As a proud seller on Amazon store’s, it’s likely safe to say you’ve done your homework to make sure you’re up to speed with all of Amazon’s requirements for having business insurance.
Whether you’re just learning about these requirements now or you’re ready to get an insurance policy, this article will walk you through everything you need to know about getting insured, including:
Best of all, we’ll give you the info you need in a way that’s easy to understand. Because we know you have better things to do than deal with confusing insurance lingo.
Let’s get to it!
If you’re a Professional Seller on Amazon who makes more than $10,000 in sales per month, Amazon is now requiring you to carry general liability insurance (also referred to as commercial general liability insurance).
Let’s break down what exactly it is and why Amazon is requiring some online store owners to have it.
A general liability insurance policy typically covers incidents such as:
If you perked up when you read “product liability,” you’ve hit the main reason as to why Amazon wants Pro sellers to carry commercial general liability insurance.
Here’s some context: In the past, Amazon’s Terms of Service stated that online store owners had to have general liability insurance if they had over $10,000 in sales over three consecutive months.
That all changed on Sept 10th, as Amazon will now require store owners to submit proof of insurance coverage after hitting $10,000 in sales in one month. In line with its previous requirement, sellers need to list Amazon as an Additional Insured on a Certificate of Insurance (we’ll cover what this means in a bit).
This requirement means Amazon will not be held liable for faulty products sold by an online retailer — rather, that product liability will fall directly on the online retailer.
So what is product liability? Simple: product liability means holding the product manufacturer or seller responsible for any faulty product that’s sold to a customer.
For example, let’s say you make running clothes that have funny expressions and original designs on them. One of your shirts was made with a dye that made a customer break out in a rash; however, you didn’t list that warning or the dyes used on the shirt’s tag.
As a result, your customer may sue you, which is when the product liability component of your general liability insurance policy could come into play. Your policy may cover the costs of the claim, as well as attorney’s fees if you have to defend yourself in court (up to your policy limits).
We’ll cover the additional benefits of general liability insurance later in this article, but let’s discuss what these insurance requirements look like in detail.
First, let’s go over the fine print. Here are Amazon’s insurance requirements for online store owners who:
“If the gross proceeds from Your Transactions exceed the applicable Insurance Threshold during each month over any period of three (3) consecutive months, or otherwise if requested by us, then within thirty (30) days thereafter, you will maintain at your expense throughout the remainder of the Term for each applicable Elected Country commercial general, umbrella or excess liability insurance with the Insurance Limits per occurrence and in aggregate covering liabilities caused by or occurring in conjunction with the operation of your business, including products, products/completed operations and bodily injury, with policy(ies) naming Amazon and its assignees as additional insureds.
At our request, you will provide to us certificates of insurance for the coverage to the following address: c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management.”
Let’s break down what that means, so you can feel confident about meeting those requirements.
Professional sellers with $10,000 or more in monthly sales will be required to get a general liability insurance policy with/$1 million per occurrence/$1 million aggregate limits.
This essentially means that your general liability policy will cover an incident that costs up to $1 million (say, for example, you’re sued for $100,000), but your policy will cover only $1 million worth of incidents in a single policy year.
This brings us back to the earlier section in our article, where we discussed the importance of product liability coverage.
Amazon wants to ensure that your general liability insurance policy includes coverage for product liability, so it’s worth double-checking with your insurer to verify that your policy carries this important protection.
Here’s how Amazon will verify that you have general liability insurance coverage — you’ll need to add them as an “Additional Insured” on your Certificate of Insurance (COI).
The Additional Insured text on your COI should read as follows:
“Amazon.com., Inc., its affiliates and assignees are additional insureds, as their interests may appear.”
Your COI should be uploaded to your Amazon Seller portal or be mailed to:
c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management
No short-term insurance policies here: Amazon retailers must hold a valid policy from 180 days of COI submission. And as Amazon is listed as an Additional Insured on your COI, that means they get notification if your insurance policy is canceled for any reason.
This one’s pretty simple, as most insurers ask you for both your name and your business’s name. Your business’s name must match the legal entity you provided to Amazon when you first signed up for their Professional Selling Plan.
If you decide to change your policy for any reason — for instance, you want to increase your coverage or you’re cancelling because you’re planning on closing your online store — you’ll need to notify Amazon at least 30 days before your intended change.
Feeling a little overwhelmed with these requirements?
Don’t worry — we got you.
Here at Simply Business, we make it easy to get general liability insurance that meets Amazon’s requirements, and more.
For example, many of our GL policies for ecommerce/online retailers are offered with a $1 million per occurrence/$2 million aggregate, meaning you’ll get even more great coverage if you choose that policy limit option.
And with many of our policies offered with a $0 deductible and fee-free monthly payment installment plans, it’s never been more affordable to get commercial general liability insurance.
Don’t forget, we can automatically add Amazon as your Additional Insured, meaning you don’t have to jump through extra hoops to list them on your COI.
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We’ve covered some of what general liability insurance can cover, especially with how it relates to Amazon’s requirements.
But did you know there are many other great benefits to having a general liability insurance policy for your online store?
Let’s break down what else general liability insurance can typically cover, especially for online retailers and ecommerce business owners:
Advertising injury: Running an online store means doing a lot to differentiate yourself from your competitors. But what happens if you inadvertently say something derogatory or false about a competitor or their product — and they sue you for it?
That’s where your general liability policy could come in handy. If this scenario ever happens to you, your GL policy could likely cover the financial costs of a resulting claim, plus your attorney’s fees (up to your policy limit).
Property damage: Even though you run an online store, you may still interact with vendors on a day-to-day basis. If you ever accidentally damage someone else’s property during the course of running your business, your GL policy could cover the cost to repair that property, plus resulting legal fees.
Third-party accidents: If you run your online store out of a home office, your homeowners insurance won’t cover any accidents that occur in your home as a result of running your business.
For example, let’s say you have your website designer come to visit you in your home office to discuss a site revamp. During the course of the visit, the designer trips over a loose rug in your office. They end up breaking their wrist and going to the emergency room, leaving them with a hefty medical bill and you with an impending lawsuit.
With general liability insurance, your policy could likely cover your designer’s medical bills, plus fees associated with a related lawsuit (up to your policy limit).
As you can see, it’s not only a good idea to have GL insurance to meet requirements set out by Amazon— it also can help reduce a lot of financial risk you may face as an online retailer.
Business insurance doesn’t have to be complicated — especially when you get your coverage through Simply Business.
If you’re ready to get covered, it’s simple: Just answer a few simple questions using our free quote tool, and you could see policy options from insurers who specialize in covering online retailers.
Best of all, you can compare different policy options, so you can get the one that works best for your business and your budget.
And if you have any questions along the way, we can help there, too. Just call (855) 708-2131 to speak to one of our licensed insurance agents. We’ll be happy to help you find the right business insurance policy for your online store.
We hope this article helped break down general liability insurance requirements for sellers on Amazon, as well as answered any questions you might have about the process of buying business insurance!
* Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on August 2021 data of 43% of our total policies sold.
I love writing about the small business experience because I happen to be a small business owner - I've had a freelance copywriting business for over 10 years. In addition to that, I also head up the content strategy here at Simply Business. Reach out if you have a great idea for an article or just want to say hi!
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*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.