To maintain a competitive edge — and to build and preserve a strong reputation — sellers who list and sell products on Amazon.com need to understand the vast marketplace’s requirements, including those for insurance.
Which sellers are required to purchase insurance?
Section 9 of the Amazon Services Business Solutions Agreement says that sellers are required to purchase commercial product liability insurance within 30 days of generating over $10,000 in monthly sales on Amazon.com, or if Amazon explicitly requests proof of insurance.
What are Amazon’s insurance requirements for sellers?
Amazon has specific requirements for sellers regarding insurance coverage, including:
- A minimum coverage of $1 million per occurrence, which is the maximum amount the policy would pay out for all claims resulting from a single incident, or occurrence.
- Coverage must encompass all products the seller has listed on Amazon.
- The deductible for any policy must not be greater than $10,000.
- "Amazon.com Services LLC, alongside its affiliates and assignees," should be recognized as additional insured parties within the policy.
- The seller’s insurer should be equipped to manage global claims and maintain the financial standing of S&P A- or AM Best A-.
Detailed guidelines are available on the product liability insurance policy page in Amazon Seller Central.
How to easily purchase compliant Amazon sellers’ insurance.
To make it as simple as possible to adhere to Amazon’s insurance requirements, Marsh has collaborated with Amazon to support its digital insurance network, the Amazon Insurance Accelerator, since August 2021.
Some of the benefits of securing coverage through the Amazon Insurance Accelerator include:
- Pre-vetted list of insurance providers with coverage that adheres to Amazon's requirements.
- Quotes from multiple insurers via one streamlined digital application.
- Savings of up to 58% available compared to non-participating insurers.*
To get started, visit the Business Insurance page on Amazon Seller Central and click on the Marsh tile.
Why does Amazon require commercial product liability insurance?
Even the most diligently crafted products can sometimes develop unforeseen issues or cause harm to consumers, whether through manufacturing defects, design flaws, or simply the way consumers interact with them. Commercial product liability insurance typically covers the financial repercussions of claims made against the business due to property damage, injuries, or other harm caused by the product.
For example, imagine you are selling electronics on Amazon.com. If a customer purchases a faulty product and gets injured as a result, you could potentially be liable for the customer's medical expenses and/or other damages. Without insurance, you’d have to pay these costs out of pocket, potentially leading to significant financial strain. Depending on the specific situation and policy wording, this insurance coverage is designed to protect and indemnify you, the savvy e-commerce entrepreneur.
How to provide Amazon with proof that you purchased insurance
Amazon might ask for insurance evidence within 30 days to confirm your contractual compliance. Upon securing a policy, you'll receive an insurance certificate, which outlines covered entities, coverage caps, and potential exclusions. Acceptable submission formats include .pdf, .doc, or .docx.
Occasionally, Amazon might also request additional documents, like your complete policy or its receipt.
To upload your certificate, visit the Business Insurance page in Amazon Seller Central and click on the link titled “Step 2: Upload Proof of Insurance.”
Simply upload your certificate of insurance, provide the readily available information listed below, and click “Submit.” It’s that easy!
- Name of insurer (Name of the insurance company that has provided you with insurance)
- Name of insured (Your name or the name of your business that owns the insurance policy)
- Policy number (Assigned to a policy by an insurance provider once you have purchased insurance from them)
- Policy start date (When your policy started)
- Policy end date (When your policy expires; typically, 12 months after the start date)
- I bought insurance from an Amazon Insurance Accelerator participant (Yes/No)
Conclusion
Purchasing commercial product liability insurance is pivotal for both protection and success on Amazon’s platform. By having this coverage in place, you can protect your bottom line and promote long-term success and reputational stability in the competitive Amazon marketplace.
Effective insurance coverage and adherence to Amazon's insurance requirements help prevent potential setbacks and financial pitfalls.
