Amazon Seller Insurance – What You Need to Know to be Covered

Do I need insurance?

When starting your Amazon business, most sellers don’t realize that when you reach $10,000 in revenue in any given month, Amazon will require you to take out a liability insurance policy. Product liability insurance is not just a necessity, but also a crucial safeguard for all Amazon sellers, regardless of their monthly sales. This insurance provides coverage for claims and legal expenses in case a customer claims the product is defective and caused bodily harm and/or property damage. Having the right insurance will help protect yourself and your company’s assets and cover any financial obligations resulting from accidents, injuries, or litigations. And while the chances of a customer suing you may be low, it’s better to be safe than sorry.

What does product liability insurance cover?

Normal/everyday household items can result in claims so it's important for small businesses selling products on Amazon's marketplace to be adequately insured. Product liability insurance could help with the following expenses:

Property Damage: If a product you sell causes property damage (such as to a home or vehicle), insurance could help pay to repair or replace the damaged property.

Medical Expenses: If a product you sell causes harm or illness to an individual, insurance could help cover the cost of medical expenses incurred, including treatments, hospital visits, rehabilitation, and other related healthcare expenses.

Legal Fees: Insurance could also help cover costs associated with legal defense related to an injury or property damage claim, including attorney fees, court expenses, and potential settlement or judgment amounts from a lawsuit initiated by a customer.

Per Amazon’s Insurance policy criteria, your commercial liability insurance policy must meet all of the following, unless otherwise required by applicable law or regulation:

• The insurance policy type can be either commercial general, umbrella, or excess liability and be occurrence based, except for certain product categories.
• The policy limit must be at least USD 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 deductible for any policy(ies) must not be greater than $10,000. Any deductible amount must be listed on your Certificate of Insurance;
• The policy must cover all sales from products you have listed on the Amazon.com store;
• The policy must name "Amazon.com Services LLC and its affiliates and assignees" as additional insureds;
• Except for single-member LLCs, your insured name must match the “legal entity” name you provided to Amazon in your Account Info. For single member LLCs, where your legal entity name is different than the name you publicly use to identify your business (“trade name,” “doing business as,” or “DBA”), it is also acceptable for your insured name to match your trade name;
• 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);
• The policy must be completed in its entirety and signed; and
• Your insurance provider must give Amazon at least 30 days’ notice of cancellation, modification, or nonrenewal.

​You can also add Amazon as an additional insured, by adding "Amazon.com Services LLC and its affiliates and assignees” with address “P.O. Box 81226, Seattle, WA 98108-1226” to your policy.

Will Amazon cover any claims?

Under specific conditions under Amazon’s A-to-Z Guarantee, Amazon will cover any claims under $1,000:

“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 Amazon will only cover claims under $1,000 so long as you hold sufficient, Amazon-approved liability insurance.

How to Find an Insurance Provider

If you currently don’t have commercial liability insurance, you can choose any insurance provider that meets all of Amazon’s requirements or select one from the network of trusted insurance providers identified by Amazon via Amazon’s Insurance Accelerator. They offer quotes from a network of vetted insurance providers.

Ensure that you and your business are adequately protected for any unforeseen circumstances, so that you can focus on growing your business without worry.​

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