In this post, I’ll share what you should know exactly about Amazon seller insurance. Do you really need it? And where can you get one?
Now, it should come as no surprise that every business needs insurance coverage, and this is no different for a business selling on Amazon.
Amazon even puts it plainly in the Amazon Services Business Solutions Agreement under paragraph 9 which you agreed to when you choose to sell on Amazon. And let’s be real, we all click “accept” without reading these terms and condition.
1. Amazon Sellers Need Commercial General, Umbrella, or Excess Liability
In the past, Amazon isn’t that strict with their sellers and are not checking if 3rd party sellers have insurance for their business although it was a requirement all along.
Only recently, with the ever increasing lawsuit that’s been sued by consumers, Amazon is preemptively checking their 3rd party sellers for proof of insurance coverage. And Amazon is quite specific in the product liability coverage.
You will most likely get an email from Amazon requiring you to show proof of Commercial General Liability (CGL) Insurance once you hit the following milestone:
- You are on a professional seller plan
- Gross monthly sales of more than US$10,000 for 3 consecutive months in a row for the USA marketplace, CAD10,000 for Canada marketplace, and MXN10,000,000 for Mexico marketplace.
2. Amazon’s Requirement for Commercial General Coverage
Once you satisfy the milestone stated above, you will be asked for a proof of insurance for the Commercial General Liability. And the proof must state very clearly according to the requirements laid out below. (Taken from Amazon directly)
- The policy limit must be at least $1 million per occurrence and in aggregate, and cover liabilities caused by or occurring in conjunction with your business operations, including products, products/completed operations and bodily injury;
- The insurance policy type can be either commercial general, umbrella, or excess liability and be occurrence based;
- Your insurance provider must have global claim handling capability and a financial rating of S&P (https://www.spglobal.com/ratings/en/sector/insurance/insurance-sector) A- and/or AM Best (https://www.ambest.com/home/default.aspx) A- or better (if S&P or AM best is not valid or used in the country where you are required to obtain insurance, a local equivalent is allowed);
- Your insurance provider must give Amazon at least 30 days’ notice of cancellation, modification or nonrenewal;
- The policy must name “Amazon.com Services LLC and its affiliates and assignees” as additional insureds;
- The deductible for any policy(ies) must not be greater than $10,000 and any deductible amount must be listed on the certificate(s) of insurance;
- The policy must cover all sales from products you have listed on the Amazon website;
- Your insured name must match the “legal entity” name you provided to Amazon (view your legal entity name) (https://sellercentral.amazon.com/sw/AccountInfo/LegalEntity/step/LegalEntity);
- The policy must be completed in its entirety and signed; and
- The policy must be valid for at least 60 days from the date of submission.
3. Where To Get Insurance Coverage?
Where to get largely depends on which country your business entity is registered in.
For Sellers with Business Registered in the USA
- Ashlin Hadden
This is the easiest among the lot as there are numerous support for insurance for businesses register in the USA. A common recommendation from many sellers will be Ashlin Hadden (https://ecom.insure) who specializes in e-commerce insurance and she understands the requirement set out by Amazon perfectly.
Simply contact her through the website and get a quote for your business.
- Amazon’s Recommended Partners (Simply Business, Bold Penguin & Next Insurance)
Simply Business, Bold Penguin and Next Insurance are some recommended insurance provider or agents that can help you get the required liability insurance for your Amazon business. This list may increase in the future as more companies are starting to provide the insurance according to Amazon’s requirement.
You can see the latest list here: https://sellercentral.amazon.com/mario/v2/az/flow/BusinessInsurance/page/InsuranceEstablishment/global/render (Requires log in)
For Sellers with Business Registered in the China
- Amazon’s Recommended Partners
Similar to the USA Amazon Insurance Accelerator, you can find partners to work with if your business is registered in China.
You can see the latest list here: https://sellercentral.amazon.com/mario/v2/az/flow/BusinessInsurance/page/InsuranceEstablishment/global/render (Requires log in)
For Sellers with Business Registered Outside of USA & China
I belong to this group since I my business is registered in Singapore. And frankly, there’s not much option for sellers like myself. After much research and enquiry, here’s my finds for sellers like myself.
- Chubb Insurance
Chubb insurance is one of the top insurance provider in the world (Amazon recognized) and chances are, there’s a local branch near you. They provide small businesses with Commercial General Coverage and you have to request for them to adhere to Amazon’s requirement yourself.
Simply pick your region and your country. You will be directed to your local country and you can begin getting a quote from them about your Amazon business.
4. How Much Does Insurance Cost?
This largely depends on the type of products you sell.
Sellers that sells Supplements or cosmetics usually have a higher insurance cost than others. Those that deals in battery related products also have a higher insurance cost due to the increased risk of fire. (Remember the hoverboard incident that burn down a family house?)
Basically, any products that is very likely to cause bodily harm or property damages will incur a higher insurance coverage. So be sure to contact your choice of insurance provider to get your exact sum.
In the ballpark figures for a product with minimal risk, you can expect to pay anywhere from $40 to $100 per month (For USA Registered Businesses only) or an annual sum of $2,000 (Businesses registered outside of USA).
Expect this cost to be higher for your riskier products.
5. How Long Do I Have To Be Insured For?
Insurance should be one of the few items you need to consider when starting any business, but we understand that new businesses usually put this expenses off until it is required to help save cost.
However, the best advice is still to get insured as soon as possible. You do not want to wait for something terrible to happen and then regret not taking up any insurance for your business! We’re talking about real people, property and lives here!
Being a responsible seller also means protecting your customers and your business financially from any claims against you. Having insurance protects your business ultimately.
Simple answer, as long as are planning to sell anything online, your insurance coverage should cover for that period you are in business.
Conclusion
So there we have it. Most of the information here are from my own research and personal experience as a seller from outside USA. What do you think about Amazon enforcing their sellers to show proof of their insurance coverage?
Let me know below if you got more recommendations for other insurance provider to help the community out.