Self Insuring

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Posted By: warshawlaw

is not the issue; the issue is who bears the risk of loss regardless of when title formally passes. All states have their own laws in reference to the issue. if the deal is between two businesses and over $500, the uniform commercial code as enacted by that state will likely kick in. as between non-businesses or a business and a consumer, the local law will kick in. Almost every state will honor a clear contractual risk of loss allocation between the parties which is why many sellers list things as "insurance or I am not responsible". What is less clear is what happens when the item is insured and lost or damaged.

Since the state law is critical, deciding which state has jurisdiction over the case is very important. The whole area of jurisdiction over internet and mail sales is a rapidly emerging field of law and the cases have not yet jelled to the point where a lawyer can say "if you do x, y will result". I suggest to my clients doing big-time mail order that every listing on ebay and any catalogue stipulate that any dispute be litigated in their home town using the law of their state. That gives you a fighting shot at blocking any attempt to drag you into court in some far away state. it would still require you to move to kick such a case out of court, but it is likely to result in your getting the case into a convenient court.

If you want to self-insure in the sense that you want to keep a little premium on each sale as a rainy day fund, I suggest you ship with some form of signature confirmation on expensive items. i like certified mail with a return receipt for this purpose. The price is fixed, not floating depending on the value of the item (only weight affects the postage), and you get a card back in the mail with the recipient's signature on it and a date of receipt. plus, you do not have to go to the post office for it. The idea of shipping from the PO and keeping the little receipt with the zip on it is not solid evidence if push comes to shove. All it proves is that you sent something to a particular zip. a signature from the recipient says it all. For really expensive stuff, i use fed ex because they get a signature and will furnish a declaration or affidavit admissible in court on request.