I would like to sell items online, and came across this story about a person who sold a $40 printer and ended up (so far) paying over $12,000 in legal fees.
What could I do to prevent this situation on a site like Craigslist?
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Professional indemnity indemnifies you against negligent advice, public & product liability against what it says, motor vehicle ... And so on. A good insurance broker will tell you what you need for your business.
When a claim is made against you, you make a claim on your insurer and, with your input, they decide to fight or settle.
I am not a lawyer.
As part of the sale, require a signed contract that says all the things you want to say to protect yourself. Get a lawyer to write you one or look for examples. I won't actually write an example contract because that might look too much like unlicensed practice of law; however, you might look into the following kinds of clauses and use them (and/or others) when drafting your own: