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  • Writer's pictureBrian Cummings

Amazon Seller Insurance: What You Need to Know?

Selling on Amazon can be a game changer for your business, opening doors to millions of customers. But with great opportunity comes great responsibility, especially when it comes to protecting your business. That's where Amazon Seller Insurance comes into play. Think of it as a safety net that catches you if something unexpected happens like a customer getting hurt by a product you sold.


This guide dives deep into what Amazon Seller Insurance is, why it's essential, and how it keeps your business safe. We'll break down the types of insurance you need, the rules Amazon has in place, and tips for finding the right coverage without breaking the bank. Whether you're just starting or looking to double-check your policy, this guide has everything you need to know to navigate the world of Amazon seller insurance confidently.


Keep reading to make sure your business is protected and ready to thrive on Amazon.


What is Amazon Seller Insurance


Amazon Seller Insurance is a program that protects sellers from potential liabilities that arise from their business operations on Amazon's platform. This includes coverage for property damage, bodily injury, and product liability claims. For example, it can help if someone sues your company after a product they purchased on Amazon malfunctions and damages their property.



The Importance of Insurance Coverage for Online Sales

Selling on Amazon can be a lucrative business, but it also comes with certain risks. These risks can include product liability claims, property damage, and business interruption. Without proper insurance coverage, these risks can result in significant financial losses for your business.

Amazon Seller Insurance typically includes three main types of coverage: liability, product, and business interruption insurance.


Liability Insurance


Liability insurance is designed to protect your business from claims of bodily injury or property damage caused by your products or operations. Amazon requires Professional sellers to have at least $1 million in liability coverage. This coverage needs to apply to the broader categories of property damage, product liability, contractual coverage, operations, and personal and bodily injury. Liability insurance is a critical investment for any Amazon seller, as it can protect your business from potential lawsuits and other legal expenses.


Product Insurance


Product insurance is a distinct form of coverage specifically tailored for businesses involved in manufacturing or selling products, such as eCommerce brands and Amazon sellers. This type of insurance can protect your business from claims related to product defects, manufacturing errors, and other product-related issues. It's important to note that liability insurance may not cover all product-related claims, which is why product insurance is often recommended for Amazon sellers.


Business Interruption Insurance


Business interruption insurance can provide financial protection in the event that your Amazon business is disrupted due to unforeseen events such as natural disasters, equipment failure, or other issues. This type of insurance can help cover lost income, ongoing expenses, and other costs associated with business interruption.


Why Do You Need Insurance to Sell on Amazon?


As an Amazon seller, you need to have insurance to protect yourself and your business. Here are some reasons why:

  • Product Liability: If a customer is injured or suffers damages due to a product you sold, you could be held liable. Product liability insurance can help cover the costs of legal fees and damages.

  • Property Damage: If you or one of your employees damages someone else's property while working, you could be held liable. General liability insurance can help cover the costs of repairs or replacement.

  • Legal Fees: If you are sued by a customer or another business, legal fees can quickly add up. Having insurance can help cover these costs.

  • Amazon Requirements: Amazon requires sellers to have certain types of insurance, such as product liability insurance with a minimum coverage of $1 million per occurrence and in aggregate.

Not all insurance policies are created equal. Make sure to carefully review the terms and coverage of any policy you are considering to ensure it meets your needs as an Amazon seller.

Insurance Requirements for Amazon Sellers

As an Amazon seller, it is important to understand the insurance requirements set by Amazon. These requirements ensure that both you and Amazon are protected in case of any incidents that may occur during the selling process.


Amazon requires that all sellers maintain liability insurance coverage. If you are a Pro Merchant or have gross proceeds of over $10,000 during any month from sales on Amazon's platform, you are required to have a minimum coverage of $1 million per occurrence and $1 million aggregate limits of commercial general liability insurance and product liability insurance.


It is important to note that commercial general liability insurance includes coverage for bodily injuries and medical expenses, as well as tangible damages like someone's physical property. Product liability insurance covers damages and injuries caused by your products.

While Amazon does not provide insurance for its sellers, it does require that you have insurance coverage from a reputable insurance provider. You should shop around and compare policies to find the best coverage for your needs.


In addition to meeting Amazon's insurance requirements, make sure that your insurance policy covers all of the products you have listed on Amazon. Some providers may offer policies as low as around $300 per year, but the average cost is typically around $500-$1,000 per year.


Amazon Seller Insurance Policy Criteria


When you're an Amazon seller, having the right insurance is crucial. Amazon requires sellers to have insurance to protect against potential liabilities. 


Here's what you need to know about the criteria for Amazon's seller insurance policy:


  • Type of Insurance Required: Amazon mainly asks for product liability insurance. This covers you if a product you sell causes harm or damage.

  • Revenue Threshold: If you're making more than a certain amount annually on Amazon (the threshold can change, so check Amazon's latest guidelines), insurance becomes mandatory.

  • Coverage Amount: Amazon has specific requirements for the minimum coverage amount. Typically, the policy must cover at least $1 million in liabilities.

  • Policy Must Include Amazon as an Additional Insured: Your insurance policy should list Amazon as an additional insured party. This means Amazon is also protected under your policy.

  • Notification Period: There's often a stipulation that you must notify your insurer within a certain period if there's a claim or potential claim related to your Amazon sales.

  • Renewal Proof: You must provide proof of insurance renewal to Amazon regularly to ensure continuous coverage.

  • Global Coverage (if applicable): If you sell internationally, your insurance should cover claims in those countries as well.

Following these criteria ensures that you meet Amazon's requirements and protects both you and your business from potential legal issues and financial losses. Always check the most current Amazon seller policies to stay compliant.


The Benefits of Having Amazon Seller Insurance

As an Amazon seller, you face many potential financial risks. Whether it's liability claims, inventory loss, or other unforeseen events, the costs can quickly add up. That's why having Amazon Seller Insurance can be a wise investment.


Here are some of the benefits you can expect:


Protection Against Liability Claims


One of the most significant benefits of Amazon Seller Insurance is that it can protect you against liability claims. If a customer is injured by one of your products, for example, you could be held liable for their medical expenses. Without insurance, you would have to pay these costs out of pocket. With insurance, however, your policy would cover the expenses up to the policy limit, which could save you a significant amount of money.


Coverage for Inventory Loss


Another potential financial risk for Amazon sellers is inventory loss. Whether it's due to theft, damage, or other reasons, losing your inventory can be a significant setback for your business. With Amazon Seller Insurance, however, you can get coverage for your inventory, which can help you recover some of your losses.


Peace of Mind


Perhaps one of the most significant benefits of Amazon Seller Insurance is the peace of mind it can provide. Knowing that you have insurance coverage in place can help you feel more confident in your business. You can focus on growing your business without worrying about the potential financial risks that come with being an Amazon seller.


Cost-Effective


While the cost of Amazon Seller Insurance varies depending on your estimated annual revenue, it is typically around $500-$1,000 per year. This cost may seem high, but when you consider the potential financial risks you face as an Amazon seller, it's a small price to pay for peace of mind and protection against liability claims and inventory loss.


Types of Insurance Policies for Amazon Sellers


As an Amazon seller, you are required to have insurance coverage that meets Amazon's requirements.


Here are some of the insurance policies that you may need to consider:


General Liability Insurance


General liability insurance provides coverage for bodily injury, property damage, and personal and advertising injury. This type of insurance is essential for Amazon sellers because it protects you against claims made by customers or third parties for injuries or damages that occur as a result of your products or services. This insurance policy also covers legal fees and settlements that may arise from such claims.


Product Liability Insurance


Product liability insurance provides coverage for damages caused by your products. This type of insurance is important for Amazon sellers because it protects you against claims made by customers or third parties for injuries or damages caused by your products. This insurance policy also covers legal fees and settlements that may arise from such claims

.

Commercial Property Insurance


Commercial property insurance provides coverage for your business property, such as your inventory, equipment, and office space. This type of insurance is important for Amazon sellers because it protects you against losses or damages to your business property due to events such as theft, fire, or natural disasters.

Amazon requires their sellers to have liability insurance coverage. The minimum requirements are $1 million per occurrence and $1 million aggregate limits of commercial general liability insurance and product liability insurance. You can also consider getting excess liability insurance or umbrella insurance to provide additional coverage beyond the minimum requirements.


How to Choose the Right Amazon Seller Insurance Policy

As an Amazon seller, choosing the right insurance policy is crucial to protect your business from potential risks and liabilities. Here are some factors to consider when evaluating and selecting an insurance policy:


Coverage Limits


The coverage limit is the maximum amount that the insurance policy will pay out in the event of a claim. It's important to choose a policy with sufficient coverage limits to protect your business adequately. Amazon requires a minimum coverage of $1 million per occurrence and in aggregate, but you may need more coverage depending on your business size and risk exposure.


Deductibles

The deductible is the amount that you will need to pay out of pocket before the insurance policy kicks in. Choosing a higher deductible can lower your premium, but it also means that you will need to pay more out of pocket if you file a claim. Consider your budget and risk tolerance when selecting a deductible.


Exclusions


Exclusions are situations or events that are not covered by the insurance policy. It's important to review the policy's exclusions carefully to understand what risks and liabilities are not covered. Some common exclusions in Amazon seller insurance policies include intentional acts, pollution, and cyber risks.


Premiums


The premium is the amount that you will need to pay for the insurance policy. While cost is an important factor, it shouldn't be the only factor when selecting an insurance policy. Consider the coverage limits, deductibles, and exclusions in addition to the premium when evaluating your options.


Provider Reputation


Finally, consider the reputation of the insurance provider when selecting a policy. Look for providers with a strong financial rating and positive customer reviews. You want to choose a provider that will be there for you in the event of a claim.


How to Get Insurance on Amazon?


As an Amazon seller, getting insurance is a crucial step to protect your business from potential liabilities. Here are the steps to follow to get insurance on Amazon.

  1. Determine the type of insurance you need: Amazon requires sellers to have a Commercial General Liability Insurance policy that includes coverage for bodily injuries, medical expenses, and tangible damages like physical property. You may also consider getting Product Liability Insurance to protect your business from any claims related to the products you sell.

  2. Find an insurance provider: You can either search for insurance providers on your own or use Amazon's recommended provider. Keep in mind that the cost of insurance can vary, so it's important to compare quotes from different providers to find the best option for your business.

  3. Obtain a certificate of insurance: Once you have selected an insurance provider, you will need to obtain a certificate of insurance that meets Amazon's requirements. The certificate should include your insurance provider's name, your legal entity name, policy number, and coverage dates.

  4. Upload the certificate of insurance to Amazon: To upload your certificate of insurance, go to your Seller Central account and navigate to Settings > Account Info > Business Information. Fill out the required fields with the information from your certificate of insurance and upload the document.

  5. Maintain your insurance: It's important to keep your insurance policy up to date and renew it before it expires to ensure that your business is always protected.


Insurance Costs and Financial Considerations


When considering Amazon seller insurance, it is important to take into account the financial implications of purchasing a policy. This section will help you better understand policy limits, deductibles, and how to calculate insurance premiums based on your sales.


Understanding Policy Limits and Deductibles


Policy limits refer to the maximum amount of coverage an insurance policy provides. Deductibles, on the other hand, are the amount of money you must pay out of pocket before your insurance coverage kicks in. When purchasing Amazon seller insurance, you will need to select policy limits and deductibles that align with your business needs.

For example, Amazon requires professional sellers to have at least $1 million in liability coverage. However, you may want to consider purchasing a higher policy limit if your business has a higher risk of liability claims. Additionally, you will need to decide on a deductible amount that you are comfortable paying out of pocket in the event of a claim.


Calculating Insurance Premiums Based on Sales


Insurance premiums are based on a variety of factors, including the type of coverage, policy limits, and deductibles. One of the main factors that will impact your insurance premium is your gross proceeds, or total sales.


According to our research, the average cost of Amazon seller insurance is typically around $500-$1,000 per year. However, your quote will vary based on your estimated annual revenue. Some providers may offer policies as low as around $300 per year.


To calculate your insurance premium, you will need to provide your insurance provider with an estimate of your annual sales. Your premium will be calculated based on your sales and the coverage limits and deductibles you have selected.


It is important to keep in mind that sales can fluctuate throughout the year, which can impact your insurance premium. Be sure to review your policy regularly and adjust your coverage as needed to ensure you have adequate protection for your business.


How Much Amazon Insurance Costs


The cost of insurance for sellers varies, but it usually depends on how much you expect to make in a year because you mainly need product liability insurance. On average, this insurance costs between $500 and $1,000 annually, but some plans can be as cheap as about $300 a year.


Here's what insurance companies look at:


  1. Your product: What you're selling really matters. If it's considered high-risk, you'll probably pay more for insurance.

  2. Type of insurance: Different policies cost different amounts. A bigger, more detailed policy like an umbrella policy usually costs more than a basic liability policy.

  3. How much you sell: If your business grows and you make more money, your insurance cost is likely to go up too.

The Amazon Insurance Accelerator Program


As an Amazon seller, it is important to protect your business and customers. The Amazon Insurance Accelerator program is a great way to obtain product liability insurance that meets Amazon's requirements. This program provides sellers with access to vetted insurance providers who offer coverage at competitive rates. Here are some things you need to know about the Amazon Insurance Accelerator program.


Vetted Insurance Providers


Amazon works with vetted insurance providers such as Marsh and Next Insurance to offer product liability coverage to its sellers. These providers have been thoroughly evaluated by Amazon to ensure they meet certain standards. This means that you can trust that the insurance providers you work with through the Amazon Insurance Accelerator program are reliable and trustworthy.


Streamlined Insurance Process


The Amazon Insurance Accelerator program makes it easy for sellers to obtain product liability insurance. The process is straightforward and streamlined, which means you can get coverage quickly and easily. You can apply for insurance directly through your seller account, and Amazon will connect you with vetted insurance providers who will evaluate your application and offer coverage if appropriate.


Tips for Managing Your Amazon Seller Insurance Policy


As an Amazon seller, it's important to manage your insurance policy to ensure that it meets Amazon's requirements and provides you with adequate coverage. Here are some tips to help you manage your Amazon seller insurance policy:


1. Review Your Policy Regularly

It's important to review your insurance policy regularly to ensure that it still meets your needs and Amazon's requirements. As your business grows and evolves, your insurance needs may change, so it's important to stay on top of any changes that may be necessary.


2. Understand Your Coverage

Make sure you understand the coverage provided by your policy, including the limits, deductibles, and exclusions. This will help you determine whether you have adequate coverage and whether

any additional coverage may be necessary.


3. Keep Your Policy Up-to-Date

Make sure your insurance policy is up-to-date and that you have all the necessary coverage in place. This includes making sure that your policy meets Amazon's requirements and that you have the required coverage amounts.


4. Work with a Reputable Insurance Provider

Choose a reputable insurance provider that has experience working with Amazon sellers. This will help ensure that your policy meets Amazon's requirements and that you have the coverage you need.


5. Keep Records of Your Insurance Policy

Keep detailed records of your insurance policy, including the policy number, coverage amounts, and expiration date. This will help you stay organized and ensure that you have the necessary information on hand when you need it.


Conclusion

In conclusion, Amazon Seller Insurance is a critical component for any seller to protect their business from unforeseen risks. As an Amazon seller, you are responsible for ensuring that your products are safe for consumers. However, accidents can and do happen, and without insurance, your business could suffer significant financial losses.

Amazon requires that all Professional sellers have at least $1 million in liability coverage. This coverage should apply to property damage, product liability, contractual coverage, operations, and personal and bodily injury. While it is not required for Individual sellers, it is still highly recommended that they obtain insurance coverage to protect their business.

The cost of Amazon seller insurance varies depending on the provider and your estimated annual revenue. On average, it can cost around $500-$1,000 per year, but some providers offer policies as low as around $300 per year.


Frequently Asked Questions


Does Amazon Have Insurance for Sellers?


Yes, Amazon does have an insurance program for sellers called the Amazon Insurance Accelerator. This program provides access to vetted insurance providers and enhanced claims coverage, offering peace of mind and protection to sellers.


Can I Sell on Amazon Without Insurance?


While it is not required to have insurance to sell on Amazon, it is highly recommended. Without insurance, you may be liable for any damages or injuries caused by your products, which can result in costly lawsuits and damage to your business's reputation.


Should I Get Insurance for Amazon FBA?


If you are using Amazon's FBA (Fulfillment by Amazon) service, you should consider getting insurance. While Amazon provides some coverage for lost or damaged items, it may not cover everything. Having your own insurance can provide additional protection for your business.


How Much is Amazon Business Insurance?


The cost of Amazon business insurance varies depending on the provider and the coverage you need. On average, sellers can expect to pay around $500-$1,000 per year for product liability insurance. However, some providers offer policies as low as around $300 per year.


What Kind of Insurance Do You Need for Amazon?


At a minimum, Amazon requires sellers to have commercial general liability insurance with a limit of at least $1 million per occurrence and in aggregate, and cover liabilities caused by products sold on Amazon. However, it is recommended to have additional coverage such as product liability insurance and cyber liability insurance to protect your business from various risks.

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