If you sell products on Amazon, you’ll be required to obtain seller insurance once you exceed $10,000 in gross sales proceeds in one month or if you’re a Pro Merchant. Eligible policy types include commercial general, excess, or umbrella liability insurance, designed to protect you from accidents that may occur as a result of the products being sold and used by your customers.
However, even if Amazon doesn’t require you to carry insurance, it’s still a good idea to get coverage. While rare, it only takes one incident to result in a significant amount of financial damages that your company might have to cover due to things like medical bills and expenses associated with litigation. Carrying the right type and amount of seller insurance doesn’t have to break the bank, and can potentially save your business one day.
Amazon seller insurance requirements
When do you need Amazon seller insurance?
Amazon seller insurance is needed when:
- You’ve exceeded $10,000 in gross sales proceeds in one month on Amazon.com; or
- You’re a Pro Merchant.
If this threshold has been met, you have 30 days to get commercial liability insurance that meets Amazon’s requirements. That said, Amazon also has the discretion to require you to obtain seller insurance even if you haven’t exceeded that $10,000 threshold — though it would be a one-off request that’s not really common.
How Amazon seller insurance can protect your business
Amazon seller insurance is primarily designed to protect you and your company’s assets in the event that customers sue you for damages that come from using your products. This includes things like medical bills from bodily injury, property damage, and legal costs.
For example, a customer purchases your product, but it ends up malfunctioning. The customer could initiate legal proceedings to force you to pay to replace or repair any damaged property. They could even pursue reimbursement for medical bills if it happened to injure them. Even if you’re not at fault, you might still be on the hook for covering costs associated with your legal defense.
What type of insurance is sufficient?
Amazon allows you to get different types of insurance. You can choose either a commercial general policy, an excess insurance policy, or an umbrella liability insurance policy. The policy you select must not exclude any items you list for sale on Amazon, and must list “Amazon.com Services LLC and its affiliates and assignees” as additional insureds.
Additional notable criteria that your policy must meet also include the following:
Insurance policy criteria | Amazon seller insurance minimum requirement* |
|---|---|
Policy limit | $1 million per occurrence & aggregate |
Deductible | $10,000 or less |
Financial rating of provider | S&P A-, or AM Best A- |
Timeframe | Must be obtained within 30 days after exceeding $10,000 in gross monthly sales, or when requested by Amazon |
Other misc. items |
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*You can view a more detailed and up-to-date list on Amazon’s website. | |
Types of insurance policies to consider for Amazon Sellers
While Amazon might mandate certain minimum types and amounts for coverages, you should evaluate your own business model and risk appetite, as you may want to carry additional insurance over and above what it requires. Here are some types that you should consider:
- General liability: In the context of selling items on Amazon, this can help cover common types of accidents, such as if a third-party vendor gets injured on your property while delivering materials or goods. It also covers damage if you have a physical store and a customer gets injured there, or if you accidentally cause damage to property owned by a vendor or customer. General liability also covers damages if another company sues you for libel, slander, or intellectual property infringement.
- Excess liability: This covers claims that are over and above your existing policy’s limits. It cannot be used on its own, but rather, extends the amount of coverage you currently have.
- Umbrella: Although similar to excess liability, the main difference here is that an umbrella policy can extend coverage for multiple underlying policies at the same time. So, for example, it can extend coverage on existing policies for auto, property, workers’ compensation, and general liability, all at the same time.
- Workers’ compensation: If you have employees, you’ll likely be required to carry this coverage due to state regulations. It is designed to protect businesses in the event an employee gets sick or injured on the job and can cover things like medical expenses, lost wages, rehabilitation costs, and more.
- Commercial property: This provides protection against damage to property owned by your business. Common examples include fire, theft, or weather-related damage.
- Commercial auto: If you drive for business purposes, this can provide protection against any bodily or property damage.
- Business owner’s policy (BOP): This bundles general liability and property insurance into a single policy. In many cases, you’ll get a discount for combining policies in this manner, and it can also help simplify your finances.
- Cyber liability: This provides protection against incidents like loss or theft of data in the event you are hacked.
How to choose Amazon seller insurance
Choosing the right types of insurance and coverage amounts is not something to overlook. Choose too little, and you won’t have sufficient protection — something that could leave your financial assets open to liability in the event of an accident. Choose too much, and you could end up overpaying for unnecessary coverage, leading to wasted funds that could be used in other areas of your business.
What to consider | Why it matters |
|---|---|
The type of work you’re involved with | Different industries and products carry varying types of risk. So for instance, if you sell products that aren’t likely to injure people or cause damage, you might be able to select a policy with lower coverage limits. Even if you don’t think this applies to you, many of the best Amazon products to sell actually do carry some risk to consumers in one way, shape, or form — so you likely already carry some risk if you’re currently an Amazon reseller. |
Where and how you work | Consider what circumstances you’re likely to encounter. For example, if your business handles a lot of information online, there could be an increased likelihood of your data being stolen. In that case, cyber liability coverage could be good to have. Similarly, if you commute to and from work, you may need to get a commercial auto policy. |
What you can afford | If you’re strapped for cash, be wary of choosing policies you can’t afford. For example, selecting a high deductible might save you money on your annual premiums, but it might not be the best option if you’re unable to cough up the funds in the event you need to file a claim. |
How often you need coverage | If you operate seasonally, you might do best with a policy that allows you to easily pause or adjust coverage time periods. |
How much does Amazon seller insurance cost?
The amount you pay for Amazon seller insurance will depend on the details of your business, how much coverage you select, as well as the specific insurance company you’ve chosen. Your total cost could be anywhere from a few hundred dollars per year to several thousand.
Here are some ballpark averages for different types of coverage:
Typical coverage limits | Estimated annual cost | |
|---|---|---|
General liability | $1M per occurrence / $2M total | $750 to $1,500+ |
Excess liability | $1M additional coverage | $500+ |
Umbrella | $1M additional coverage | $500+ |
Workers’ compensation | $250,000 per accident / $500,000 per policy | $1,000 to $2,000+ |
Commercial property | Varies | $1,000 to $3,000+ |
Commercial auto | Varies | $1,500 to $2,500+ |
BOP | $1M per occurrence / $2M total | $1,500+ |
Cyber liability | $1M per occurrence / $1M total | $800 to $1,500+ |
Factors that affect the cost
The cost of Amazon seller insurance will be different for every business. Insurance pricing is based on the perceived risk and likelihood of claims being filed, as well as the likely monetary amounts that would need to be paid out. There can be unique risk factors to each business, and individual insurance providers may also have their own varying levels of appetite for risk.
Here are some of the items that can affect your insurance cost:
- Business details: This includes your line of work, your business revenue, types of products you sell, where you operate, and the value of your business property.
- Claims history: Businesses with a record of regularly filing claims are viewed as more risky and generally end up paying higher insurance premiums.
- Coverage limits: Higher limits mean you are protected for more costly accidents. However, it will come in the form of higher premiums, as insurance companies could potentially be on the hook for higher payouts.
- Deductibles: Higher deductibles can save you money on your insurance premium because it’s essentially more money you have to fork over first before the insurance company needs to issue any payouts.
- Policy type: Policies covering different types of incidents carry varying risks and costs depending on the likelihood of those incidents occurring.
Where to get Amazon seller insurance
You’ll have plenty of options when it comes to getting the right type of Amazon seller insurance. For simplicity’s sake, you can opt for Amazon’s Insurance Accelerator (sign-in required for your Amazon account). It’s a network of insurance providers that will offer the coverage to satisfy Amazon’s requirements. The tradeoff here is that your options may be limited, you may not have as much flexibility in customizing your policy, and it may not be available in all areas.
If you’re looking for some potentially better options, I recommend considering the following three companies:
- Simply Business: Best for multiple options
- ERGO – Next Insurance: Best affordable pricing for small businesses
- Thimble: Best for seasonal businesses
Simply Business: Best for multiple options
Pros
- Quickly compare quotes
- Purchase same-day coverage
- Fast online application process
Cons
- Not a direct insurer
- Limited online customization
- Coverage options vary by provider
Standout features |
|
Financial rating | AM Best rated Travelers, which owns Simply Business, an A++ (Superior) |
Why I like it | Simply Business is an online broker that can allow you to get quotes from multiple companies with just a single application. This can save you time and money from having to apply to separate companies on your own. And, you can customize policies and get instant access to policy documents after purchasing. |
ERGO – Next Insurance: Best affordable pricing for small businesses
Pros
- Purchase insurance online in less than 10 minutes
- Discounts when you bundle policies
- Licensed agents to advise you
Cons
- No 24/7 claims call center
- Coverage options are not as extensive as a larger carrier
- Not ideal for high-risk industries
Standout features |
|
Financial rating | ERGO - Next Insurance's AM Best rating is A- (Excellent) |
Why I like it | ERGO - Next Insurance is a company that focuses on providing coverage to smaller companies, particularly those with fewer than 5 employees, as well as those with annual revenue that does not exceed $5 million. Policies are often provided in 3 tiers, each with varying levels and amounts of coverage, allowing you to choose the one best suited for your needs and affordability. |
Thimble: Best for seasonal businesses
Pros
- Short-term coverage available
- Customizable liability limits
- Quickly adjust limits for venue requirement
Cons
- Not ideal for full-time businesses
- No 24/7 call center for claims
- Can be difficult to reach a person during regular business hours
Standout features |
|
Financial rating | Most policies are written through Markel or National Specialty Insurance Company (NSIC); Markel's AM Best rating and NSIC's AM Best rating are both A (Excellent) |
Why I like it | A major selling point of Thimble is that it makes it incredibly easy to get insurance coverage for specific timeframes, making it ideal for companies that do not operate year-round. For example, you can get coverage by the hour, day, month, or year. You can also easily get a quote in seconds, and obtain coverage within just minutes. |
Frequently asked questions (FAQs)
Amazon seller insurance is required if you exceed $10,000 in gross monthly sales, if you’re a Pro Merchant, or if specifically requested by the Amazon team. Coverage must be obtained within 30 days. Even if it’s not required, however, I strongly recommend considering it as it can protect you against accidents that might otherwise cause financial hardship for your business. If you’re just starting out, read our guide on how to sell on Amazon to avoid many common newbie mistakes.
Amazon does allow certain exceptions to be made if you have made a good faith effort to obtain a satisfactory policy but have been unable to do so. This can happen if, for example, the area you live in does not have the specified financial ratings for insurance companies. In this case, the Amazon team can review your proposed policy to determine if it can be considered an acceptable equivalent.
It can generally run from $1,000 to $3,000 per year. Costs will be determined by the coverages you select, the insurance company that’s been chosen, and the details of your business.
Bottom line
Amazon seller insurance is required if you exceed $10,000 in monthly gross sales, if you’re a Pro Merchant, or if requested by the Amazon team. However, it’s smart to have coverage even if Amazon doesn’t require you to carry it. Different types of insurance coverages exist, and it’s something that could keep small accidents from turning into a financial catastrophe.
