IT reseller and hardware supplier insurance

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-06

If you resell hardware, build and ship configured systems, or run a value-added reseller (VAR) business, your risk profile sits somewhere most insurance pages ignore: halfway between a retailer and a technology consultancy. You handle physical products that can fail, catch fire or get stolen off the back of a van — and you also give advice, specify solutions and, increasingly, run managed services on top. A policy built for a pure software house misses half your exposure. A policy built for a shop misses the other half. This page walks through what a properly constructed programme for a UK IT reseller looks like, and why each part matters.

Why is insurance for an IT reseller different from insurance for an IT services firm?

A pure services firm — a software developer, an IT consultant — mostly sells time, expertise and code. Its biggest exposures are getting advice wrong (professional indemnity territory) and data or systems incidents (cyber territory). When you sell hardware, a whole second category of risk arrives with the stock: things that can physically hurt people, damage property, be dropped, be stolen, or fail in a customer's server room.

Product liability is the clearest example, and it is the single biggest gap we see when resellers arrive with a policy written for a services business. If a laptop battery you supplied overheats and damages an office, or a rack-mounted unit you installed causes an electrical fault, the claim is about the product causing injury or damage — not about your advice. Professional indemnity generally will not respond to that. You need product liability, and because most resellers did not manufacture the kit, the way your supply chain is structured matters enormously to how that cover is arranged. As the seller, you can find yourself first in line for a claim even when the defect originated with the manufacturer, particularly where the manufacturer is overseas or has ceased trading. Recovering from a manufacturer in Taiwan or a distributor that went into administration is slow at best; your own product liability cover is what responds in the meantime.

The second difference is stock. A services firm's assets are mostly laptops and people. A reseller might hold tens or hundreds of thousands of pounds of inventory — in a warehouse, in a van, at a customer's site awaiting installation, or in transit from a distributor. Standard office contents cover was never designed for that.

What does product liability insurance actually cover for a hardware supplier?

Product liability covers your legal liability if a product you supplied causes bodily injury to someone or physical damage to their property. For an IT reseller the realistic scenarios are more mundane than dramatic, but no less expensive: a faulty power supply that starts a small fire, a poorly assembled custom build that damages other equipment on the same circuit, a battery incident, a monitor arm that fails and injures someone.

Two points are worth being precise about. First, product liability responds to injury or damage caused by the product — it does not pay to repair or replace the faulty product itself, and it is not a warranty scheme. The cost of honouring a return or replacing dead-on-arrival stock is a trading cost, not an insurable liability in this sense. Second, if you modify, assemble, configure or brand the hardware — as most VARs do — insurers may treat you as closer to a manufacturer than a pure box-shifter, which changes how the risk is rated and what questions you will be asked. Be upfront about exactly what you do to the kit before it ships; it is one of the areas where an imprecise description on a proposal form causes real problems at claim time.

Product liability is usually written alongside public liability as a combined section. Public liability picks up the non-product side: a customer tripping in your unit, damage caused by your engineer while installing equipment at a client's premises, and similar third-party incidents arising from your day-to-day activities.

How should I insure stock, and what about goods in transit?

Stock cover needs to reflect how your inventory actually moves, not just where it sleeps. Think through the journey: goods arrive from a distributor, sit in your warehouse or workshop, get configured, go into a vehicle, and end up at a customer's site — sometimes staged there for days before installation. Each stage is a different exposure, and a policy that only insures stock “at the premises” leaves the riskiest legs uncovered.

Points we work through with resellers include:

• Sums insured that track reality. IT stock values swing with order cycles — a single large fulfilment can double what you are holding. Seasonal or peak-period uplifts, or a declaration-based arrangement, stop you being underinsured in the exact week it matters.
• Theft conditions. IT hardware is attractive, portable and easy to sell on. Insurers often impose minimum security requirements on premises and vehicles — alarm specifications, overnight vehicle conditions — and a claim can fail if those conditions were not met. Know what your policy requires before the night it is tested.
• Goods in transit. Whether in your own vans or with couriers, transit cover should match the maximum value on any one vehicle or consignment, not an averaged guess. Check how unattended-vehicle theft is treated — it is one of the most commonly restricted scenarios.
• Stock at customers' sites. Kit delivered but not yet installed, or held for a phased rollout, needs the territorial scope of your cover to follow it.

Larger or more complex risk? Speak directly to a director — call 0117 325 0027 or email info@apexinsurancebrokers.co.uk.

I mostly sell hardware — do I still need professional indemnity?

If any part of your revenue comes from specifying, recommending, designing, configuring or installing solutions — and for almost every VAR it does — then yes, you have a professional indemnity exposure sitting alongside the product one. Technology professional indemnity (the same cover Americans call technology errors & omissions, or tech E&O — two names for one product, not two products) covers claims that your professional work caused a client financial loss.

The reseller-flavoured examples: you scope a server and storage solution that turns out to be undersized for the client's stated workload; a network you designed and installed is misconfigured and the client loses trading time; you recommend a product that was genuinely unsuitable for the requirement the client gave you. None of those involve the hardware physically failing — the kit may be working exactly as the manufacturer intended — so product liability will not respond. The allegation is that your judgement or workmanship fell short, and that is squarely PI territory.

To be clear on status: professional indemnity is not a legal requirement for IT businesses. It is, however, very frequently a contractual requirement — larger clients, public-sector frameworks and vendor partner programmes routinely demand evidence of PI at a specified limit before they will trade with you. If you supply into those channels, the question is usually not whether to hold PI but what limit your contracts demand. Our page on technology professional indemnity insurance goes deeper on how the cover works and how limits are typically set.

Does selling to consumers change anything?

It does, in two ways worth understanding — one legal, one practical.

Legally, sales to consumers in the UK are governed by consumer protection law, notably the Consumer Rights Act 2015. In general terms, goods sold to consumers must be of satisfactory quality, fit for purpose and as described, and consumers have statutory remedies — such as rejection, repair or replacement — when goods fall short. These are trading obligations you owe regardless of insurance: no policy relieves you of the duty to refund or replace faulty goods, and the routine cost of honouring consumer rights is part of running a retail operation, not something a liability policy pays. What insurance does address is the step beyond: where a defective product goes on to cause injury or damage, product liability responds to that liability.

Practically, consumer sales change your risk shape. Business customers tend to raise disputes through account managers and contracts; consumers complain in volume, return goods more freely, and a single defective product line can generate many small incidents rather than one large one. Insurers will want to understand your consumer/business sales split, your returns handling, and whether you sell through your own channels or marketplaces. Getting that presentation right — and making sure your terms of sale, warranties and insurance are pulling in the same direction — is exactly the sort of thing a specialist broker earns its keep on.

Do IT resellers need cyber insurance?

It depends on how far up the stack you have moved. A pure box-shifting operation still holds customer data, takes card payments and runs on systems that can be locked up by ransomware — so it has a cyber exposure like any modern trading business. But the exposure steps up sharply the moment you offer managed services, remote support, hosting or ongoing administration of client systems. At that point an incident on your side can cascade into your clients' businesses, and you are also a more attractive target: attackers increasingly go after IT suppliers precisely because they hold credentials and access into many customer environments.

A well-built cyber policy funds the response to an incident — forensics, legal advice, notification, restoration — covers your own business interruption while systems are down, and provides third-party liability cover if clients suffer loss because of a failure on your side. On the regulatory side, be careful with what you assume: your obligations under UK GDPR and the Data Protection Act 2018 are overseen by the Information Commissioner's Office (ICO), and while a cyber policy will typically fund legal costs of dealing with a regulatory investigation, whether regulatory fines themselves can be insured is legally uncertain in the UK and cover for them is often excluded or restricted. Treat cyber as your incident-response and liability backstop, not a fine-payment scheme. For a fuller walkthrough of how the cover operates, see cyber insurance explained.

What about supplier failure and customers who don't pay?

Two commercial risks sit around the edge of a reseller's insurance programme and deserve an honest word. First, supplier and supply-chain risk: if a distributor fails or a manufacturer withdraws support, standard liability and property policies do not compensate you for the commercial disruption. What your insurance programme can do is make sure you are not also carrying the manufacturer's defect liability unprotected — which is why robust product liability and carefully reviewed supply contracts matter together. Second, credit risk: resellers often trade on 30- or 60-day terms with thin margins, so one significant customer insolvency can hurt more than any physical loss. Trade credit insurance exists for exactly this — it is a specialist class, and whether it makes sense depends on your customer concentration and terms. It is a conversation worth having; if that is a live concern, speak to an Apex specialist rather than trying to self-serve it.

Which covers are legally required, and which are contractual?

Only one cover on this page is required by law: employers' liability insurance, which is compulsory under the Employers' Liability (Compulsory Insurance) Act 1969 as soon as you employ staff, with only narrow exceptions. That includes warehouse staff, engineers, apprentices and, in many circumstances, temporary and casual workers — if people work for you, assume EL applies and check the exceptions rather than the other way round. Everything else — product liability, public liability, stock, transit, PI, cyber — is driven by commercial reality and contract rather than statute. Vendor partner agreements, framework contracts and larger customers will specify minimum limits (commonly illustrative figures like £1m, £2m or £5m for liability covers); landlords and finance agreements bring their own requirements. The practical approach is to map what your contracts demand, then make sure the programme covers your genuine exposures beyond the contractual minimums — the two are not always the same thing. For the broader picture across a technology business, our guide to what insurance an IT company needs sets out how the pieces fit together.

How does Apex arrange cover for resellers and VARs?

We start with what you actually do, because with resellers the label rarely tells the whole story. A “hardware supplier” might be a pure distributor, a custom-build workshop, a VAR with a services arm generating half its revenue, or an MSP that also ships kit — and each of those needs the weight of the programme in a different place. We look at your sales mix (business versus consumer, own-brand versus resale), what you physically do to products before they ship, how stock moves and peaks, what your contracts and vendor agreements require, and how deep your services and managed-services layer runs. Then we build a programme — typically combining product and public liability, stock and transit, technology PI, cyber and employers' liability — where the sections meet without gaps or double-paying for overlap. Because we work with technology businesses every day, we also know how to present a reseller's risk to insurers so the configuration workshop or the managed-services book does not get misunderstood and mispriced. If you would rather start online, our short proposal form takes a few minutes and comes straight to a broker, not a call centre.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This article is general information, not advice on a specific policy or a recommendation to buy any product.