Do you need insurance to sell on Amazon? The answer is “it depends.” If your Amazon business is big enough, then you’re required to get insurance coverage. So if your store is nearing the insurance requirement threshold or is already there, it’s a great idea to brush up on Amazon’s insurance requirements.
Keep reading for an A-Z guide to Amazon’s insurance requirements, what kind of policy you need, and how to get coverage.
Does Every Amazon Seller Need Insurance?
Strictly speaking, not every Amazon seller needs insurance. However, according to Amazon’s terms of service, liability insurance is mandatory if your monthly revenue exceeds $10,000.
Once you hit that revenue marker, you have 30 days to show your certificate of insurance to the platform. Otherwise, you might face an account suspension.
Why Do You Need Amazon Seller Insurance?
Amazon seller insurance is required because the platform isn’t held responsible if accidents or injuries happen because of your business activities. With liability insurance, you and your store’s assets are covered in case your store gets sued or somebody gets injured in incidents related to your store’s activity. Plus, liability insurance is mandatory according to Amazon’s terms of service, so not getting insurance may result in an account suspension.
Required Insurance Coverage for Amazon Sellers
The primary required coverage for Amazon sellers is Commercial General Liability (CGL) insurance. CGL insurance covers any medical costs and legal fees that stem from injury and incident claims caused by your business activities.
How Much Does Mandatory Amazon Seller Insurance Cost?
According to Amazon’s seller liability insurance criteria, you need coverage worth at least $1 million to be considered properly insured as a seller. For this amount of coverage, you generally need to pay around $300 to $1,000 annually.
That said, your seller insurance costs will depend on things such as the following:
- Insurance coverage amount.
- The products you sell.
- Your business assets.
- Your business size.
If you’re trying to calculate Amazon seller insurance costs, asking a broker is always a good option.
Additional Amazon Seller Insurance Requirements
In addition to the $1 million coverage requirement, Amazon’s insurance policy criteria also require the following:
- The insurance policy must be written on an “occurrence basis”, which means the policy covers claims based on when the incident occurred and not when the claim is filed.
- The deductible must be $10,000 or under.
- The policy must cover all sales made on your Amazon store.
- The policy must name Amazon as its additional insured party.
- The policy must stay valid for claims about incidents that happened while the policy was active, even if those claims are made after the policy ends.
- Your insured name must match the legal entity name you provided to Amazon.
- The insurer must have global claim handling capability and an A- or better rating on S&P, AM Best, or its local equivalents.
- The policy must be completed and signed by an authorized insurer representative.
- The insurer must give Amazon at least 30 days’ notice of cancellation, modification, or non-renewal.
Optional Coverage for Amazon Sellers
CGL coverage is the primary requirement for Amazon sellers. However, you can purchase other types of insurance coverage to strengthen your protection. Let’s take a look at some extra coverage options you can get:
Product Liability Insurance
Product liability insurance is similar to CGL coverage in that it protects you from claims made due to harm caused by your products. However, product liability insurance specializes in claims involving product defects.
It’s also important to remember that product liability insurance isn’t included in Amazon’s insurance requirements. This type of insurance acts more as an add-on or supplementary coverage to your main CGL policy. However, some insurers may offer Amazon product liability insurance bundled with CGL protection.
Workers’ Compensation Insurance
Workers’ compensation insurance pays out benefits to workers who become injured or ill due to job-related accidents. Amazon doesn’t require you to have workers’ comp insurance, but if you operate in the United States, you may need this type of coverage because the government mandates it.
While workers’ comp is usually meant for employees of your business, you can still benefit from it if you’re a sole proprietor, since it can cover workplace injuries that you may suffer.
Cyber Insurance
Amazon is a digital-first marketplace. If you sell on Amazon, you may have other digital assets to protect from cyberattacks. That’s where cyber insurance comes in; it can cover you in the event of information theft and data breaches, helping you safeguard vital digital assets.
How to Get Insurance for Amazon Sellers
You can get insurance for Amazon by going to an insurance broker for assistance or talking to an insurance company representative. But before you do so, you should have the following in hand:
- Your personal contact information.
- Your business contact information, such as its entity name, FEIN number, and address.
- Details about your Amazon store and its activities.
- The number of employees at your business, if applicable.
Many companies sell CGL insurance that can fit Amazon’s requirements. Here are some example companies that you can look into for your Amazon seller insurance needs:
- AXA
- USAA
- Geico
- Travelers Insurance
- TD Insurance
- Progressive
- Chubb Insurance
This is not an exhaustive list, so if you’re trying to compare insurance companies to find the best deal, ask your local insurance broker for assistance.
Amazon Insurance Accelerator
If you want to skip the long process of researching and vetting insurance providers, you can use the Amazon Insurance Accelerator, accessible through your Seller Central. This is a digital insurance marketplace that features pre-vetted insurance companies like Chubb and Liberty Mutual.
The Insurance Accelerator also offers a fast and simple application process that you can finish within minutes, as well as fully online purchasing capabilities. That means you can get the insurance needed to keep your store running quickly and easily.
Choosing the Right Amazon Seller Policy
While features like the Amazon Insurance Accelerator can help you find insurers more easily, it’s still a good idea to assess what makes a policy the “right” one to protect your business. Here are a few tips to help you pick the right Amazon seller insurance company:
Assess Your Insurance Needs
Amazon requires you to have $1 million in insurance, but that’s the bare minimum. Depending on your business needs, you may need to get more coverage. Consider your insurance needs and choose a coverage amount that’s appropriate for your store.
Compare Insurance Costs
When looking for policies, think about the insurance cost. Shop around and check the insurance premiums from multiple companies to find one that fits your budget. While CGL insurance typically costs $300 to $1,000 per year, there’s still a chance that you can find better deals.
Check Insurance Company Reach
One of the requirements for your seller insurance provider is global handling capability. If the insurance company can’t handle global claims, then you need to find another insurance company that fits the bill.
Fortunately, you can use the Insurance Accelerator to get through this. If a company is listed on the Accelerator, it has been vetted by Amazon, and you can purchase a policy from there without issue.
Key Takeaways
If your monthly Amazon revenue is $10,000 or more, seller insurance is mandatory. Once you cross the revenue threshold, you’re required to have $1 million worth of commercial general liability coverage, which typically costs between $300 and $1,000 annually. Otherwise, you could face account penalties or suspensions.
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