Amazon Product Liability Insurance: What Sellers Need to Know
Most sellers don’t realize that Amazon requires them to have product liability insurance. The retail giant is not accountable for seller’s mishaps. It’s up to sellers to protect themselves from injuries, accidents or litigation. Luckily, eCommerce insurance is not as complex as it may seem.
This is where Amazon’s Product Liability Insurance requirements can help. The marketplace offers great insights to get proper coverage to protect your assets.
In this post, we’ll dig into Amazon’s insurance requirements. You’ll learn its pros and cons, and how you can meet the product liability requirements.
Why Do You Need Product Liability Insurance?
Product liability insurance protects your brand from claims that an item caused damage or injury to the customer.
Let’s say a product you sold caused a physical injury to the buyer. In such a case, product liability insurance will take care of the medical bill to treat the customer.
This type of insurance can also cover any legal fees from lawsuits. In other words, you’d be protecting your brand from costly settlements.
Note: Limited Liability Companies (LLC) can be an extra safeguard against potential lawsuits. It’s not an Amazon requisite, but an LLC can be a second layer of protection to your brand’s assets.
Related content: Should You Sell As A Sole Proprietor Or LLC On Amazon?
New Amazon Product Liability Insurance Requirements
Amazon has faced some item-related lawsuits recently. This encouraged the retail giant to enforce its long-held insurance requisites for sellers.
The move also prompted new changes to Amazon’s insurance policies to protect both sellers and customers.
A to Z Guarantee Expansion
A-to-Z Guarantee claims protect customers from all order issues made to third-party brands. Amazon reviews each complaint and determines if it’s eligible for a refund.
This new expansion further protects sellers against fraudulent claims. Here’s how it works:
When a user files a claim, Amazon will analyze the request to prove its validity.
Amazon mediates all valid claims resolutions between sellers, customers, and the insurance provider.
The new expansion saves brands from having to check A-to-Z claims on their own. Instead, Amazon takes care of the process.
Watch this video to learn more about A to Z claims:
Amazon Pays Up
In case of valid claims, Amazon will cover any compensation under $1000. Plus, the marketplace won’t seek compensation from sellers with valid insurance.
More than 80% of claims are under $1,000. By covering the expense, Amazon protects both sellers and customers who follow its policies.
Note: Sellers are responsible for claims above &1,000. This is because such claims are often lawsuits.
Insurance Requisites for Sellers
For the moment, only Amazon sellers who earn over $10,000 per month require liability insurance. Note that your insurance must meet the following criteria:
Policy Limits
At least $1 million per occurrence, in general aggregate, and in aggregate for products and completed operations.
The policy should cover all liabilities related to your business operation:
Products liabilityBodily injuryPersonal injuryProperty damage
Policy Type
Go for Commercial general liability (GGL), umbrella, or excess liability. Note that your policy must be written based on occurrence.
Policy Deductible and Coverage
The policy should cover all products listed in the marketplace. As for the deductible, this must be under $10,000. Amazon does not accept higher amounts. Plus, the deductible should be listed on your certificates of insurance.
Insurance Provider
Make sure you hire a provider with Global claim handling capabilities. Besides, its financial rating must be S&P A-, AM Best A-, or higher.
Insureds
Sellers can include additional insureds in your policy. Only ensure that they match the legal entity name provided to Amazon.
Note that you need to add Amazon as an additional insured. This further protects the marketplace by your own policy.
Cancellation Notice
Amazon requires sellers to notify them of any modification or non-renewal to their policy. This must be done with at least 30 days’ notice.
Validity
The policy must be signed and completed within at least 60 days from the submission date to Amazon.
Certificate of Insurance
You’ll get this document from your insurance provider. The certificate of insurance includes the persons and property covered, the coverage amount, deductions and exclusions.
Amazon gives you 30 days to upload the certificate of insurance to Seller Central.
You can find Amazon’s Insurance Policy Criteria in Seller Central. Go to the “Program Policy” help page and click on “Pro Merchant Insurance Requirements.”
How to Get Product Liability Insurance
Sellers can select any insurance provider they want. Granted, their final choice must comply with Amazon’s policies.
The process is quite simple. Contact insurance providers like Geico and Wells Fargo. State that you are an Amazon seller and they’ll send you a quote.
You can also choose a company that specializes in eCommerce policies. The process may be a bit easier since they already know the coverage you need.
Well Insurance, Bunker Insurance and Next insurance are three great options.
But what if you are having trouble selecting an insurance provider? Well, you can get help from the Amazon Insurance Accelerator.
Amazon Insurance Accelerator
Source: Marsh
The retail giant partnered with Marsh to create Amazon Insurance Accelerator. It’s a network of approved firms that offer competitive liability insurance to sellers.
You can access the Insurance Accelerator in Seller Central.
Note that it’s not required to use an insurance provider within the program. However, make sure that your chosen firm meets Amazon’s policy requirements.
Note: Foreign-based sellers need a global protection policy. They must also purchase insurance within their country of origin.
Final Thoughts
Note that most sellers must comply with the Amazon Product Liability Insurance requirements by September 1, 2021.
Also, it’s not clear whether sellers who earn under $10,000 per month require insurance. However, it’s better to be safe than sorry.
The odds of having an Amazon customer sue you are low. But it’s always better to be prepared. So, stick to the Amazon Product Liability Insurance requirements as much as possible.
As you see, it’s not that complicated to insure your Amazon business. Plus, it’ll give you much needed peace of mind, so you can focus on improving your service.
It’s always better to have your insurance set up than having no protection at all.
Author
Esteban Muñoz is an SEO copywriter at AMZ Advisers, with several years’ experience in digital marketing and e-commerce. Esteban and the AMZ Advisers team have been able to achieve incredible growth on the Amazon platform for their clients by optimizing and managing their accounts and creating in-depth content marketing strategies.
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