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Amazon Seller’s Insurance Requirements

Amazon's seller insurance guide
Table of Contents
Are you a seller on Amazon and want to reduce your financial risk to a minimum? Should you get Amazon seller insurance or not? Then you are in the right place! Accidents and mistakes happen again and again and cause consequences of unforeseeable proportions. In the worst case, your business can be destroyed in just one day. Therefore, it is recommended that every Amazon seller gets insurance. However, the process of getting insurance is complex for some people. For this reason, we have put together this article to answer your most important questions about Amazon seller insurance requirements!

Why Should Amazon Sellers Have Insurance?

But why is insurance so important for you as an Amazon seller?  Like any other business, selling on Amazon comes with unpredictable risks that can lead to huge financial losses. There are several regulations that Amazon Sellers have to observe. In many cases, non-compliance can lead to problems. Imagine these situations:

  • You import blenders from China and sell them on Amazon. A technical defect in a product leads to a fire that damages the buyer’s kitchen. The latter will now contact you and demand compensation.
  • You create a new Amazon listing. You are using a product image protected by copyright because you were unaware of it. Now you are confronted with the claims of the creator.
  • A customer trips over a box in your inventory and breaks his leg. The subsequent treatment incurs high costs, for which compensation is now being demanded.

Of course, you can never foresee all risks and be prepared for every eventuality. But you can at least minimize your risks and protect yourself from the worst consequences by purchasing insurance that covers the cost of damage.

On the other hand, being self-employed instead of having an LLC is one of the biggest reasons you should get insurance to sell on Amazon.

As a legal entity, you must consider that you are fully responsible for any company debt or problem. 

Man is registering Amazon's seller insurance.

In the worst-case scenario, as a self-employed Amazon seller, you will have to cover all expenses out of your pocket and your assets. Therefore, getting insurance can be very helpful should anything serious happen. It is better to pay a few dollars a month than to continually be afraid that your clients may present a problem due to using your products.

What Type of Business Insurance Do Amazon Sellers Need?

There are several types of Amazon seller insurance you can get. The ones mentioned below will cover the most common risks of selling on the Amazon marketplace: 

Insurance Appropiate forcoverscost
Business Owner’s PolicyBuying general liability and commercial property insurance bodily injury/property damage lawsuits/ inventory damage or loss/ business interruption affordable
Worker’s Compensation Insurance Sellers who have employees and proprietors employee medical expenses/partially missed wages/ employer liability insurancemedium
Commercial Auto Insurancebusiness-owned vehiclesphysical damage and collision/injuries caused to other people/required repairs due to vandalism or extreme weather conditionsmedium/high
General Liability InsuranceAll Amazon sellerspersonal injuries/ advertising injuries/product liability insurancemedium/high
Cyber Liability InsuranceAll Amazon sellers who handle credit card numbers or other sensitive informationdata breaches and cyberattacks/customer notification expenses/fraud monitoring services/cyber extortion demandsmedium/high
Commercial Umbrella Insurance All Amazon sellerscustomer injury/ property damage/ employee injury lawsuitsmedium/high

1) Business Owner’s Policy 

Also known as BOP, a business owner’s policy helps Amazon sellers to buy general liability insurance and commercial property insurance together – in a cost-effective way. This is best for bodily injury and property damage lawsuits, inventory damage/loss, and business interruption coverage. 

2) Worker’s Compensation Insurance 

This type of insurance is required by most states from sellers who have employees. It can also protect sole proprietors from work injury costs. It is best for employee medical expenses, partially missed wages, and employer liability insurance. 

3) Commercial Auto Insurance 

This type of insurance is required for business-owned vehicles. It covers accidents involving, for example, an Amazon seller’s delivery van or any other vehicle related to the business. It is best for physical damage and collision coverage, injuries caused to other people and required repairs due to vandalism or extreme weather conditions. 

4) General Liability Insurance 

This insurance covers common lawsuits like slip-and-fall accidents and usually includes product liability insurance if any harm is caused by your products. It is best for personal injuries, advertising injuries, and product liability insurance. 

5) Cyber Liability Insurance 

This Amazon seller insurance can help you as an Amazon seller to survive data breaches and cyberattacks. Any shop that handles credit card numbers or other sensitive information must get this insurance. It is best for customer notification expenses, fraud monitoring services, and cyber extortion demands. 

6) Commercial Umbrella Insurance 

Once a claim reaches the limit, this insurance boosts coverage on a seller’s general liability, employer’s liability, and commercial auto insurance. It is best for customer injury, property damage, and employee injury lawsuits. 

How Much Do You Need to Pay for Amazon’s Seller Insurance?

The cost of Amazon seller insurance depends on various factors that affect the price. For example:

  • The type of insurance
  • The scope of the cover and the sums insured
  • The nature of your business (size, industry, location)
  • The products you offer
  • Previous claims

Because there are so many variables, it’s impossible to give a fixed price here is impossible. It is best to get Amazon seller insurance quotes from an insurer.


Read More: How Much Money Can You Make from Online Arbitrage?


What Are the Requirements of Amazon Seller Insurance?

According to Amazon, your insurance must meet the following criteria: 

  • Insurance policy type: Can be commercial general, umbrella, or excess liability and be occurrence-based, except for specific product categories. 
  • The policy limit: Must be at least $1 million per occurrence and in aggregate. It must cover liabilities caused by or occurring due to your business operations (including products, completed operations, and bodily injury). 
  • The deductible: Must not be greater than $10,000. Any amount must be listed on the certificate(s) of insurance. 
  • Coverage: Must cover all sales from your listings on the Amazon website. 
  • Additional insureds: The policy must name “Amazon.com Services LLC and its affiliates and assignees” as additional insureds with the address “P.O. Box 81226, Seattle, WA 98108-1226”. 
  • Ensured name: Must match the “legal entity” you provided to Amazon (you can find it on your Account Info page). 
  • Insurance provider: Must have global claim handling capability and a financial rating of S&P A- and/or AM Best A- or a local equivalent if S&P and AM best are not valid in your country. 

Your insurance provider must also provide Amazon with at least 30 days’ notice of cancellation, modification, or nonrenewal. 

  • The policy must be completed in its entirety and signed. 

How Can I Get Amazon Seller Insurance?

Woman is getting Amazon's seller insurance.

Getting Amazon seller insurance is relatively easy. You must contact reliable insurance companies like Wells Fargo, Progressive, Geico, etc., to receive quotes. Since product liability insurance is the most common required policy type, your quote will be based on your estimated annual revenue and cost around $500 – $1000 per year. 

You can contact Well Insurance, Next Insurance, and Bunker Insurance to get your insurance from companies that specialize in working with Amazon sellers. These companies are more familiar with the scene and can determine the coverage that best suits your needs. 

If you want to view quotes from multiple insurance companies, you can check out the Insureon website. Whatever you choose, make sure to tell the insurance agent that you are an Amazon seller. This way, the agent can help you meet Amazon’s exact requirements. 

After all, this is done, remember to upload your Certificate of Insurance to Seller Central. You can get this document from your insurance provider. 

Final Thoughts

Investing in Amazon seller insurance may seem unnecessary at first, but it can save you a lot of trouble if something does happen. Depending on the insurance policy, it reduces your financial risk, which can arise, for example, from legal disputes, theft, or injuries to the body and property. Why take a risk if you don’t have to?

However, there is no “best” seller insurance. It depends on your individual needs and the appropriate choice of insurance coverage. Get insurance that gives you the protection you need without the unnecessary extras that only add to the cost. An experienced provider will help you find the right insurance for your needs.

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