Do I need Amazon Seller insurance?
The question of whether or not you require liability insurance to sell on Amazon is a common one.
The short answer, if you are an Amazon Pro Merchant, is yes. And while that might sound initially daunting, it isn’t as complicated or expensive as you might fear - but it is a necessity.
You should always treat your Amazon business like any other, and that includes insuring it against any financial obligations resulting from accidents, injuries or litigations.
Thompson and Holt managing partner Craig Gedey explained: “It’s a common misconception that is something goes wrong then Amazon will cover you as a Seller. But that simply isn’t the case. Amazon doesn’t want that responsibility and that is why it is so important to read their terms and conditions of service, particularly on this issue.”
Details of Amazon’s insurance requirements can be a little difficult to find in Seller Central, but on the Program Policy help page, there are numerous polices that Amazon requires you to abide by. The following is written under Pro Merchant Insurance Requirements:
“Pro Merchants who sell on Amazon must provide proof of Commercial General Liability insurance. This insurance, obtained at the merchant’s expense, shall cover up to $1,000,000 per occurrence and in the aggregate and must include product liability, bodily injury, or personal injury, property damage, and other requirements as stated in the Amazon Services Business Solutions Agreement. The insurance must indicate that “Amazon.com, Inc., and its affiliates and assignees” are added as additional insureds.”
Fundamentally that means that if you have an individual seller account, Amazon does not require you to have insurance - although that is something that Thompson and Holt recommends you do regardless.
Further information on the requirements for Amazon’s Pro Merchant Sellers can be found on the Amazon Services Business Solutions Agreement.
That reads: “If the gross proceeds from Your Transactions exceed the applicable Insurance Threshold during each month over any period of three consecutive months, or otherwise if requested by us, then within thirty 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 for the coverage to the following address: c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management.”
Basically, if your sales exceed the applicable insurance threshold for three months in a row, Amazon requires you to have insurance. To find out what the threshold is you must then scroll down to the ‘Definitions’ section, under ‘Insurance Limits’ and ‘Insurance Thresholds’.
‘Insurance Limits’ means the applicable one of the following:
• $1,000,000 CAD, if the ‘Elected Country’ is Canada
• $10,000,000 MXN, if the ‘Elected Country’ is Mexico
• $1,000,000 USD, if the ‘Elected Country’ is the United States
‘Insurance Threshold’ means the applicable one of the following:
• $10,000 CAD, if the ‘Elected Country’ is Canada
• $100,000 MXN, if the ‘Elected Country’ is Mexico
• $10,000 USD, if the ‘Elected Country’ is the United States
What this means is that if your sales are over $10,000 per month for at least three months in a row, you will need to carry insurance with at least $1,000,000 in coverage. And even if you are currently just below the threshold, Thompson and Holt would recommend being insured. Just because you don’t meet Amazon’s threshold doesn’t mean you won’t be liable if a customer gets injured.
The insurance that you need is Commercial General Liability (CGL), Umbrella and/or Excess Liability Insurance coverage. Limits must be not less than: $1,000,000 per occurrence, $1,000,000 in the aggregate for products and completed operations, and $1,000,000 in the general aggregate. Such insurance must include products liability, products/completed operations, bodily injury, personal injury, broad form property damage, and broad form contractual coverage.
So where is the best place to look for insurance?
There are a number of companies that specialise in Amazon and eCommerce sellers - Well Insurance, Next Insurance and Bunker Insurance are three of them worth checking out. Have a look at those and do your own research into other insurance companies to see which best fit your specific requirements. One way to look at multiple insurance companies is through Insureon, letting them know that you are an Amazon Seller.
For added protection, it is also worth looking into forming a Limited Company for your Amazon business. Although that is not required by Amazon, what it does do is protects your personal assents in case of a lawsuit. That alongside proper insurance will provide a strong level of piece of mind.
Free Amazon Seller Suspension Help and Advice
If you have found yourself suspended while selling on Amazon, contact Thompson and Holt for a free LiveChat to get your Seller business back online as quickly as possible.
Thompson and Holt are also offering a free months trial of their Monitor and Protect service to help sellers prevent a suspension of ASINs or an their account during the COVID pandemic, more information on how to protect your Amazon seller account from a suspension can be found here.