Why Do Sellers Need Amazon Liability Insurance?

Amazon Sellers Insurance Liability Coverage

As of June 2023, Amazon sellers insurance costs between $500 and $2,000 per year, with a quote based on estimated annual revenue. Rates can vary widely but generally fall within the range of 0.25% to 1% of revenue.

Amazon sellers insurance protects sellers from expensive damages. For instance, if someone sues you after a product they bought on Amazon breaks down and damages their property, without the proper coverage, you would have to pay for the damages out of pocket.

Amazon requires its Pro Merchants and sellers with over $10,000 in sales a month to have small business insurance.

The policy must cover all sales of products that you have listed on the Amazon website. The insured name must match the legal entity name you provided to Amazon. The deductible for any policy or policies for Amazon Sellers Insurance must not be greater than $10,000.

Will Amazon Cover Any Claims?

However, it is important to manage your expectations as there are certain conditions attached to this. Amazon’s A-to-Z guarantee is designed to provide coverage for property damage and personal injury. According to the policy, Amazon will directly compensate customers for claims that are under $1,000, which make up the majority of cases, without any cost to the sellers. In cases where the seller is unresponsive or rejects a valid claim, Amazon may step in to pay claims for higher amounts.

Furthermore, the policy states that Amazon will bear these costs and will not seek reimbursement from sellers who comply with their policies and possess valid Amazon Sellers Insurance that is approved by Amazon. In essence, if you have valid Amazon Sellers Insurance that Amazon approves, they will handle any claims that are under $1,000.

Amazon Insurance Policy Criteria

Amazon is clear about the level of liability insurance you need a minimum of $1 million in coverage per event and in total. This is not a cap. It’s a safeguard, protecting your business from a variety of potential liabilities, from product-related injuries to operational accidents. But it’s not just about the numbers. It’s about the type of policy and the contents.

Types of policies: Most policies are occurrence-based (i.e., claims-made vs. occurrence-based) with some flexibility for certain product categories (e.g., commercial general vs. umbrella vs. excess liability).
Both occurrence-based and occurrence-based policies are acceptable in some cases (e.g. for claims-made policies). For claims-made policies, Amazon requires that policyholders have at least 3 years of tail coverage.
Your policy must list Amazon and its assigns as additional insurers.
Amazon requires that your insurer has global claim handling capabilities and has a financial rating (i.e. S&P A+ or AM Best A-) or better.
The deductible of any Amazon Sellers Insurance policy or policies must be no more than $ 10,000.
The policy covers all sales of the products listed on your Amazon website.
The insured name must be the name of the legal entity named by you to Amazon.

These Amazon Sellers Insurance requirements are carefully chosen. This is why our policies are exclusively tailored for Amazon sellers, alleviating the burden of finding suitable coverage. From obtaining a quote and receiving your policy documents to submitting your insurance certificate to Amazon, we have everything under control.

What Business Insurance Types Do Amazon Sellers Need?

Let us explore some of the common insurance policies that Amazon sellers often obtain to protect themselves against the most prevalent risks associated with selling on Amazon.

Please note that Amazon does not mandate sellers to have all of the following policies. They only require a minimum of Commercial General Liability insurance, while the other policies are recommended for specific use cases.

One of the essential insurance policies that Amazon requires from its sellers is Commercial General Liability Insurance. This policy becomes mandatory once a seller reaches $10,000 in revenue within a month.

Commercial General Liability Insurance provides coverage for various aspects, including:

1. Bodily injuries and medical expenses
2. Physical damages to someone’s property
3. Protection against intangible damages, such as safeguarding one’s reputation from claims like libel or slander.

Given the limited timeframe of 30 days to secure a policy that meets Amazon’s requirements, sellers must find the right insurer once they achieve the milestone of $10,000 in monthly revenue.

Product Liability Insurance for Amazon Sellers

Product Liability Insurance and General Liability Insurance have similarities, but they serve different purposes. Product Liability Insurance is specifically designed for businesses involved in manufacturing or selling products, such as eCommerce brands and Amazon sellers. It provides coverage for claims related to product defects. On the other hand, General Liability Insurance covers claims associated with the overall operations of a business.

While Product Liability Insurance is a valuable option for e-commerce sellers, it is important to note that Amazon does not accept this type of insurance to meet their minimum requirements for sellers earning above $10,000 in monthly revenue. Therefore, sellers still need to have a commercial general policy. This is why Assureful’s General Liability Insurance includes Product Liability Insurance as part of its coverage.

Business Owner’s Policy (BOP) for Amazon Sellers

A Business Owner’s Policy (BOP) is a clever combination of General Liability and Commercial Property Insurance, providing comprehensive coverage for businesses. It safeguards against claims arising from various incidents such as fire, theft, and other disasters, as well as claims related to business operations like bodily injury or property damage.

By bundling these coverages into a single, cost-effective package, a BOP offers protection against potential risks associated with bodily injury lawsuits and property damages. While having a BOP fulfills Amazon seller insurance requirements, it is not obligatory as Amazon’s terms state that general liability coverage alone is sufficient.

If you own or rent your property for storing and distributing goods outside of Amazon, it is advisable to consider a BOP for your Amazon eCommerce business. This policy provides a valuable safeguard, although it is important to note that Amazon does not mandate a Business Owner’s Policy for selling on their platform.

Workers’ Compensation Insurance for Amazon Sellers

Workers’ Compensation Insurance is a vital asset for businesses, regardless of their size. While scaling may be a common goal for Amazon retailers, it also brings forth increased responsibilities, especially when it comes to the well-being of their team members. This is where Workers’ Compensation Insurance truly shines, serving as a crucial safeguard against unforeseen events. In New York State, this coverage is not merely optional but mandated for retailers with employees. However, its significance extends beyond large enterprises. Even sole proprietors can reap the benefits of this insurance, ensuring they are shielded from work-related injuries that conventional health insurance plans may overlook.

Please note that Amazon does not require sellers on their platform to have Workers’ Compensation Insurance.

Cyber Insurance for Amazon Sellers

All organizations, regardless of their size or industry, encounter cyber risk in today’s technologically driven world. As technology continues to advance and evolve, so do the potential threats that businesses face. This is precisely why every business and organization must have a comprehensive cyber security plan in place, along with cyber liability insurance, to effectively manage and minimize cyber risk. At Weinsurexyz, we recognize the intricate nature of cyber threats and offer tailored solutions to safeguard and ensure your valuable business assets.

When personally identifiable information from a business database falls into the wrong hands, the costs can run into millions of dollars. Every person affected must be notified, their credit must be monitored, the security breach must be investigated, lawyers must be hired, government fines must be paid, and lost trust and business must be regained.

Umbrella Liability Insurance for Amazon Sellers

Even if you carry General Liability Insurance for your business, you might face a repair, settlement, or judgment over your coverage limit. Without Business Umbrella Insurance (also sometimes called Umbrella Liability Insurance or Excess Liability Insurance ), you would have to pay the uncovered expenses out-of-pocket. For a single premium, a Business Umbrella policy adds another layer of protection to any of several other policies that you might carry, including General Liability, Employer’s Liability, and Hired and Non-owned Auto Liability policies. For instance, if you have $1 million in General Liability coverage and a covered claim is settled for $1.5 million, your Business Umbrella Insurance policy would pick up the $500,000 not covered by your General Liability policy.

If Amazon requests a certificate of insurance, it can be sent to:

c/o Amazon
P.O. Box 81226
Seattle, WA 98108-1226
Attention: Risk Management

See How Much You Can Save on Amazon Sellers Insurance Liability Coverage

Accurately rated and fairly priced Commercial General Liability Insurance to fit your e-commerce needs We’re business insurance experts who work only with top-rated carriers, you can get all your coverage from a single source, and be confident that you have all the coverage you need at a competitive rate. We simplify buying business insurance, with fast, one-stop shopping for all your Amazon sellers insurance needs. Amazon liability insurance protects sellers from expensive damages. For instance, if someone sues you after a product they bought on Amazon breaks down and damages their property, without the proper coverage, you would have to pay for the damages out of pocket.

Because small businesses face different risks during normal operations, you may find you need more coverage. Other common types of small business insurance include:

Request a quote now. We’ll typically get back to you in 24 hours or less, and we can start your coverage immediately.

Not sure what you need? We can help. Contact WeinsureXYZ today for a free, no-obligation consultation with one of our licensed Amazon Sellers Insurance experts. We are available from 9:00 a.m. to 5 p.m. Eastern Time, Monday through Friday. Call us toll-free at (888)-540-7374.