3 Things Amazon Sellers Need to Know About Insurance

In this guest post from WELL Insurance, Matt Lovell explains what Amazon sellers need to know about insuring their businesses.

Do you have the protection you need in place for your eCommerce business? Amazon.com, Inc. (“Amazon”) requires sellers to have insurance coverage; failure to do so could lead to account suspension.

In this post, I’ll share what you should know about insuring your Amazon business.

You Need to Be Insured

As an Amazon seller, you need insurance to meet Amazon’s guidelines as well as to protect your growing business. The type of coverage needed varies based on your account specifics. Let’s take a look at a few common examples:

Professional Seller Account: In order to have this type of account, you must have a one million dollar general liability policy in place that lists “Amazon.com, Inc., and its affiliates and assignees” as additional insureds. You’ll also need to provide Amazon with a certificate of insurance for your policy.

Private-Label Sellers: If you design, manufacture, sell or distribute private-label products, you need to have an insurance policy. This is especially important as more of the risk falls to you and your business if anything should go wrong with your products. Whether you are manufacturing your own products or having that work subcontracted out with a supplier, there is risk exposure for you as a merchant.

In either case, look for a policy that includes coverage for bodily injury, property damage and products liability. Bodily injury coverage helps pay for another individual’s physical injury that occurred as a result of injury or death caused by a product sold to them. Property damage liability coverage helps pay for damages caused to another person’s belongings or properties up to your policy limits. Products liability covers the insured policyholder in the event that they are brought into a lawsuit as a result of their products causing bodily injury or physical damage. Another type of coverage that Amazon sellers may want to consider is suspension insurance, which protects merchant revenue in the event of a suspended account. (For more on suspension insurance, see below.)

Not All Insurance Brokers Are Created Equal

When insuring your livelihood, you need to work with an agent who truly understands your business. It’s also helpful to have a basic understanding of the two main types of insurance agents: independent versus captive. An independent agent (such as WELL Insurance) is able to quote your policy with multiple companies to find the best coverage at the best price for that specific seller and risk. Captive agents only work with their own company, which limits your policy options to what is available from that insurance agency.

Different sellers have diverse needs. Depending on what products are being sold, the policy may need to be written in a very specific way. For example, if a merchant is selling a private-label item that is manufactured in China, that seller is now a manufacturer, not simply an online seller. Many Amazon merchants are unaware of this distinction and have their policy written incorrectly. This means that the company may have to pay the loss when a claim occurs.

Don’t rely on “maybe” insurance. Instead, take the time to ask your agent the right questions and make sure that you are properly insured from the start. Ask if your insurance agent has any experience with eCommerce businesses and how long they have been writing these types of policies. While eCommerce is fairly new in the insurance world, you should find an agent who is familiar with the industry in order to get the best possible protection for your business. (To learn more about what to ask your eCommerce insurance agent, watch for our webinar with eComEngine!)

Consider Suspension Insurance

We began offering suspension insurance after a client who owns an Amazon store came to us to ask if her current policy would provide coverage if her seller account was suspended. We did some thorough research and discovered that it would not. We also found another major issue: there was nothing on the market that would protect her business in the event of an account suspension. WELL Insurance Agency was founded out of this need. Our Amazon Suspension Insurance policy does not replace Amazon’s required general liability insurance policy. Rather, it is specifically tailored to cover a merchant in the instance of an account suspension.

Suspension insurance includes income protection for online sellers, multiple coverage levels to choose from and more. You can still purchase a policy if you have had a loss in the past.