As an Amazon seller, there are several things you need to keep in mind when setting up your business and one of these is insurance.
Depending on the type of products you sell, you may be required to have certain types of insurance in order to do business on Amazon.
In this article, we’ll cover everything you need to consider when choosing insurance for your business.
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Who is required to have Amazon seller insurance?
Amazon sellers who are earning more than $10,000 USD per month in gross sales are required to maintain a commercial general liability policy.
However, even if you’re below that sales level we’d still recommend maintaining an insurance policy as you can never be too safe.
Just because you’re below Amazon’s threshold doesn’t mean you won’t be liable should your product injure someone.
What are the Amazon seller insurance requirements?
As a minimum, Amazon insurance requirements state that sellers should obtain and maintain commercial liability insurance.
Some criteria that your policy must meet are:
- Have a minimum limit of $1,000,000 per occurrence and in aggregate, cover bodily injury, personal injury, and broad form property damage arising out of your products or business operations
- Covers all your available product listings on Amazon.com
- “Amazon.com Services LLC and its affiliates and assignees” should be named as additional insureds in the policy
- Insured name must match legal entity name
- The business insurance provider must give Amazon at least 30 days’ notice of cancellation, modification, or nonrenew
- The insurance company provider must have global claim handling capability and a financial rating of A- or above by Standard & Poor’s.
Why do you need insurance to sell on Amazon?
As eCommerce sellers, there are a few reasons why you may need to carry insurance and have a certificate of insurance when selling on Amazon:
1. To protect your business
You may have worked hard at building a successful business, but if something goes wrong with one of your products, you could be held liable.
This could result in a lawsuit that could put your business at risk. Having insurance will help to protect your business in case of any damages or losses.
2. To comply with Amazon’s policies
According to Amazon’s Program Policies, Amazon sellers with a Professional account and sales of $10,000 or more need to secure general liability insurance.
3. To give your customers peace of mind
When customers purchase products from you, they want to know that they are covered in case something goes wrong.
Having the appropriate insurance coverage in place will give your customers peace of mind and help to build trust in your business.
What types of insurance are available?
Amazon insists on a commercial liability policy (also known as general liability insurance), but there are some other types of insurance Amazon sellers can consider:
- Product Liability Insurance: Covers sellers in case their products cause harm or injury to a consumer. It’s crucial, especially when selling physical goods.
- Professional Liability Insurance: Also known as errors and omissions insurance, it covers claims of negligence or inadequate work.
- Business Interruption Insurance: Helps cover lost income and expenses in the event of a covered disruption to your business operations, like a natural disaster or equipment breakdown.
- Cyber Liability Insurance: Guards against data breaches, cyberattacks, or other tech-related issues that compromise customer information.
- Cargo Insurance: For sellers dealing with shipping goods, this covers damage or loss of cargo during transit.
- Workers’ Compensation Insurance: Mandatory in many places if you have employees, it covers medical costs and lost wages for employees injured on the job.
- Commercial Auto Insurance: If your business involves delivery or transportation, this insurance covers vehicles used for business purposes.
- Sellers’ Suspension Insurance: Some specialized policies cover financial losses incurred due to Amazon suspending your account.
- Inventory Insurance: Protects your inventory against damage or loss, such as fire, theft, or natural disasters.
Of these, most Amazon sellers find product liability insurance the most important, along with cargo insurance for each shipment of goods.
How to find the right insurance for your business?
There are many types of Amazon business insurance available, and the best way to find the right policy for your business is to contact insurance companies and get quotes.
The best companies for Amazon liability insurance that we have worked with in recent years are:
Amazon also helps its sellers in finding the right insurance through the Amazon Insurance Accelerator. It’s a network of vetted insurance providers who will evaluate your business and recommend the right insurance for you. You can learn more about it here.
Amazon seller insurance FAQs
Amazon FBA insurance: Final thoughts
It’s important to make sure that you meet seller requirements and obtain insurance coverage that is right for your business.
Not having the proper insurance in place could put your business at risk.
To make sure you’ve got the coverage you need, reach out to one of our recommended Amazon sellers insurance providers:
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