Insurance 101 for Amazon Sellers

Insurance 101 for Amazon Sellers

Whether you’ve created the most innovative new product, found a perfect reselling opportunity, or decided to start selling your work on a larger scale, we can all agree that Amazon is one of the most effective ways to reach a large, motivated audience. The trouble with Amazon is that while it’s easy to get started, cracking the code to growth can get complicated quickly. While no one (realistically) is expected to read the entire Amazon Services Business Solutions Agreement cover to cover, there is one section that’s important to understand: Insurance. In this article, we’ll go over the insurance Amazon requires, where and how to get it, what it covers, and why it’s important.

Amazon Requirements

If you have a Professional Selling Plan, Amazon requires you to have General Liability Insurance. The requirement states,

“Sellers with professional selling plans on Amazon.com must provide proof of Commercial General Liability insurance. This insurance, obtained at the seller’s expense, shall cover up to $1,000,000 per occurrence and in the aggregate and must include products liability, bodily injury, or personal injury, property damage, and other requirements as stated in the Participation Agreement. The insurance must indicate that “Amazon.com, Inc., and its affiliates and assignees” are added as additional insureds.”

The required Additional Insured wording must be as follows:

“Amazon.com., Inc., its affiliates and assignees are additional insureds, as their interests may appear”

The document also specifies that your Certificate of Insurance must…

  • Be an original document.
  • Contain an Additional Insured Endorsement.
  • List all seller subsidiaries or DBAs covered by the certificate provided.
  • Provide at least 30 days’ notice of cancellation, modification, or non-renewal.
  • Show complete insurance carrier names as listed in the A.M. Best Property & Casualty Guide.
  • Be completed in its entirety and signed.
  • Note: Binders are not acceptable.
  • You must have Commercial General Liability (CGL), Umbrella and/or Excess Liability Insurance coverage with limits of not less than:
    • $1,000,000 per occurrence, $1,000,000 in the aggregate for products and completed operations, and $1,000,000 in the general aggregate. Such insurance must include products liability, products/completed operations, bodily injury, personal injury, broad form property damage, and broad form contractual coverage.
  • You may also satisfy the insurance limits by using any combination of Commercial General Liability and Umbrella and/or Excess Liability insurance.

Let’s break it down:

$1M worth of General Liability Insurance
This means your insurance would cover up to $1M in damages. Typically, this coverage starts around $21/Month.

You have to be the one to buy it

Products liability, bodily injury or personal injury, and property damage
These are typically included in general liability coverage. To ensure that they are included, list them to the agent or broker you’re speaking with.

Additional Insured Endorsement
Adding Amazon as an Additional Insured means that they are protected by your policy as well, when applicable. Again, you can tell your agent or broker that you need this included on your Certificate of Insurance. Make sure that the wording on your certificate matches the requirement exactly, or Amazon may request a new one, suspending your account until you’ve presented it.

Original Proof of Insurance Document
Proof of insurance is typically displayed on an Accord form or Certificate of Insurance. It will likely be sent to you via email after you’ve purchased your policy. If you purchase the Amazon Sellers’ Policy, you’ll be sent the link to your Live Certificate of Insurance, which you can update from your account when you need to, download as a PDF, or share with Amazon’s provided email address. The Live COI can be updated and shared with other retailers requiring proof of insurance as well. Proof of Insurance should be sent to the following address:

Amazon.com Attn: Risk Management P.O. Box 81226 Seattle, WA 98108-1226

Or by email: coi@amazon.com

To make sure you have the correct coverage, read the requirement to your agent or broker in its entirety, or purchase a pre-made Amazon Sellers’ policy with the specific requirements built in.

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Supplemental Coverage

If you make less than $10K in sales per month or do not have a professional selling plan, you may not be required to cover your business. However, if you’re making more than a few bucks here and there, you should consider covering yourself anyway. Typically, you can cover up to $2M in damages, potential lawsuits, or lost revenue for around $25/month – which is well worth the investment. Here are the most helpful coverages for Amazon Sellers:

General Liability

A standard General Liability policy protects against any physical damages to a person or their property. For example, if a customer was injured using your product, General Liability would cover any legal action or medical bills.

Professional Liability

Professional Liability, also known as errors and omissions, protects you against any mistakes or errors in judgment that cause harm to your customers. For example, if you failed to list a certain chemical on the label and someone had an allergic reaction, they could sue you for negligence.

Amazon Suspension Insurance

This coverage kicks in if Amazon suspends your account, causing lost revenue. It can help cover your costs while your sales are halted, as well as provide legal assistance if it’s necessary to re-activate your account. It’s newer on the market, and only offered by a few select carriers.

Riders

A rider is an add-on to your insurance policy, which provides extra protection for specific risks. Ask your broker about adding riders for:

  • The inventory in your home/warehouse
  • Protecting your inventory while you are transporting it
  • Hired and non-owned auto coverage

Where Do I Get It

The Amazon Seller Policy

The best way to know you have the exact coverage Amazon requires is to select a pre-built policy. That way you know you’ll have the right coverage, limits, endorsements, and additional specifications on the first try.

If you already have a broker or agent or want to purchase the coverage elsewhere, make sure you’re specific about your business and your requirements.

Here’s an example of what to say to an agent:

“I am selling finished goods online at Amazon.com. I need a General Liability policy of at least 1 million in the aggregate, and 1 million per occurrence. Part of my requirement is that Amazon.com, Inc., and its affiliates and assignees are added as additional insureds. They’ve requested the following wording: Amazon.com., Inc., its affiliates and assignees are additional insureds, as their interests may appear

To get a quote as quickly as possible, be prepared to answer the following questions:

  • Do you carry dietary supplements?
  • Do you private label or manufacture your own goods?
  • Do you import items from out of the country?
  • Do you have a physical location?

About Mara Benowitz

Mara Benowitz is a Content Creator and Brand Specialist at Bunker. Mara recently received a Bachelor's Degree in Journalism from the University of Wisconsin-Madison.

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