Amazon FBA is the biggest business solution in the E-commerce market these days. A lot of people, especially young entrepreneurs, are investing a lot into the digital market as an Amazon FBA seller. It provides them an edge to expand their business on a global level.
Amazon FBA is the easiest way to enter the digital market and reach a huge number of customers in different parts of the world. Your product can be available to people all over the globe in no time.
As an Amazon FBA Seller, you have to keep in mind that there are two types of selling accounts for this purpose. One is the Individual Seller Account, and the other is Professional Seller Account. You can choose one of these account types to sell depending on the number of items or products you plan to sell in a month.
Creating an account on Amazon FBA is easy and selling your product is very convenient. But you must know that there are some requirements you need to consider when you are an Amazon FBA Seller. Insurance is one of the most important components of this process. You will have to take care of insurance requirements if you are planning to expand your business growth with Amazon. Hence, there are always bigger opportunities to avail when we talk about Amazon.
Amazon itself has mentioned the details of all the terms and conditions of business you have to consider as a Seller. But most of us never read the complete details.
In this topic, we will cover the aspects you can consider getting insurance as an Amazon FBA Seller. Therefore, we will tell you what exactly are the requirements for Amazon insurance, where you can get it, how you can get it, what it covers and why it is very important.
Do I Require Insurance as an Amazon FBA Seller?
Amazon is considered as the most money-spinning online marketplace in the world of eCommerce. It does not matter what type of product you have; it is open for all kinds of products.
Being an online seller, you will have to keep it in mind that understanding your liabilities are very necessary. Finding the accurate covers is always time-consuming and sometimes a little intimidating.
You need to ask yourself a question that the covers you need will be able to protect you as well as meet the satisfying standards of Amazon and the FBA terms and conditions?
If you are a large retailer on Fulfillment by Amazon, you will spend most of your time running your business rather than trying to find the right type of insurance.
So, you will have to make insurance your priority and find it either by yourself or finding a trusted broker.
What is Amazon Seller Insurance?
Amazon Seller Insurance is a wide term. When you become a seller on Amazon FBA, you need to know that you are their partner and you have agreed to their terms and conditions. Liability insurance is in particular an imperative clause of the agreement.
Product Liability Insurance is considered being the most important insurance cover for Ecommerce entrepreneurs. As an online retailer, the type of your business depicts the risk you need to cover through insurance. Most businesses these days have Combined Liability, which means that they have Public Liability Insurance and Product Liability Insurance at the same time.
Being an Amazon FBA Seller, we believe that Product Liability Insurance is imperative to you. It is always there to instantly protect you from claims where your product causes some injury, loss, or damage (small or huge) to someone or their property.
Moreover, Amazon Private Label is an amazing concept as it allows you to repack your products with your own customized and personal branding. Product Liability Insurance will certainly cover this activity and as you pursue this, you can recognize it as your product.
Therefore, if you are a seller partnering with Amazon, you require to have insurance whenever you reach a certain level.
Why Do You Need Insurance to Sell on Amazon?
Amazon at some point will require you to have a Product Liability Insurance. Amazon will never take the responsibility of insurance, as a business owner or an Amazon seller you will have to take care of it on your own and find a proper insurance.
The reason for this insurance is to protect yourself and the assets of your company whilst covering the financial compulsions that caused by injuries, coincidences, or litigations. And whilst the chances of any customer that might sue you are very low, it is quite better to stumble on the side of carefulness and stick to the rules of Amazon.
Accidents might happen, any simple product can cause harm in that case. So, It is better to have insurance to protect yourself from unforeseen incidents.
We recommend to have LLC (Limited Liability Company) if you are a bigger seller or in future, your business grows.
Requirements for Amazon FBA
As a seller on Amazon if you have an Amazon Professional Seller Account then you will require a General Liability Insurance.
To understand General Liability Insurance, you need to read a few details below.
General Liability Insurance
- It covers property damages, third party injuries, advertising injuries
- Also, it will cover damages caused by your services, business operations, or employees
- It also covers the non-professional negligent acts
- Moreover, it typically starts at about $21 per month, though the prices may vary depending on the location and risks involved in your business
Requirements for Amazon Insurance
- Sellers must provide the proof of Commercial General Liability Insurance
- It will cover up to $1,000,000 per occurrence and it must include products liability, bodily injury, personal injury, and other requirements as stated in the agreement
- Typically starts with $21 a month
- It must indicate Amazon
- Your certificate of insurance must be an original document
- It must contain an Additional Insured Endorsement
- Also, it must list all the subsidiaries or DBA’s
- It must provide at least 30 days for modification, cancellation or non-renewal
- Show complete insurance carrier names
- Completed in its entirety and signed
- Binders are not acceptable
- You should also satisfy the insurance limits by using any combination of Umbrella/ Excess Liability Insurance and General Liability Insurance
Additional Insured Endorsement
- It means that they protect by your policy as well whenever it is applicable
- This should be included on your certificate of insurance at any cost
- Wording on the certificate must match the requirements exactly or Amazon will request a new one (suspending your account until a new one is provided by you)
Original Proof of Your Insurance Document
- It is generally displayed on the certificate of insurance or the Accord form
- After you purchase the policy it is probably sent to you via email
- If you have purchased the Amazon Seller’s Policy then you will receive a direct link to your certificate of insurance (downloadable and can be updated from your account as per your needs)
- It can be updated and shared with other retailers as well
Insurance Limits
- If you choose Canada then your insurance limit is CAD 1,000,000
- Or, If you choose Mexico then your insurance limit is MXN 10,000,000
- If you choose the United States of America then your insurance limit is USD 1,000,000
Insurance Threshold
- CAD 10,000 if you choose Canada
- MXN 100,000 if you choose Mexico
- USD 10,000 if you choose United States of America
Note
If you are having sales that are over $10,000 per month for at least three months consecutively then you will certainly need to have an insurance that will have about $1,000,000 in coverage. Moreover, if you do not meet Amazon’s threshold level that does not mean you will not be liable if a customer gets injured. So we recommend to have insurance in all cases.
What Type of Insurance Do You Need?
- As we have mentioned above that Amazon requires sellers to have at least $1M in coverage.
- You may also satisfy the insurance limits and add required Additional Insured wording as mentioned earlier
- $1,000,000 per occurrence in the general aggregate
- $1,000,000 in the aggregate for products and completed operations
How You Can Get an Amazon FBA Insurance?
If you think getting an Amazon insurance is tough then you are wrong!
You can sign up for Amazon seller insurance in a very simple way, as simple as you sign a contract with any local insurance company.
Also, You can simply give them a call or visit their website to ask about the commercial general liability insurance, general liability insurance or product liability insurance.
You have to make sure that you are fully prepared to answer the questions with honesty and truthfulness on the platform that Amazon has provided you. The type of product or item which you are selling and its corresponding category are two of the main factors that will depict your annual premium.
If you feel like you are not able to contact every insurance provider yourself to get the best quote then you must contact independent insurance companies. They will provide you with the best quotes from multiple insurance companies without taking any extra time. You can use them to find the best prices for maximum coverage.
Below are some vital points you should consider while requesting quotes from independent insurance companies. You must provide them with the following details:
- Provide them with vital information regarding your business
- The name of your business
- Operations of the business
- History of your business
- Annual revenue
- Details of business partners, if any
- History of insurance
- Prior claims, if any
After the above information has been provided for your application of quote you can choose the available options accordingly.
The average for commercial business liability is approximately $500 per year. That is a good deal as it will provide all the necessary protections to your business.
Insurance Companies for Amazon
Here are few Insurance companies that are particularly working with Amazon and many other eCommerce sellers. The best thing about these insurance companies is that they will know it instantly what type of coverage your business requires.
Where You Can Get Liability Insurance and How Much Will It Cost?
As we have told you before that applying for insurance coverage is quite straightforward. All you need to do is contact some good insurance companies as listed above.
As you know, it is entirely a product liability insurance so your quote will be based on your estimated annual revenue.
The average cost will be around $500 to $1,000 per year.
If you want to view the quotes from different insurance companies on the go, you can use Insureon. They will send you different quotes from some of the top carriers for comparison and it will save a lot of your time. You will have to make sure that you let the insurance agent know that you are an Amazon FBA seller beforehand. This will ensure the exact requirements for Amazon to be covered.
Your Amazon Insurance Have Been Sorted Out!
You must protect your eCommerce business with an FBA insurance policy or Amazon seller insurance policy.
In this age, we all know that business expansion is not a big deal. So, you must be advanced in your protection to save your expanded business from accidents or losses that are sudden. Protect your business from any scenario that might ruin it in a few minutes.
Buying insurance must be your top priority after reading this!
If you are thinking that you are still not ready to purchase it or your business is not on that bigger level of growth, then you must think again!
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