had one who came to us and they were selling in the exercise equipment arena. And it was one of those products that you put over the door frame and you’re doing pull-ups and stuff like that.
Kevin King:
Resistance. Yeah, it’s one of those resistance. Yeah, I know exactly what you’re talking about.
Ashlin:
And one of the bands snapped, hit this guy in the eye, ended up suing. And they really were just trying to come back and say, hey, well, we already had like how to install it. We had warning labels. We told them what the right way to do it was. And they were really trying to like back out of the claim saying like, hey, this is user error. We didn’t do anything wrong. Same thing with like trampolines. You know, like everybody has those trampolines and there’s warning labels all over the trampolines. Like if you get hurt, you can’t sue us. Unfortunately, those don’t work. I mean, you can put whatever you want on there, but people are still going to sue you and you’re still going to have the legal fees. So that’s really like my biggest horror story is when you don’t end up doing it, you still have to defend yourself. And there’s thousands, like I said, thousands and thousands and thousands of dollars in legal fees.
Kevin King:
Which one covers if I have a warehouse or I’m storing a bunch of products in my garage or something, which one of those policies is a separate policy or is it covered on?
Ashlin:
Separate policy on the depending on the state? If you’re in like Florida, then it has to be a separate policy. But if you’re in a reasonable state, it can be an endorsement on your current policy. And that’s inventory coverage or business personal property. And I’ll give you a horror story on that one. One of these, I won’t say a name, but there is one community leader that came to me and had a warehouse, had his products in the warehouse and needed the inventory covered. And I sent him the quote and he’s like, oh, that’s too expensive. I’m not going to worry about it. We’ll look at this again next year and maybe I’ll do it then. Well, they were moving some racking around and needed to like move this pipe. There was a pipe that was in the way. And so they turned off the water, rerouted the pipe, put the racking up. Everything’s good to go. Ended up cracking somewhere in the pipe that he added and got four inches of water in his warehouse. And he had toys. And so four inches of the bottom of all of his toys that were on the ground were destroyed and had over three hundred thousand dollars damage to his inventory and didn’t have coverage. So he called me back and he’s like, hey, can I can I get that coverage now? Unfortunately, I can’t cover something that’s already happened in the past, but I can help you moving forward. But it’s like, you know, those types of things is I always say I can’t ensure a burning building if the building’s on fire. You’re you’re too damn late. If you get a policy today and you have a claim yesterday, I can’t help you. But if you get a policy today and you have a claim tomorrow, then yes, I can. So I guess like you just bite the bullet and do it. Most people aren’t in the thousand dollar range anyways. If you’re just RAOA wholesale, you know, if you’re not doing a million dollars a year, you know, you can have a sometimes six, seven hundred, eight hundred dollar policy. It doesn’t have to be thousands and thousands of dollars.
Kevin King:
Those past history, like in this case, affect you like, you know, when you get car insurance, if you get a bunch of speeding tickets or you’ve had a history of accidents, it’s going to jack your rate. Or even during a policy, you know, say the policy is good for three years or a year or whatever, and you have something when it comes time to renew, they jack you because they just had to pay out a big claim or they drop you. Does that happen with products and general liability insurance as well?
Ashlin:
It does. It does. I mean, insurance is all about risk. And if there’s been a past history of claims, then that does tell them that it would potentially have more of a risk moving forward. But like in the case of Jim, like there’s no way that I mean, he couldn’t he didn’t have an insurance policy, so there was nothing to turn in. So there was no like we didn’t have to say that there was a claim prior to because there was there wasn’t a claim. You just eat the cost. So it really just depends on, you know, do you turn in a claim or you don’t turn in a claim? Sometimes if you have a thousand dollar loss, you just eat the thousand dollar loss and don’t turn in the claim. Same kind of thing with auto insurance. You get a little fender bender and you can talk the guy into, hey, here’s 200 bucks. Go away. Let’s don’t submit the claim.
Kevin King:
Even like in car insurance, like, you know, like recently my wife had scratched up the side of her car a few months ago and I took it to the body shop and insurance probably would have paid that. But I paid a five hundred dollar deductible or something and would have been on my record versus I just paid them nine hundred dollars or something and and they fixed it. But that still goes on Carfax. So it’s still it doesn’t go in the insurance, but it’s still there. You know, if a future buyer or something has it. So it’s hard to hide unless you’re your buddy or you do it yourself or your buddy down the street.
Ashlin:
Insurance companies don’t look at Carfax. So you really probably saved yourself hundreds of dollars in your renewal next year.
Kevin King:
Yeah, that’s why I did it.
Ashlin:
Insurance companies get their money. I hate to say it because, you know, I’m an insurance agent, but they’re going to get their money. So if you can pay for it out of pocket and not submit a claim, then that’s always the best thing to do. But insurance is there for catastrophic events. That’s what insurance was designed for. Insurance wasn’t designed for a two hundred and fifty dollar scratch. Insurance was designed for a hundred thousand dollar bodily injury claim. It was designed for a fifty thousand dollar, you know, that kind of stuff. It’s not designed for small little claims.
Kevin King:
With my health insurance, for example, I use Oscars since I’m self-employed and I get some of the highest deductibles because it’s exactly that. A lot of times it’s cheaper for me just to pay out of pocket than to try to have them cover it. And it’s there for if I get in a big car accident or if I get cancer or, you know, something along those lines. That’s what I’m not trying to have it pay for my everyday stuff, because in the end, like you said.
Ashlin:
You and I are different, Kevin. We get that. But a lot of people don’t. They’re like, oh, well, I pay for insurance, so I’m going to submit this five hundred dollar claim. Well, that’s why insurance is so expensive, because everybody submits a little five hundred dollar claim and that increases everybody else’s prices. People would stop submitting five hundred dollar claims. Our insurance prices would go down.
Kevin King:
How do insurance agents make money? Do you get to keep the whole first premium or you get a percentage? Do you get money? Do you get money on a recurring basis as they renew? How do.
Ashlin:
So we get paid through the insurance carrier so we don’t get paid by you guys at all. We get a percentage of commission off of the policy premium. And then depending on what type of policy it is, there could be a renewal commission also. So that’s why we try to keep you guys happy. We want you to stick with us.
Kevin King:
That’s not, I mean, if someone does a five hundred dollar general liability policy, you’re not making much money.
Ashlin:
No, we’re not.
Kevin King:
For all that time and effort that you got to put into it and the paperwork and everything.
Ashlin:
Yeah, so like when I first got into this business and, you know, the policies were five hundred bucks and I was like, this is, you know, it’s going to cost me months to handle this. Because, again, this was brand new. Nobody was doing it. So, you know, I might make 50 bucks on this. I was like, I’m going to spend months doing this. But I just I fell in love with this community and I fell in love with these sellers and I fell in love with like stuff like this, where you guys are truly trying to help each other grow and learn and expand. And the more people I talk to and the more conferences that I went to. Yeah, you guys sucked me in. Like you suckered me like nobody’s business.
Kevin King:
Now you have you have quite a few people working for you now, too. I mean, it’s grown because you’re like the top in the space, right? You probably have the most clients in this e-comm space. I know there’s a few others out there.
Ashlin:
I’m a broker. Definitely has the most as a broker. Now, I’m not like I don’t know about each one of the carriers. I’m sure they have more than me. But yeah, I have 15 women. All of the people that work for me are women. A lot of them are single moms or women getting back into the workforce. And I have the best team that anyone could ever ask for from my office manager to my front desk lady. The women are just absolutely amazing.
Kevin King:
There’s some other insurances, too, that a lot of sellers don’t think about. You know, I’m partners with and several of my businesses, I have partners. And one of the things that I’ve always worried about is what if, you know, what if something happens to one of them? What if one of these guys gets hit by a bus walking across the street or has a heart attack? And I know sellers who this has happened to. I know it was a big, huge eight figure seller a few years ago was partners with. She was partners with another guy and the guy just died. And I know another guy out of Florida. He’s out of Tampa that he’s doing really well in e-commerce at another partner. And he one of his dreams was to take his kids to every Disneyland in the world. So he took it like a month or two months and I flew him to Paris and Shanghai and Orlando and L.A, and Hong Kong and wherever else they are. Tokyo. And then when he got back three days later, he died and he was like 50 years old and affected. She had to end up closing the business because she didn’t know what to do. So what type of insurance can cover something something like that, like a key man policy or something? What is that? Can you explain that?
Ashlin:
So it’s a really great reminder to everyone. So a key man policy is like a life insurance policy. So let’s say we’re married and you pass away and your life insurance policy goes to your wife. So it’s the same type of situation, but instead of it going to your partner’s spouse, it goes to the business. So it’s then one a write off for the business so it can be used as a tax deduction for as a business expense. And then two, once that person were to pass away, it goes to the business to help you either hire replacement, pay off debts, try to hire someone to come in and help run the business. If you don’t know how to run the business, hire consultants, things like that. So it would be a non taxable income so you can continue to run the business. Or you could say, heck, I don’t want to run the business anymore. I’m going to use this funds to hire somebody to come sell the business and take my money and run. So it really is a good way if you have multiple people into the business to help protect your assets if somebody were to pass away.
Kevin King:
How does that work on a payment? You set the amount like half a million bucks or a million bucks and that’s the policy?
Ashlin:
Either way. So you can say, hey, Ashlin, I don’t want to spend more than seven thousand dollars a year on this policy. And we can back it up and say, OK, for seven thousand dollars for this type of person, this height, this weight, we can give you two hundred fifty thousand dollars in coverage. Or you could say, I need two hundred fifty thousand dollars in coverage for this person, this person, this person. And we’ll tell you how much it is. So we can kind of do it either way. Most people do it the second way where they say, OK, I know it’s going to cost me X, Y, Z to hire somebody else. And I know we’ve got this amount in debt. We have this amount in credit cards. We’ve got a line of credit for this. So I need a half a million dollars. And then we would run the quote that way. So it really depends on how you guys wanted to work it, but we could do it either way.
Kevin King:
So is it like life insurance where I have to go get a physical and stuff or it’s just you just put your height and weight or do they look at you, your condition?
Ashlin:
If you’re young enough, sometimes you don’t have to do a physical, but majority of the time people want more than like 50 grand. And so they’re going to require a physical. But we take care of the cost of all of that. So like the blood draws and anything like that. The agency takes care of that. You literally just got to go give us your blood or give us your urine, depending on, again, how much of coverage you need.
Kevin King:
Keyman basically is life insurance for the business.
Ashlin:
Yep. There’s another one that we haven’t talked about yet that I think is super, super important is workers comp. If you have anyone who is an employee, not a 1099, but an employee, you should definitely have workers comp. We have a lot of people say, well, they just sit at the desk and source all day or whatever. It doesn’t matter. They still, again, can claim whatever they say they want to claim. We had an attorney in this e-comm space and one of his employees stood up and hit her head on a sconce, like on the back wall. And she’s claiming permanent brain damage. She’s under 30 years old and wants like $50 million because she’s never going to be able to work again. And she just hit her head. So she was a desk employee, which typically super, super low risk. But again, it doesn’t shit happen. Oh, stuff happens and people sue.
Kevin King:
Yeah, they do. People sue for the craziest thing. So you start adding all this up, though, this insurance people listening, man, this cost me a few pennies here. I mean, you can if you’re doing millions of dollars, this could be into the tens of thousands or even hundreds of thousands of dollars just in the annual insurance for if you’re doing everything right.
Ashlin:
Is that way? No, it’s not. Not everybody is that high. You just like to sell risky crap. I can say most of my RAOA sellers are typically if they’re not doing a million dollars, they’re typically under a thousand dollars a year in premium for the general liability.
Kevin King:
But I’m talking about if you add all the other stuff, if you add in.
Ashlin:
And then you’re depending again on your workers comp. Most are under a thousand dollars or comp, depending on your products, like where you’re where your source I’m sorry, where you’re storing them. If you’re in Florida, yeah, it’s gonna be more expensive. But if you’re in Indiana, Illinois, Kentucky, Ohio, like Midwestern, you can get coverage for under a thousand bucks. So most people aren’t super crazy unless they’re storing millions and millions of dollars and they’re selling like fidget spinners with knives on the ends of it. That’s a real product I have insured. It’s like a Death Star. That one’s expensive.
Kevin King:
There’s another type of insurance that a lot of people, they don’t really think about. And that’s insurance on your shipments, you know, especially like with the Evergreen or whatever that that ship was got stuck in the Suez Canal a couple of years ago. And then and then there’s been a couple others of accidents at sea where containers just flew over the side of the boat. Do you help people with that type of insurance as well?
Ashlin:
We do. I’m telling you, everything except health insurance. We can do your home and auto too. But yeah, cargo insurance is a little difficult. If you’re shipping just a small amount of items over, I would say go with your freight forwarders insurance. Unless you’re shipping containers over, then it’s just typically not worth the cost of insurance because that is quite expensive. But if you’re shipping the container or a half a container, something like that, then absolutely we could get an annual policy for that. But that’s like a one off situation. We really need to talk about how much you’re shipping and how often you’re shipping and what the true cost of goods are.
Kevin King:
What type of insurance covers the people in San Francisco when the hoodlums on the street break into the Apple Store and steal all the iPhones or they go into the CVS’s and take a thousand dollars worth of stuff out? Is that product insurance, liability insurance? Is that property insurance? What is that?
Ashlin:
That’s your BPP, your business personal property. That’s going to be the same coverage as your inventory. It typically goes on your general liability policy as an endorsement unless you’re in one of those high risk areas where it has to be one of the standalone policies.
Kevin King:
I know if you’re using a 3PL or even if it’s Amazon, Amazon had a fire in a warehouse in California like a year ago or so. I know there’s been a few others in 3PL’s that people use even for their Shopify business or just to store some stuff. A lot of times that inventory is not covered by their insurance. You’re still responsible for it. If you are storing a bunch of goods in a 3PL or even an Amazon warehouse and something happens to that warehouse, you’re SOL in most cases. How do you protect that?
Ashlin:
That again is an endorsement that we add to the policy and we extend the liability to an offsite premise.
Kevin King:
Is that expensive?
Ashlin:
About the same cost as the inventory coverage. It doesn’t matter if your inventory is at home, your garage, your mama’s garage, a 3PL. Wherever you’re storing it, you need to have it covered. We have a lot of people say, well, my 3PL is going to cover it if there’s a fire or theft. I have over 100 3PL’s currently insured and two of them cover your inventory. Everybody else says you’re on your own for inventory. If you’re using a 3PL, just pick up the phone and call them. Say, hey, do you have my inventory covered under your policy? If they say yes, say prove it. Send me a certificate of insurance showing that my inventory is covered. It’s not much more to just extend your policy to that 3PL. I’m a control freak, so I want to know that it’s done and covered the right way. I would just do it myself because any time they can drop that coverage, they don’t have to let you know. Yeah, it could be covered today, but what if they forget to pay their bill tomorrow? You’re out that. If you’ve got any substantial amount of inventory in your 3PL, I would just add it to your current policy.
Kevin King:
That goes for Amazon too, right? Stuff store and Amazon fulfillment centers. Is that covered?
Ashlin:
Once they accept it, then it’s on their policy. But in the transition from the time that it gets into their system, that is not covered under their policy.
Kevin King:
What would I need to cover? I ship in 10 pallets to Amazon and they claim they never received it.
Ashlin:
There’s no coverage for that.
Kevin King:
There’s no insurance for that?
Ashlin:
There’s no insurance for that yet.
Kevin King:
Ah, okay. Someone needs to come up with that insurance. That would be a good one because I hear those stories all the time. You shipped it and then they say they didn’t receive it. You provide proof that it was shipped and they’re like, sorry, we didn’t get it. Good luck.
Ashlin:
We’re working on it, Kevin.
Kevin King:
You’re working on it. All right.
Ashlin:
You guys come to me and say, hey, here’s my pain points and we try to fix them, but insurance is slow. Insurance companies are slow, but we’re working on that one.
Kevin King:
What exactly is a certificate of liability? You have to send that to Amazon. You said about the 3PL, they should prove it to you. If the 3PL proves it to me, does it have to name me on there that I’m covered? How does that work?
Ashlin:
A certificate of insurance, it is a snapshot in that day and time that you write the certificate of insurance. I can give you a certificate of insurance right now and tomorrow your policy lapses and there is nothing you can do about it. To have a true certificate of insurance for Amazon I think is between you and I and everyone listening is kind of bogus because it could change in a heartbeat. I could call tomorrow and cancel it, but it gives you an idea of what’s going on in that specific day and time. Now, Amazon has said, hey, we need that certificate of insurance and we need it uploaded into Seller Central. Then they started to realize somebody could call tomorrow and cancel the policy. Then they changed it to say you have to list me as an additional insured. If you cancel the policy, then your insurance carrier has to notify me. They got a little smart and now they have the additional insured with the certificate cancellation form. If you cancel the policy, then they get informed. You have to upload it to a certain place. You have to put certain numbers in certain fields. Again, you kind of have to have an agent who knows what they’re doing to show you what to do. We have this whole video on put this here, put that there, put this here, put that there kind of thing. It’s a pain in the butt.
Kevin King:
This insurance stuff sounds really exciting. Tell me another really cool story, some fascinating story that you’ve seen, some crazy claim that was made or that someone had to pay out some crazy amount or what’s something else?
Ashlin:
The biggest claim that we’ve had so far is $608,000. That’s the biggest one that we’ve seen.
Kevin King:
Were you around when that whole hoverboard thing happened? I wasn’t, but I use that in my presentations all the time. One, because nobody was actually hurt, which is great. The dog and the cat made it out alive, which is great. That’s kind of what speared this whole thing with Amazon. They keep coming back and saying they’re tired of being on the hook for people putting bad products on the market. They want you guys as the third party seller to make sure you’re doing your due diligence and putting safe products on the market. So that’s really kind of how things started with that. And then the dog leash. It wasn’t our client, but there was some guy out walking the dog and he was a surgeon, one of those retractable dog leashes and the dog pulled away and the dog leash broke and snap back and hit him in the eye. And then he’s claimed that he could never do surgery again because now his peripheral vision is screwed up. And I think really that was kind of what spurred Amazon to be like, all right, we’re done. We’re tired of you guys putting crap products from China onto this platform. We’re tired of getting sued. We’re tired of spending all of this money on legal fees. You guys are going to start spending money on legal fees. That’s when they decided to make you put them as an additional insured. So now you are defending Amazon in case of a lawsuit.
Kevin King:
What about like data and stuff? Is there something around like if someone hacks my computers and gets all my customer email list or, you know, you see these cases where some big retailer gets, you know, eight million accounts were compromised. Is there insurance for any of the abuse against that?
Ashlin:
Yeah. So that’s cyber insurance. And Amazon does pretty well with their cyber stuff. So if you’re just selling FBA, I would say maybe that’s one that you keep a couple hundred bucks in your pocket for. But if you’re doing anything, Shopify, eBay, your own website, things like that, where you’re taking non-public or private information, that’s where I would pick up the cyber insurance. If you’re collecting data burs, credit card information, addresses, things like that on any one of the platforms, then you need to look at cyber insurance and that would cover if you’re hacked.
Kevin King:
Is that expensive?
Ashlin:
Not too bad. Again, it’s based on your sales, how much you’re selling. So how much you’re like interacting with people. But most of those policies, you’re looking at, you know, maybe $700 to $1000 a year.
Kevin King:
What does that cover? I mean, because the credit card companies, if someone steals the credit card information, the credit card companies will deal with that. But what’s it cover if someone sues you for violating my privacy or something? What does it cover?
Ashlin:
Typically, you have to pay for a monitoring service for everyone that was hacked for a year. Depending on the state, sometimes it’s three years. So that could be, you know, $24 a month per person.
Kevin King:
Like one of those LifeLock kind of things or something like that?
Ashlin:
Like a LifeLock. It covers the cost to inform your clients that there’s been a hack. It costs any type of like, let’s say they got hacked and somebody actually took the funds. It would cover the cost to reimburse them those funds. So those types of things.
Kevin King:
Okay. What else do we need to know about insurance? What do we not cover here?
Ashlin:
I think the only other one that you haven’t covered yet that we like to suggest is commercial auto insurance. So if you’re using your personal vehicle for business use, so let’s say like you’re sourcing in your personal vehicle, you’re going back and forth to USPS, you’re going back to the UPS store, those types of things. If you’re in a car accident on business time, your personal auto insurance can deny the claim. So again, if you’re using your business and your personal auto for business, you really should have a commercial policy. Along with that, the inventory coverage during that. So inventory off premise. So let’s say I’m sourcing at Kohl’s and I have $10,000 in product in my car and I go to Target and someone breaks into my car and steals my $10,000 with a product. Typically, your personal auto insurance is not going to cover that. So business is business, personal is personal. If you’re using your personal vehicle for business, you need a commercial policy.
Kevin King:
Got it. So I need to get like 18 different policies here to make sure that my butt is covered.
Ashlin:
Oh, make your check, Kevin.
Kevin King:
As soon as we get off here, tell me the total and I’ll send you the money. No, but seriously, if people want to learn more about this or maybe they’re realizing, hey, I need to I need to straighten up my ship here and get my ducks in a row. How would they reach out to you? How do they find out more?
Ashlin:
Yeah, the easiest thing to start learning about the different products is our website, www.ecom.insure. So ecom.insure. Don’t throw a .com at the end. It is just .insure. You can always e-mail me sales@ashlynhaddeninsurance. You can call us 765-432-8989. You can see me at one of the 22 conferences I do every year. You can find me on Facebook, Ashlin D as in dog Hadden. Feel free to message me even if you’re outsourcing and you’re like, hey, I’m thinking about this product. Shoot me a text message and I’ll say stay the heck away from that. Or, yeah, I’m okay with that. I’m always around. I’m always here for free advice. I don’t sugarcoat anything. I’ll tell you like it is. Yeah, so that’s really the best way to do it.
Kevin King:
I think you got something there for everybody. No matter what their choice of method of contact is, you got it. Awesome. Cool. Well, Ashlin, I really appreciate you taking the time today to share with us.
Ashlin:
See, it was sexy, right?
Kevin King:
It was sexy. We made it sexy. You were smiling the entire time. It was good. That’s right. Well, thanks again, Ashlin. We’ll see you at one of those 22 conferences, I’m sure.
Ashlin:
Sounds good. Thanks, Kevin. Have a good night.
Kevin King:
Thanks. Ashlin, as usual, has some interesting stories to tell, some of the experiences she’s had when it comes to insurance. And insurance is something that a lot of us just gloss over. But it’s very important to take a look at all the different types of insurance and just see why, A, it’s something that I didn’t do in the beginning. And it actually came back and bit me once or twice. And now I like to check all those boxes off. And hopefully Ashlyn’s giving you some good information to give you some food for thought. If you missed the Billion Dollar Seller Summit and you’d like to get the replay, I normally don’t make replays available for the live events. But this one, there’s quite a few people that could not make it because of graduations, because of school and other things. So if you go to billiondollarsellerSummit.com forward slash replay, R-E-P-L-A-Y, then you can actually get some information on catching the video replays from the Billion Dollar Seller Summit. We’ll be back again next week with another really awesome episode. It’s going to be really, really cool. I think you’ll really like it. But before we go, I’ve got some good advice for you. It kind of plays into what Ashlin was talking about. You know, it’s not about what someone can do for you. It’s who and what the two of you become together. It’s not about what someone can do for you. It’s who and what the two of you become when you’re together. Have a great week. See you next Thursday. Bye.
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The post #347 – The Secrets of E-commerce Insurance: From Difficult-to-Insure Products & Horror Stories with Ashlin Hadden appeared first on AM/PM Podcast.
