In 2020, stores in LA and NYC were looted, and consignors panicked. In 2026, the risk is still there. I consigned 20 pairs to a major shop. I asked a simple question: “If this store burns down tonight, do I get the $10,000 list price or the $200 retail price?” The answer was buried in a 40-page PDF that nobody reads.
Key Takeaways
- The “Consignor” Risk: Until the shoe sells, you still own it. But the shop has “custody.” This creates a liability gray area.
- Payout Value vs. List Price: If the store is destroyed, most contracts state they owe you the “Payout Value” (List Price minus their 20% commission), not the full sale price.
- Force Majeure: Check for “Civil Unrest” or “Act of God” exclusions in the consignment agreement. Some shops try to absolve liability for riots.
- Your Policy is Secondary: Your personal insurance usually excludes items “held for sale” or “on consignment.” You are 100% reliant on the shop’s insurance.
The “Why” (The Trap): The “Bailment” Agreement
When you drop shoes off, you enter a Bailment agreement.
- Flight Club/Stadium Goods: Generally, they carry large commercial policies that cover consignor inventory.
- Local Boutique: The small shop down the street? They likely have a minimal “Business Owners Policy” that might cap inventory coverage at $50,000. If they have $500k of heat in the store and it burns, you are getting pennies on the dollar.
The Investigation (I Read The Contracts)
I analyzed the Terms of Service for the big players.
1. The Big Players (FC/SG)
- Terms: They generally accept liability for loss or damage while the item is in their possession.
- Valuation: They pay the amount you would have received if it sold (e.g., Sale Price – Commission).
- Verdict: Generally safe, but payouts can take 6-12 months after a catastrophic event.
2. The Local Consignment Shop
- The Risk: I asked a local shop owner, “Who is your carrier?” He hesitated.
- The Trap: Many small shops are underinsured. If they go bankrupt after a robbery, you become an “unsecured creditor.” You will likely never see your money.
3. Your Own Insurance
- The Clause: “Property away from residence.”
- The Exclusion: Most policies exclude property “conveyed to others for sale.”
- Verdict: Once you hand it to the clerk, your insurance stops.
Comparison Table
| Scenario | Big Box (FC/SG) | Local Boutique | Your Insurance |
| Theft/Fire | Covered (Payout Value) | Risky (Check their limits) | Excluded |
| Civil Unrest | Covered | Maybe | Excluded |
| Bankruptcy | Safe-ish | High Risk (Loss of asset) | N/A |
Step-by-Step Action Plan
Before you consign that Grail.
- Ask for the COI: Ask the shop manager: “Can I see your Certificate of Insurance?” If they refuse, do not leave your $5,000 shoes there.
- Keep Your Drop-Off Receipt: This is your only proof of ownership. Take a photo of it immediately.
- Monitor “Aging”: If a shoe hasn’t sold in 60 days, take it back. The longer it sits, the higher the risk of damage, swap-outs, or shop bankruptcy.
- Cash Out Fast: If you have a credit balance in your account, withdraw it immediately. Do not use the consignment shop as a bank. If they freeze funds (like FTX did), you lose.
FAQ
Q: A customer tried on my shoe and creased it. Does the shop owe me?
A: Yes. The shop is responsible for maintaining the condition. If they return it to you damaged, refuse to accept it and demand the Payout Value.
Q: Can I insure my consigned items myself?
A: Only with a Commercial Policy. A standard collector policy usually stops coverage once you give it to a third party to sell.
[IMAGE: Snippet of a consignment contract highlighting the “Risk of Loss” section.]