“Because you shopped for similar items…”
Nearly every Amazon customer is familiar with this phrase (and those like it) that the retailer uses to suggest other products you might want or need.
Many of those Amazon customers are buying from third-party sellers. According to Amazon, since third-party sellers joined Amazon in 1999, they’ve grown to make up 58% of Amazon sales. Additionally, sellers on Amazon are growing at 52% a year (compared to 25% for first-party sales by Amazon).
Small businesses like yours are making a big impact.
If you’re selling on Amazon, something you might want or need is ecommerce business insurance. In fact, if you have an Amazon Professional Seller account, Amazon requires you to have commercial general liability insurance if you have over $10,000 in sales in one month.
It’s not required for an Individual Seller account, but it is highly recommended (read on and we’ll explain why).
It’s pretty simple. If you have an Amazon Pro seller account and you grossed more than $10,000 in sales in a month, you are required to get general liability insurance (also referred to as commercial general liability insurance).
If your sales volume is less than stated above, or if you have an individual seller account, Amazon doesn’t currently require you to have general liability insurance, but you may want to consider it anyway.
You don’t have to be a big online seller to run into big problems. Imagine you have a business selling several hand-carved Himalayan salt lamps each month. One of the lamps has a bad wire that causes a fire in a customer’s home. If that happens, you could potentially be on the hook for damages. Talk about bad karma.
General liability (GL) insurance could protect you in instances like that. Typically, GL insurance covers costs associated with third-party accidents, property damage, and bodily injury. It can also do even more.
Here are a few ways GL insurance can benefit both Professional Sellers and/or individual online sellers.
The salt lamp scenario is a good example of a risk that might be involved with selling certain types of products. It’s a good idea to spend some time looking at what the most common types of liability and risks you may face in running your online business.
Here are a few examples of common risks online business owners may face:
Damage or injury from products: Along with the example above regarding the property damage from the defective wiring in the salt lamp, consider what could happen to people using your products. For another example, a customer might have an allergic reaction to a beauty product they bought from you.
Property damage: Even though you run an online store, you still may interact with vendors on a day-to-day basis. If you ever inadvertently damage someone else’s property during the course of running your business, your general liability (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.
Personal injury: Much like with property damage, accidents can happen in the real world that can affect your online business. For instance, let’s say a supplier falls and breaks their arm while visiting your warehouse. Your GL insurance may help cover the medical costs of your supplier’s injuries and resulting legal fees that might be involved (up to your policy limit).
There’s also “advertising injury,” which can be particularly concerning for online businesses. It includes claims of stolen ideas, invasion of privacy, libel, slander, and copyright infringement related to advertising. That’s where general liability insurance can help.
For example, based on your knowledge, you claim on your website that a competitor’s product causes hair loss. Turns out that’s not true and your competitor sues you for libel. Without insurance, you could be responsible for paying any settlement and the legal fees involved with it.
Advertising injury also can occur from seemingly good intentions. Perhaps you have a customer who sent you an email with a glowing review. You’re excited and publish her comments and her picture on your webpage. Unfortunately, you didn’t get her permission to use her image and review. She brings a claim against you for violating her privacy.
Having GL insurance can help cover your legal costs and settlement costs from the case.
It’s easier than ever to buy small business insurance these days, and that’s good news. However, with so many options, it’s also easier to wind up with a policy that doesn’t adequately cover your business or that costs too much for the protection it provides.
Like any other important business decision, we recommend investing some time to go through several options to help make sure you get what you need.
Having all your business details at the ready (such as those we cover in this article) can help things move along more quickly. It can also be helpful to have a list of a few providers you want to check out, and a price range for your policy.
No matter where you start shopping for insurance, you will typically be asked for the same basic details about your business. These include:
Each insurance company asks different questions, but you can usually plan on needing to provide the above info to get a policy quote.
As a Professional Seller, you’re likely no stranger to customers looking for the best price and value. That approach can be just as beneficial to you if you’re looking to find an affordable insurance policy that gives you the right coverage for your online business.
Remember, insurance companies want to compete for your business, so get as many quotes as you can. If you’re looking to save time gathering quotes, we can help.
Check out our fast and easy-to-use quote comparison tool! Just enter a few details about your business and we’ll provide you with quotes from insurers who can provide insurance coverage that meets Amazon’s requirements.
When you shop around, you’ll probably see insurance policy prices that vary differently. It has nothing to do with you, but everything to do with how business insurance companies work.
Much the way you target certain customers with your products, insurance companies specialize in covering certain types of businesses. This usually means that an insurer is more comfortable covering online businesses or has more experience with them.
That means their policy prices will usually be less than a provider who doesn’t usually cover that type of business.
Still, before you jump at that affordable policy, make sure it gives you sufficient coverage. You don’t want to find out the hard way that you weren’t properly covered!
Before you buy that policy, take a few minutes to verify that it’s going to protect your business. Here are some questions to ask yourself:
We can save you some time right now and show you how a commercial general liability policy for your online business would stack up.
Our ecommerce business insurance options offer up to $1 million for any one incident or claim, and up to $2 million over the length of the policy, which exceeds Amazon's current requirements.
Our general liability coverage meets Amazon’s requirements for insurance coverage for Professional Sellers who make over $10,000 per month.
We have the capability to immediately add Amazon as an Additional Insured (another Amazon requirement) as part of your quote. You won’t usually need to request a separate COI (certificate of insurance).
We also have affordable general liability coverage rates as low as $25.25/month* for ecommerce and online retailers.
Our GL insurance product also typically protects against advertising injury claims.
We offer the convenience of fee-free monthly installment plans and $0 deductible plans, where applicable.
Most insurance agencies have some form of in-person support who can help you if you have any questions about your policy quote or purchase. Feel free to pick up the phone and call them!
Here at Simply Business, our Customer Solutions Center has licensed insurance agents who know anything and everything about online insurance policies. If you want to get quotes through us and have any questions, we’re here to help!
Running your business online is a great way to generate income, keep some balance in your life, and share products and creations you’re passionate about with millions of people around the world.
Still, the virtual world is not free from the risks and hazards of the real world. We can help protect you and your business in both the online and brick-and-mortar worlds. And we can make it as quick and easy for you to buy online as you do for your customers.
In fact, we love getting online business owners the insurance they need. Probably just as much as business owners like you love sharing the joys of Himalayan salt lamps and other cool products with the rest of us.
*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 July-September 2023 data of 10% of our total policies sold.
As a 9-year-old at summer camp, I hated it — especially after being pulled screaming from the pool during the swimming competition. While this left me without an aquatic achievement patch, it also inspired the letter to my parents that got me an early release from Camp Willard. That showed me the power of writing. I’ve done my best to use it only for good ever since, such as writing helpful articles for small business owners.
Ed writes on a number of topics such as liability insurance, small business funding, and employee management.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
*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.