Amazon Seller Insurance: Everything You Need to Know

Richard Clayton

March 8, 2021

Have you ever stopped and asked yourself whether or not you have any sort of protection for your business?

If you sell on Amazon, running a business on a global marketplace is no different than if you were to own a physical clothing store or restaurant. Your Amazon store is a business and you need to treat it like one, one that you need to protect. Accidents can happen at any given moment and if one of your products causes a damage or injury to your customer, you’ll most likely be slammed with legal fees. To avoid this, you need to get Amazon Seller Insurance, now.

As of March 15^th,, Amazon Pro Sellers are required to have insurance in order to protect their business from unexpected scenarios. No worries though, it’s not as complicated as you think it may be.

Here we’ll go over what Amazon seller insurance is, why you need it, Amazon’s requirements, where and how to purchase it, and more.

What is Amazon Seller Insurance?

Amazon Seller Insurance is a policy required by Amazon that protects both you and your business against costs that may arise as a result of any unforeseen circumstances, legal fees, bodily injuries, property damages, as well as any settlements that you may be responsible for.

In short, Amazon does not want the responsibility of accidents, damages or injuries caused by the items you sell and instead, wants you to purchase coverage so that only YOU are liable for your business.

Why You Need Insurance to Sell on Amazon

You may very well be selling great products, but in reality, all it takes is for one damaged or defective product to injure one of your customers or even employees, and you’ll be seeing a lawsuit at your front door in no time. Now, that’s the last thing you want on your mind!

When disaster strikes, it’s important that you don’t rely on Amazon to take care of any unexpected situation. Remember, it’s better to be safe than sorry.

So, what does Amazon require of sellers?

Amazon Requirements

According to Amazon, if you have a Professional Selling Plan, you are required to have Commercial General Liability Insurance which covers up to $1M in damages. Below we’ll break it down.

Commercial General Liability Insurance – This insurance covers up to $1,000,000 in damages such as bodily injury, personal injury, property damage, and more. The insurance must indicate that Amazon.com, Inc., and its affiliates and assignees are added as additional insureds.

Pro Sellers are required to have this insurance and provide proof of Commercial General Liability with a certificate.
Individual Sellers who do not meet the ‘insurance threshold’, are not required to carry this insurance but are encouraged to have it.

In a nutshell, if your sales reach over $10K a month, 3 months in a row, then you are required to have insurance covering at least $1M in costs. See below Amazon’s ‘insurance threshold’:

$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

Do note that Amazon’s Sellers Policy is available to only those sellers with a registered business in the U.S.

Product Liability – Perhaps you sold a damaged/faulty product (without knowing) to a customer which then resulted in an injury or caused an accident and now your customer is filing a lawsuit against you! With product liability insurance, products manufactured for your business are covered. The cost for product insurance depends on a few things such as product type, annual sales revenue and size.

Where to Get Amazon Seller Insurance & How Much it Costs

To apply for Amazon Seller Insurance, simply contact one of the insurance companies listed below and ask them about obtaining Commercial General Liability or Product Liability insurance for your Amazon business.

You’ll have to provide an insurance agent with additional information on your business such as what you sell, annual revenue and if you manufacture your own products. After completing the application process, your agent will then offer you a few quotes on how much the insurance will cost you.

The average price for Commercial General Liability or Product Liability Insurance can cost you between $500-$1,000 a year and trust us, it’s worth it.

Here are some of the insurance companies we recommend you purchase insurance from:

For businesses registered in the U.S.

Next Insurance

For businesses registered in China

Protect Yourself and Your Business

Carrying Amazon Seller Insurance is vital in order to continue selling and grow your business. Don’t neglect your business and think that accidents can’t happen, because to be truthful, anything can go wrong at any given time, even if you think you’re selling the safest products on the market. If you don’t already have insurance, make sure you get it ASAP so you can avoid any legal battles in the future.

What are you waiting for? Get the protection your business needs now.

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