If you’re selling on Amazon, you might be surprised to learn that the platform requires you to have product liability insurance. Contrary to popular belief, Amazon does not cover the risks associated with your products; as a seller, it’s your responsibility to protect your business. Insurance is crucial for safeguarding your company’s assets and covering potential financial liabilities from accidents, injuries, or legal disputes. Although the likelihood of a lawsuit may seem low, it’s wise to err on the side of caution. For instance, there have been cases where customers sued for faulty products, like solar eclipse glasses that allegedly failed to protect their eyes. Even seemingly harmless products can lead to unexpected incidents, making it essential to have insurance to mitigate risks and comply with Amazon’s requirements.

Finding information on Amazon’s insurance requirements in Seller Central can be challenging. However, you can locate these details on the Program Policy help page, which outlines various policies sellers need to follow. Scroll to the “Pro Merchant Insurance Requirements” section for specific guidelines. According to Section 9 of the Amazon Services Business Solutions Agreement, you must obtain and maintain commercial liability insurance within 30 days if your monthly sales exceed $10,000 on Amazon.com or if requested by Amazon. You can purchase commercial general, excess, or umbrella liability insurance. Your chosen policy must cover all the products you list for sale on Amazon. 

To comply with Amazon’s insurance requirements, your commercial liability insurance policy must meet the following standards:

• Coverage Limits: Minimum of $1 million per occurrence and, in the aggregate, covering all liabilities related to your business operations, including product liability and bodily injury.
• Policy Type: Must be a commercial general, umbrella, or excess liability insurance, written on an occurrence basis.
• Provider Requirements: The insurance provider must have global claims handling capability and an S&P A- and/or AM Best A- or higher financial rating. A local equivalent is acceptable if these ratings are not applicable in your country.
• Cancellation Notice: The provider must notify Amazon at least 30 days before any cancellation, modification, or non-renewal.
• Additional Insureds: Amazon.com Services LLC and its affiliates and assignees must be named as additional insureds.
• Deductibles: The deductible cannot exceed $10,000 and must be listed on the certificate of insurance.
• Coverage Scope: The policy must cover all products you list on Amazon.
• Insured Name: The insured name must match the legal entity name provided to Amazon, which can be viewed on your Account Info page.
• Policy Completion: The policy must be fully completed, signed, and valid for at least 60 days from the submission date.

If your monthly sales exceed $10,000, you must have insurance with at least $1 million in coverage. Even if you are below this threshold, having insurance is advisable to protect against potential liabilities related to your products.

Commercial General Liability (CGL) insurance protects your business from product liability issues. It generally includes coverage for:

• Bodily Injury: This covers medical expenses and legal defense costs if your product injures someone.
• Property Damage: Pays for repairing or replacing damaged property owned by others and associated legal expenses.
• Legal Fees: Assists with the costs of defending against product liability claims.

Additionally, some CGL policies may cover advertising injury, encompassing claims related to slander, libel, copyright infringement, or misappropriation of advertising ideas.

Excess Liability Insurance is essential when your existing primary insurance policy’s coverage limits are insufficient. It provides additional coverage for claims exceeding your primary insurance’s limits and must be purchased separately for each primary policy you wish to extend.

Umbrella Insurance is an extended form of coverage, allowing you to increase protection across multiple underlying policies with a single policy. For example, an umbrella policy can extend coverage for commercial general liability, auto, and worker’s compensation.

You should consider Excess Liability Insurance for your Amazon business if:

• Your current insurance does not meet Amazon’s required coverage limits.
• You are selling high-risk products that could result in more significant liability claims.

Obtaining liability insurance, including Commercial General Liability, Umbrella, and Excess Liability coverage, is straightforward. Start by contacting insurance companies to request quotes tailored to your needs. You can also find insurance providers specializing in Amazon seller policies, which may offer more targeted coverage options. The insurance cost can vary based on factors like your business size, product risk level, and coverage limits, but you can typically receive personalized quotes by contacting insurers directly.

Amazon sellers’ insurance costs vary widely based on several factors but typically range from $500 to $1,000 annually, with some providers offering policies starting around $300 per year. The quote you receive will largely depend on your estimated annual revenue and the type of product you sell. High-risk products generally lead to higher premiums, and more complex policies, like umbrella coverage, often come with higher costs. Additionally, as your business grows and your revenue increases, expect your insurance premiums to rise accordingly.

Here are some insurance companies that specialize in providing coverage for Amazon and e-commerce sellers:

• Assureful (recommended)
• Well Insurance
• Next Insurance
• Bunker Insurance

These providers are well-versed in the specific insurance needs of Amazon sellers, ensuring you get the appropriate coverage for your business.

The liability insurance cost for Amazon sellers varies depending on factors such as the type of products sold, annual revenue, coverage limits, and the business size. Generally, Amazon sellers’ general liability insurance can range from $300 to $1,000 annually, though higher-risk products (like electronics or cosmetics) or higher coverage limits can push this cost higher.

Amazon requires sellers who earn more than $10,000 per month to have liability insurance with a minimum coverage of $1 million per occurrence, aggregate, and product liability.

Technically, you can list and sell on Amazon without insurance, but it’s not recommended. Amazon requires certain sellers to have liability insurance, especially those with high sales volumes or selling specific types of products. Even if not explicitly required for your category or sales volume, having insurance is crucial for protecting your business against potential claims, such as product defects or accidents that could result in legal action.

Having liability insurance helps you manage risks and adds credibility to your business. If you’re unsure whether you need insurance or what coverage is appropriate, consulting with an insurance professional can provide tailored advice based on your situation.

For selling on Amazon, you generally need general liability insurance that includes product liability coverage to protect against claims of bodily injury, property damage, or product defects. Amazon typically requires a minimum coverage of $1 million per occurrence and $1 million aggregate. Depending on your business needs, you might consider additional insurance types like professional liability or property insurance. It’s essential to check Amazon’s specific requirements for your product category and consult with an insurance professional to ensure adequate coverage.

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