February 3, 2022

Amazon Seller Insurance - All you need to know

Amazon Seller Insurance - All you need to know
Amazon Seller Insurance - All you need to know

Amazon is a leading online marketplace. With this position comes some unique challenges. 

As an Amazon seller, whether you are just starting out or you're a pro who has been at it for years, it is important to protect yourself and your business with business insurance. 


Amazon requires that some sellers get some insurance coverage for selling on the platform. 

In this article, we will cover all you need to know about Amazon seller insurance including: 


  • What is Amazon Seller Insurance? 
  • Why do Amazon sellers need insurance? 
  • Types of Amazon Seller Insurance 
  • Amazon Seller Insurance requirements
  • Amazon Seller Insurance costs 
  • Where to get Amazon Seller Insurance 

What is Amazon Seller Insurance?

Amazon Seller Insurance is a requirement for Pro Merchants selling on Amazon. The insurance provides coverage for expenses like accidents, injuries, and lawsuits that may occur while selling on the platform. 


Amazon announced that from September 1st, 2021, sellers who reach $10,000 in monthly sales must get insurance on their inventory and transactions. In previous years, Seller insurance was only compulsory for sellers that earned $10,000 for three months consecutively. 

Why do Amazon sellers need insurance? 

Amazon requires that sellers with a Pro Merchant account and monthly sales of $10,000 or more get insurance. 


However, it is important to get insurance as an Amazon seller whether you are new or experienced. 


You may be thinking, does Amazon have your back if something goes wrong? The answer is no. 

Amazon doesn't want to take responsibility for any damages. It is up to you to get protection for yourself, assets, and any financial obligation that may come from accidents or injuries. 

While the chances of getting a lawsuit from a customer are low, it is always best to be prepared for any unforeseen circumstance that may arise. 


For example, a customer may sue you for a faulty blender that blew up their face. They may require that you cover for their injuries. In a situation like this, your insurance company can help you cover any settlement. 

Types of Seller Insurance

Various types of Seller Insurance are available to online retailers. These insurance types extend beyond the Amazon platform. Here are a few types of seller insurance in ecommerce: 

Product liability insurance

This type of insurance is the most common form of insurance coverage Amazon sellers utilize. Product liability insurance covers product issues including manufacturing defects, damaged products, inaccurate labeling, and so on. With this policy, you can cover financial obligations due to product defects leading to personal injury or property damage. 

General liability insurance 

General liability insurance is a common type of business insurance. It is similar to Product liability insurance, however, this insurance policy extends to services. General liability insurance covers physical injury, property damage, and advertising injury. It also covers expenses from settlements, legal fees, and litigation expenses. 

Amazon suspension insurance 

The Amazon suspension insurance is a relatively new form of coverage. This policy is not required by Amazon, however, it is a good idea to extract a policy for this. If your Amazon Seller central account gets suspended, your insurance company can cover the monetary expenses, protecting you from the impact of your monetary losses. 

Shipping and cargo insurance 

Shipping accidents are real and can impact cash flow significantly. This is why it is important to consider shipping and cargo insurance. 


When you lose stock during transit, your insurance company could take the responsibility of negotiations with transportation firms in the case of damages. If you want to choose shipping insurance for your Amazon FBA business, you need to decide which products need to be insured. You also need to understand the timings and filing process and check which products can and cannot be covered. Some agencies may not cover certain products, so it’s important to find out which products your preferred agency can cover. 

Cyber insurance 

This is a form of coverage for ecommerce retailers. This type of coverage covers a situation where there is a breach of information. It involves sensitive information being exchanged during a transaction. 

Amazon Seller Insurance requirements 

Here are the Amazon Seller Insurance requirements you need to adhere to. It is important to take note of them to ensure you get a valid insurance policy. 

Liability coverage 

Amazon requires that Pro Merchants take out policies that have at least a $1 million liability coverage. This coverage should be for every occurrence and in aggregate. Your policy or policies should include coverage for the following: 


  • Product liability 
  • Bodily injury 
  • Personal injury
  • Products/complete operations
  • Broad form property damage 
  • Broad form contractual coverage 


The policy type could be commercial general, umbrella, or excess liability insurance. In addition, they must be written on an occurrence basis. 

Your insurance provider must have a global capability to handle claims. They must also have a star rating of A- or better. 

List Amazon as an additional insured

Next, Amazon requires that you include ‘Amazon.com Services LLC’ and their assignees as additional insured on your policy. In simple terms, what this means is that Amazon will have coverage. If someone sues Amazon because of your product, Amazon will have protection. Your insurance policy will help pay for any settlement as well as the cost to defend them in any lawsuit. 

Submit proof of coverage  

Amazon might require that a seller provides a certificate of insurance as proof of coverage. In this case, the seller will need to send the document to the Amazon headquarters in Seattle with the address ‘P.O. Box 81226, Seattle, WA 98108-1226.’


Take note that your insured name must match that of your “legal entity” on your Amazon account. If it doesn’t match, your certificate of insurance (COI) will not be accepted. It may also lead to the suspension of your account. 


You can check out Amazon program policies for more requirements and expectations before you get started. 

Will Amazon be responsible for covering any claims? 

Yes, Amazon’s new insurance policy states that they will be covering claims under $1000 without requesting any reimbursement from the seller. This is under the condition that the seller follows Amazon's policies and holds valid insurance.

Amazon Seller Insurance costs

Amazon Seller Insurance costs vary depending on the provider and the coverage. In general, Amazon Seller Insurance could cost between $500-$1000 every year. 

Where to get Amazon Seller Insurance 

You can choose your insurance providers but you must ensure that the policy follows Amazon’s requirements. 


You can use platforms like Insureon to view and compare quotes from different carriers. 

Amazon has also launched a new Insurance accelerator. They partnered with Marsh to offer a network of vetted insurance providers. 


This makes it easy for sellers to obtain the best Amazon seller insurance at an affordable price. 

Some insurance companies that work specifically with Amazon and other ecommerce sellers include Next Insurance, Well Insurance, and Bunker Insurance


Using these insurance companies is beneficial as they understand exactly what type of coverage an Amazon seller needs. 

Protect your business with Amazon Seller Insurance 

Sometimes there are unforeseen circumstances that could be detrimental to your business as an Amazon seller. It is important to get insurance for your Amazon business and give it the needed protection. With valid insurance, you can increase company sales and grow revenue with Amazon having peace of mind. 


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