When starting an Amazon business, what many sellers don’t realize is that Amazon—at some point—will require you to have Amazon seller insurance. While this necessity may seem intimidating to think about, obtaining eCommerce insurance isn’t as complicated or expensive as commonly believed to be.
In this article, we go over everything you need to know about Amazon seller insurance, including why you need it, Amazon insurance requirements, as well as how to get it.
Why Do You Need Amazon Seller Insurance?
Selling on Amazon is like any other business, and, like all businesses, insurance is important to protect yourself and your company’s assets from any financial responsibilities in the event of injuries, accidents, or lawsuits.
While the chances of a customer suing you may be low, it is still a possibility that can put you and your company in a very tight spot financially.
An example of this is when Amazon sold 24,000 faulty carbon monoxide detectors made by Chinese companies.
Obviously, you may not think that one of your many products is faulty or poses a risk to others, but cases like these do happen. Accidents do occur. As a seller, you probably don’t think you need Amazon seller insurance, however, it’s better to be protected from unforeseen incidents than bear the consequences if you don’t have any insurance at all.
Amazon Seller Insurance Requirements
It can be a little difficult to find information on Amazon seller insurance requirements. However, Amazon lists several policies that sellers must adhere to on the Program Policy page.
Still can’t find it? You can see Amazon seller insurance requirements at section 9 of the Amazon Services Business Solutions Agreement, where Amazon states:
“If the gross proceeds from Your Transactions exceed the applicable Insurance Threshold during any month if the Elected Country is the United States, or each month over any period of three (3) consecutive months if the Elected Country is Canada or Mexico, or otherwise if requested by us, then within thirty (30) days thereafter, you will maintain at your expense throughout the remainder of the Term for each applicable Elected Country commercial general, umbrella or excess liability insurance with the Insurance Limits per occurrence and in aggregate covering liabilities caused by or occurring in conjunction with the operation of your business, including products, products/completed operations and bodily injury, with policy(ies) naming Amazon and its assignees as additional insureds. At our request, you will provide to us certificates of insurance, the full insurance policy, or other documents we may request for the coverage to the following address: c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management.”
It defines “insurance limits” by country as the following:
- One Million Canadian Dollars ($1,000,000) (if the Elected Country is Canada),
- Ten Million Mexican Pesos ($10,000,000) (if the Elected Country is Mexico),
- One Million U.S. Dollars ($1,000,000) (if the Elected Country is the United States).
It defines “Insurance Threshold” as the following:
- Ten Thousand Canadian Dollars ($10,000) (if the Elected Country is Canada),
- One Hundred Thousand Mexican Pesos ($100,000) (if the Elected Country is Mexico),
- Ten Thousand U.S. Dollars ($10,000) (if the Elected Country is the United States).
Struggling to decipher this legal business mumbo-jumbo? Well, basically, if your United States-based Amazon business transactions exceed $10,000 in a month, then you will have to get insurance coverage within 30 days to continue selling on Amazon. This insurance will have to be at least $1,000,000 in coverage.
What Type of Insurance Do You Need?
As said above, sellers are required to have $1,000,000 in coverage. This can take the form of either Commercial General Liability, Umbrella, or Excess Liability Insurance. This insurance requirement can be satisfied by using either one of the above insurances or a combination.
Along with that, you must name Amazon and its assignees as additional insureds, with Amazon specifying:
“Please contact your insurer to add ‘Amazon.com Services LLC and its affiliates and assignees’ with address ‘P.O. Box 81226, Seattle, WA 98108-1226.’ as an additional insured.”
Will Amazon Cover Any Claims?
Yes. In Amazon’s updated Amazon seller insurance policy—A-to-Z Guarantee— they state:
“Amazon will resolve and pay for valid property damage and personal injury claims against sellers under $1,000 as a concession to customers. Claims under $1,000 account for more than 80% of cases in our store, and Amazon will bear these costs and not seek reimbursement from sellers who abide by our policies and hold valid insurance. These concessions will not affect your order defect rate, and you will be kept informed at every step so you can continue to ensure your products are safe.”
This means that as long as your business provides proof of Amazon seller insurance, Amazon will cover any claims under $1,000.
However, if you aren’t insured at the time, then Amazon can still pay the customer claim but will request that you provide proof of insurance within 7 days.
If you fail to do so, then Amazon will expect you to reimburse them the amount of the concession. They will enforce this by withholding funds from your disbursements equal to the amount of the claim.
If you disagree with the claim, you have 30 days to appeal it.
As 80% of claims are under $1,000, this means what Amazon really wants your Amazon seller insurance to cover are big lawsuits, such as when a couple sued over faulty eclipse glasses. At that point, $1,000,000 in coverage may not be enough coverage to protect you and your business. This is something to keep in mind when browsing your insurance options.
How to Obtain Amazon Seller Insurance?
Obtaining Commercial General Liability, Umbrella, or Excess Liability Insurance is pretty simple. There are many insurance companies on the market that you can receive quotes from, such as Progressive, Geico, Wells Fargo, etc.
To easily compare quotes from multiple different insurance companies, then you can use websites such as Spott. Spott will send you multiple quotes from top carriers so you can select the one that best suits your business’s needs. When working with insurance comparison companies, it is important to inform the insurance agent that you are an Amazon seller so they can ensure Amazon’s exact requirements are covered.
U.S. Insurance Companies Specifically for Amazon sellers
As we mentioned before, there are a variety of insurance companies that carry the Amazon seller insurance you need for your business. However, there are also many geared for Amazon seller insurance. Down below, we list a few insurance companies that are tailored specifically for Amazon and eCommerce sellers:
The perk of going with the Amazon seller insurance companies listed above is that they will best understand your needs and the type of coverage you need to sell on Amazon.
How to Get Insurance as an International Seller
If you are an international seller selling in the United States, then you also are required to get Amazon seller insurance coverage. In order to do this, you would get insurance in your local country that must have global claim-handling capabilities as well as an “A” rating from AM Best or S&P or better. If these ratings aren’t valid in your country, a local equivalent is permitted as well. Lastly, you have to make sure the insurance you purchase has a global product liability rider to ensure your products fall under its coverage policy.
Amazon Insurance Accelerator
If going through the multitude of insurance options is too much of a pain for you, then you should look towards Amazon’s newly launched Insurance Accelerator.
Through a partnership with Marsh, the Insurance Accelerator makes it easier and more affordable for sellers to obtain the necessary Amazon seller insurance for your brand, offering you a network of trusted insurance providers so you can quickly obtain quotes and get insured as quickly as possible.
This is great, especially if you must insure your business within a certain amount of time—whether it’s 30 or 7 days.
International sellers can also take advantage of the Amazon Insurance Accelerator, as Marsh is a global insurance broker with ties around the world.
Don’t know how to sign up for the Amazon Insurance Accelerator? Follow the steps below:
- First, you must log into Seller Central. (Or create an account if you haven’t already.)
- The list of insurance providers in the Amazon Insurance Accelerator is located under the Business Insurance section of Seller Central.
- Select what country your business is registered in from the drop-down menu.
- From there, you can compare policies and quotes from different insurance companies in your country. Up above, we’ve shown the U.S. options.
- After, you can go onto the Step 2 tab, where you have to upload the proof of insurance once you get approved for a policy. This will most likely be the Certificate of Insurance your provider will give you. Even if you get your insurance from a provider outside of the Amazon Insurance Accelerator network, you still must upload your proof to receive Amazon’s $1,000 claim coverage.
- Congratulations! You’re now insured.
How Much Does Amazon Seller Insurance Cost?
Honestly, there isn’t a flat rate cost that we can tell you. The Amazon liability insurance cost is primarily dependent on the risk profile of the types of products. For instance, if you sell baby toys (extremely high-risk), you can expect to pay a larger cost than if you sell home decor (low-risk).
Along with that, the insurance price also depends on the scale of your business. You can expect to pay a percentage of your revenue, usually from 0.25% to 1%.
Do I Need to Provide Proof of Insurance to Amazon?
Yes. You must upload your Certificate of Insurance to Seller Central as soon as you obtain insurance. Amazon can also request that you mail them your certificates or any other documents to the following address: “c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management.” However, this usually isn’t required for normal cases.
As you can see, protecting yourself and your Amazon business isn’t as difficult as it seems! With Amazon seller insurance, you—as a seller— can have peace of mind and focus all your efforts on growing your business.
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