When you add a new product to your store on Amazon’s e-commerce marketplace, you may dream of it skyrocketing to bestseller status overnight. But what if that same product causes unforeseen harm instead, plunging you into a nightmare of legal and financial liability claims?
In this article, we’ll explore four hypothetical scenarios* where commercial product liability insurance comes to the rescue by safeguarding your financial stability and e-commerce aspirations against consumer claims.
Let's dive into these examples and explore the significance of protecting your business.
Example 1: Flammable costume
Product category: Clothing
Type of claim: Bodily injury caused by inadequate warning
Imagine a scenario where a customer purchases a dinosaur costume from your online apparel store for their 6-year-old child to wear to a Halloween party. Approximately 30 minutes after arriving at the party, a portion of the child's costume catches fire when they get close to a bonfire. The child is immediately rushed to the emergency room and receives treatment for a first-degree burn.
It is discovered that a section of the costume was made from rayon fabric. The customer alleges that the product's labeling did not provide adequate warning about its flammability and claims you should be held responsible for covering their medical expenses.
Example 2: Their neighbors weren’t happy
Product category: Electronics
Type of claim: Property damage caused by product defect
In this scenario, a customer receives a portable speaker they purchased from your listing on Amazon.com. Excited to test it out, they decide to bring it to their neighbor's house for a summer barbeque. The speaker is playing their favorite music when, suddenly, it overheats, catches fire, and leaves a scorch mark on their neighbor's wooden deck.
As a result, the customer claims you are responsible for the damage and demands that you pay the bills associated with repairing their neighbor's deck. Product liability insurance could help cover these costs.
Example 3: Allergic reaction
Product category: Health and beauty supplies
Type of claim: Bodily injury caused by mislabeling
Consider a situation where a customer purchases an exfoliating scrub from your listing on Amazon's marketplace. The morning after receiving it, the customer applies a thin layer to their face. However, shortly after, they notice their face turning red and experiencing a burning sensation. Even after frantically washing their face, the symptoms persist.
Worried, the customer rushes to the emergency room for treatment and soon learns that the exfoliating scrub contains tree nuts — something they are highly allergic to. Since there was no labeling or notation on the product listing indicating that the scrub contained nuts, the customer expects you to cover the cost of their medical expenses.
Example 4: Some assembly required
Product category: Home furnishing
Type of claim: Bodily injury caused by inadequate instructions
In this example, you are an entrepreneur who sells DIY furniture kits that contain what you would consider to be comprehensive assembly instructions. Unfortunately, soon after a customer completes the assembly of a high-top wooden chair purchased from your storefront, the chair collapses, resulting in the customer breaking their hip.
The customers claim your instructions were inadequate and that you are responsible for the medical expenses associated with their injury and any legal fees for obtaining the settlement. Product liability insurance could help cover these costs.
Protecting yourself and your e-commerce business
As an Amazon seller, it is crucial to understand and prepare for potential liability claims tied to a product you sold online. With product liability insurance coverage, you can mitigate financial risks, safeguard your reputation, and focus on growing your business.
At Marsh, our experienced team is ready to assist you in navigating the complexities of product liability insurance. We understand Amazon sellers' unique challenges and can provide tailored solutions to meet your specific requirements.
To help e-commerce sellers protect their businesses, Amazon and Marsh have collaborated to support Amazon's digital insurance network, the Amazon Insurance Accelerator. By completing a simple digital application, you can receive a product liability insurance quote from up to three carriers in five minutes or less.
To buy coverage through the Amazon Insurance Accelerator, visit the Business Insurance page within Seller Central and click on the Marsh tile to start your application – it's quick and easy.
If you have questions or need help during the process, don't hesitate to contact our support team at amazonsellers@marsh.com.
Don't leave your long-term success as an e-commerce entrepreneur to chance. With product liability insurance, you can protect yourself and your growing business.
*Hypothetical scenarios provided for illustrative purposes only. The product liability policy contains exclusions, limitations, and other provisions not referenced and should be consulted for full coverage terms, conditions and requirements.
