You’re probably here because, like many others, you have finally discovered the beauty of Amazon selling. It is very important, however, to start treating Amazon selling like any other business venture, and part of that is securing a business insurance.

Whether you’re a newcomer to the platform or a pro that’s been doing it for quite some time, you probably already know that having business insurance for online sellers is a must! 

Amazon requires their sellers to carry an active coverage of insurance to be able to protect their merchants and buyers from any unfortunate events that may come at a later time.

In this article, we will be discussing everything you need to know about Amazon seller insurance, specifically:

  • Do you need insurance to sell on Amazon?
  • Does Amazon require product liability insurance?
  • How much product liability insurance do I need?
  • Do I need insurance for Amazon FBA?
  • Does Amazon give health insurance?

Do you need insurance to sell on Amazon?

NOT all Amazon sellers are required to have an Amazon business insurance, but you should consider having one anyway. Only Amazon sellers with a Pro Merchant account earning a gross sale of $10,000 per month for three consecutive months are required to have one.

But even if your business doesn’t meet the criteria set by Amazon to carry their business
insurance coverage, it is very important to future-proof yourself and your business from any financial consequences that are brought about by unforeseen events.

Remember that precaution is always better than cure. And when the time comes that
something unfortunate comes knocking at your doorsteps, you would want to make sure that you are protected.

Does Amazon require product liability insurance?

The short answer would be, “not everyone is required to have one, but everyone should have one.”

Starting September of this year, Amazon has been pretty strict when it comes to their sellers’ compliance with their insurance standards. As mentioned earlier, Amazon started requiring Amazon online retailers to carry a commercial product liability insurance and have Amazon as an additional insured the moment their Amazon store reaches the $10,000 threshold sales for a month.

The Amazon Retailer Product Liability Insurance is designed to keep businesses within the platform protected against any forms of liability, litigation, and other possible claims that may arise from injuries or property damages brought about by their products.

No matter how safe or well-tested you claim your products to be, there is always an off chance that something might be wrong with them. These defective or damaged items can range from being just a bad review to a full-blown lawsuit which your business might never recover. Having Amazon seller insurance will be your salvation if ever this happens.

Always keep in mind that accidents happen all the time. And no matter how frivolous or
superficial a customer’s claim can be, once pushed through into a lawsuit, it’s going to cost you and your business money. Having the right insurance can help you pay for the legal fees that you will be needing and settlement costs just in case you ever need it.

How much product liability do I need?

Amazon made it very clear to their sellers as to what kind of insurance you will be needing under section 9 of their Amazon Services Business Solutions Agreement. They have streamlined the most important details that are needed to be part of your insurance as an individual seller or as a pro merchant.

If you are an Amazon seller that falls under the $10,000 monthly gross sales bracket, you will be needing a minimum of $1,000,000 per occurrence in aggregate, including product liability, bodily injury, personal injury, and property damage.

In addition, Amazon also requires their Pro Merchants to list them down as part of additional insured granting them the same protection as you. This means that in case of any complaints or lawsuits, Amazon is just as free as you are from any liability or damages that the customer is claiming. Amazon, just like you, would not like to have any form of responsibility to fall on their shoulders.

To make sure that you adhere to Amazon’s standards and guidelines, Amazon will be
requesting a Certificate of Insurance. This document highlights the important details of your insurance, specifically the clauses required by Amazon.

Do I need insurance for Amazon FBA?

Being Amazon’s third-party seller, using their Fulfillment by Amazon (FBA) has a lot of perks and advantages to it. From handling customer support to fast delivery, Amazon has got you covered. But that doesn’t mean that you get a free pass when it comes to their insurance requirements.

Just like any other Amazon merchants, third-party vendors are also obliged to comply with Amazon’s insurance guidelines. With Amazon being more aggressive with their insurance guidelines, individual sellers meeting the $10,000 monthly income threshold are also under an obligation to ensure their businesses.

Other than the general liability and product liability insurance that these sellers are recommended to carry, they can also avail of other insurance policies that will protect their business.

Among these insurances are property insurance, HNOA insurance, inland marine insurance, transit and transportation insurance, and more.

Does Amazon give health insurance?

As of writing, the health insurance benefits offered by Amazon are limited to its company
employees. Although there are rumors circulating that Amazon will soon be offering health insurance in the near future, there has been no confirmation made on the side of Amazon. This rumor started circulating after Amazon sent out a survey to its online sellers and merchants regarding their current health insurance policies as a way of making their platform a better space for their sellers.

Amazon offering health insurance policies to their sellers shouldn’t come as a surprise given the company’s step by step approach in entering the health space. This can be another B2B venture that will offer a health insurance plan that can be maximized depending on the sellers’ needs.