Online Insurance

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In light of the recent headlines involving online auction fraud, it would be a logical step for such sites to provide insurance to the online buyer, right? Not exactly.

Although it can be a valuable service for users who purchase higher-end items, the idea of providing insurance for buyers hasn't caught fire yet. Amazon.com auctions and eBay.com so far are the only two "heavy hitter" sites that insure buyer's items; Yahoo!'s auction service doesn't. Icollector.com, a website specializing in fine art and antiques, offers a service called Iguarantee, which covers items bought through its site up to $50,000. Almost any online auction site will offer information about insurance and protection against fraud, even though few sites are actually willing to insure your transactions.

Outside the boundaries of these sites, however, is an outlet for online auction transactions called WebTradeInsure.com, which works in conjunction with several of its approved sites such as eBay, Yahoo! Auctions, Amazon.com auctions and boxLot. The company offers credibility insurance (up to $10,000) and transit insurance (up to $25,000). Some credit card companies have also extended their guarantee to purchases made at online auction sites, although before any purchases are made consumers should check with their credit card companies for their policies and restrictions.

Ebay.com has retained insurance coverage with Lloyd's of London and will reimburse users as much as $200 (with a $25 deductible) once the insurer investigates the claim and finds items to be fraudulent. Claims under $25 are not covered.

At Amazon.com, a few options are available. In the case of fraudulent items buyers can receive up to $250 of the listing's final closing price. If the site's Payments System is used, coverage increases to $2,500 with no deductible. There is a catch in Amazon's coverage though: Buyers may have a maximum of three claims - period.

Some online auction users make sure a site offers insurance protection before making any purchases, a "look before you leap" approach, so to speak. Another consumer attitude seems to be "Aw, go ahead and leap!" Caveat emptor - let the buyer beware - is the policy that underscores these purchases. This dichotomy could change as the need for insurance grows, and some credit card companies are extending their guarantee for purchases made at online auction sites. One thing is for certain: if the occurrence of fraud at these sites increases, so too will the need to provide buyers with some piece of mind.