What are the new Amazon liability insurance requirements?
A recent announcement by Amazon that it will start to enforce its long-held requirement for Sellers to have liability insurance should not be ignored.
Amazon has long requested that Sellers have product liability insurance, but rarely did any more than send some Sellers emails with a link to upload their documents. But following a number of lawsuits that held Amazon liable for products sold on the site, they are now looking to enforce the need for insurance much more keenly.
A new mandate from Amazon requires third-party sellers to secure product liability coverage after reaching $10,000 in sales in one month, rather than three months, on Amazon.
Stuart White managing partner of Thompson and Holt and a previous Amazon Seller himself, answers the key questions that you need to know ahead of the September 1 deadline that has been set.
What insurance is Amazon now requesting?
Stuart White, Thompson and Holt: “You can read the exact requirements in Seller Central under ‘Business Insurance.’ Your commercial liability insurance policy must meet all of the following criteria:
• The policy limit must be at least $1 million per occurrence and in aggregate and cover liabilities caused by or occurring in conjunction with your business operations, including products, products/completed operations, and bodily injury;
• The insurance policy type can be either commercial general, umbrella, or excess liability and be occurrence based;
• Your insurance provider must have global claim handling capability and a financial rating of S&P A- and/or AM Best A- or better (if S&P or AM best is not valid or used in the country where you are required to obtain insurance, a local equivalent is allowed);
• Your insurance provider must give Amazon at least 30 days’ notice of cancellation, modification or nonrenewal;
• The policy must name “Amazon.com Services LLC and its affiliates and assignees” as additional insureds;
• The deductible for any policy(ies) must not be greater than $10,000 and any deductible amount must be listed on the certificate(s) of insurance;
• The policy must cover all sales from products you have listed on the Amazon website;
• Your insured name must match the “legal entity” name you provided to Amazon;
• The policy must be completed in its entirety and signed
• The policy must be valid for at least 60 days from the date of submission.
Does Amazon cover anything itself?
Stuart White, Thompson and Holt: “Amazon will cover all claims of $1,000 or less for sellers with no penalty to sellers. Amazon needs its sellers able to handle the bigger lawsuits that are over $1,000. According to Amazon’s own statistics, 80 percent of claims are less than $1,000. They will cover these for Sellers if Sellers’ insurance covers the big lawsuits.”
Who can help me find the right insurance?
Stuart White, Thompson and Holt: “Amazon has provided a list of approved carriers and an international insurance broker, Marsh, to help sellers find the right insurance for their businesses. The brokerage giant has collaborated with Amazon on its new digital insurance network, Amazon Insurance Accelerator., and it’s worth doing some research on that. The correct insurance will cover you on all the other platforms you sell on, including on personal websites.”
I’m based outside America - who should I get insured with?
Stuart White, Thompson and Holt: “You need to get instance in your own country and make sure it has a global product liability rider. Your provider must have global claim handling capability and an “A” rating from S&P and/or AM Best or better.”
I already have insurance on Amazon - will I be okay?
Stuart White, Thompson and Holt: “You need to review your policy now to make sure it meets all of Amazon’s new requirements, including the 30 days’ notification of cancellation, modification or non-renewal to Amazon. Make sure your policy goes up to at least $1 million per claim. Depending on where you have your current insurance, it may not cover you in the detail now needed.”
I have multiple seller accounts on Amazon - do I need multiple insurance policies?
Stuart White, Thompson and Holt: “No. One policy which covers all your inventory should be sufficient. However you may need to upload it through each seller central account, and you should list the brands as well as the corporation on the certificate of insurance.”
I’m a reseller and not a brand - do I still need insurance?
Stuart White, Thompson and Holt: “Absolutely. Amazon makes this clear, and just because you are re-selling does not mean you are immune from being sued by an unhappy customer. Courts recently ruled that Amazon was liable for selling dangerous products on its platform, and that extends to you if you sell a damaged, dangerous or faulty item.”
Will Amazon ever read my policy?
Stuart White, Thompson and Holt: “You should act as if they will. It may be that machine learning robots are the ones scanning policies for the relevant details, but they are becoming increasingly sophisticated and can find the information they need very quickly. Don’t try and cut corners.”
Is product liability insurance all that I need for my Amazon business?
Stuart White, Thompson and Holt: “No. You still need to consider factors such as damaged inventory, injuries or accidents in the workplace and theft. Be thorough about deciding on the insurance for your business because it could be crucial.”