Amazon Suspension Insurance:  What You Need to Know

Transcript

Liz: Hi everybody. I'm Liz Fickenscher, business development lead at eComEngine, and I'm happy to bring you Matt and Lori from WELL Insurance. I met them at the 2017 Prosper Show, and couldn't wait to tell you about what they're doing to offer increased protection, and peace of mind in a very, very volatile eCommerce world. Sorry, we had a little bit of a technical difficulty because I need to remember to unmute myself.

Liz: So we're going to hear a lot of information today about insurance, suspension insurance, and some things that you can do to protect yourself from suspension. But first, I'm going to give you a little bit of background on eComEngine, so you can see why we're able to present this information to you.

Liz: Most of you know us because of the software we've built for you, sellers on the Amazon Marketplace. We're eComEngine, creator of FeedbackFive, RestockPro and eComSpy. We developed these tools to help Amazon merchants automate segments of their businesses. We offer intuitive and innovative tools, a fantastic customer service and tech support team. And lots of thought leadership in eCommerce theory and best practices.

Liz: That's why today we want to introduce you to WELL Insurance. It would be an understatement to say that it is definitely a best practice to make sure you're properly insured as an eCommerce professional. So I'm going to turn everything over to Matt and Lori so that they can teach us what we need to know. But first, I think they're going to tell us a little bit about themselves.

Matt Thanks, Liz. We appreciate you having us on today. My name is Matt Lovell and I've been an insurance agent for about 18 years now. We developed and started WELL Insurance to help eCommerce sellers. As most Amazon merchants don't realize that they need insurance to protect themselves. There's a litany of things that can threaten your livelihood. Lori came to us several months ago and asked us if her Amazon business was suspended, would she have coverage for it? So I'm going to let Lori give you a little background about herself and how WEELL Insurance came to be.

Lori: Hey guys, my name's Lori Jurans and yeah, I'm an Amazon seller. So we've been doing this specifically on Amazon for seven years now. And as our business grew, which was really exciting, but my husband and I that's, all we do full time is our eCommerce business. And the majority of it is definitely on Amazon, which is a blessing and also a bit concerning at times to know that our entire family is tied to Amazon.

Lori: So with that, I was doing our due diligence of... We're private labelers. So we were doing our due diligence and getting our general liability per Amazon's terms of service, Wayfair's terms of service, Walmart... All the places that we are. And we were getting our general liability through an insurance agency where Matt and our other business partner Nicole was working. And so we were just reviewing our account, as we always did every year to make sure we had the proper general liability coverage.

Lori: And like Matt said, I said, "You know, I'd really like to know if we were to be suspended by Amazon. Is there any type of insurance for that, maybe something similar to a business interruption policy that other business owners have access to." And of course there was nothing like that, but Matt and Nicole were amazing and said, "You know Lori, that doesn't mean we can't start talking about trying to make one available."

Lori: So we kind of went from there. So that was definitely the birth of the product just the need, the necessity of it. And I'm really proud that there's something out there now for my family, and hopefully something that can be of use and protection for other sellers. Because I think there's a real need for it, especially as more and more people get into this industry, and more and more people become dependent on that income for their livelihood.

Lori: So yeah, that's who I am and I'm still selling every day and glad that we've got some options for insurance. More options than we've had in the past anyway. So that's who I am, and that's kind of the role that I play within WELL Insurance is continuing to let them know what's going on on the seller side of things, which as you guys know, is always changing.

Matt I guess we're ready for the next slide Liz. Let's about insurance. What is general liability insurance and who needs it? General liability is the basics. It's the building blocks of what your company needs as a seller. Hopefully you have a general insurance policy in place already. For those of you who don't, let me try and explain general liability, just in a very simple, basic form.

Matt It's designed to protect the company's assets, pay for any financial obligations due to losses from injury, negligence, and accidents that could occur. A general liability policy can protect the business from bodily injury, property damage, legal fees, judgements, any settlements that could be awarded, should you be successfully sued.

Matt So who needs a general liability policy? That's a pretty easy answer. It's every business owner for every business needs a general liability policy. We live in a super crazy society these days. And if you think your business is low risk and it's not worth paying a small premium associated with policy, you're fooling yourself. Typically these premiums rank between 500 to 2,000 dollars depending on the type of business and the risk associated with it. That's definitely a lot less than a potential lawsuit in the hundreds of thousands of dollars, if not into the millions. Plus you've got the cost of hiring legal counsel, which typically is included in a general liability policy.

Matt So let's talk about products liability now. Next slide Liz. Products liability. Generally that is included with a general liability policy at limits that are similar if not matching what the general liability aggregate limit is. This coverage provides the manufacturer or the seller liability in the event that one of their products were to cause bodily injury or property damage to a third party due to a defect, malfunction, just anything that could happen to that product that could injure somebody. This could be a product of any type. Food... Could be a machine, could be a toy, any of the good sold by the business to the public. Types of typical products liability claims include manufacturer production flaws, design defects, defective warnings or instructions. Next slide, Liz. Please.

Matt Let's talk about all insurance agents are not created equal. Is your policy rated correctly? Many eCommerce business currently have general liability policy in force, but do you have it rated correctly? Not everyone that sells online should be rated as an internet retailer. If you're selling a type of private label product that's manufactured overseas, you now become a manufacturer. You're not a retailer anymore. You're the one that has the product liability going back to that product. Now you have a huge liability exposure, which is generally not there if you are selling someone else's product, a retail arbitrage product.

Matt At times, the insurance company may want to see some type of compliance reports that your product meets US safety standards. So it's definitely something to think about. In this case, a lot of companies may or may not have coverage. If you're not rated correctly, you may have maybe insurance, and we don't what maybe insurance. Make sure you're rated correctly. Make sure your agent knows your eCommerce business. If your agent doesn't know the difference between FBA and FBM, you might want to look for one that does. Next slide, Liz.

Matt Let's talk a little bit about business auto. Even though your company may not own a vehicle per se, you still may have an exposure for auto liability. Ask yourself two questions. Do you go to the post office or the UPS store at company time? Do you go up to the bank during operating hours to make a deposit? If you answered yes to either one of those, you have an auto exposure. At minimum, you need at least a hired non-owned auto policy. This will protect the business in the event that an accident occurs on company time and you're brought into a lawsuit for that. Next slide, Liz.

Matt Next on the list we have the umbrella or the excess liability coverage. The umbrella policy is simply a standalone excess liability policy that helps the business in case they're brought into a lawsuit, or facing a judgment for anything that might be in excess of what their general liability limits offer.

Matt Let's use for an example, that a business was sued and they're facing a judgment of 1.5 million dollars because something they were legal legally liable for. The general liability would pay the first 1 million dollars then the umbrella would kick in to pay the additional half million on top of it. If the business did not have the umbrella in place at that time, they could be held responsible for that excess of half million dollars. I'm sure there's not a lot of us that can go to the check book and cut that 500000 dollar check to make that problem go away. An umbrella is a cheap solution to that problem. Next slide, Liz.

Matt Business interruption coverage, her business income coverage, simply put. This is more for a brick and mortar type of business. It's for some reason, if you're forced out of your business or it has to temporary close. Let's say you have ,a fire and you have to move out. And you're shut down for a period of time. This is going to help replace net incomes, normal operating expenses, payroll, mortgage. It's also going to help you temporarily relocate. Any of the fees or any of the expenses that are associated with that move, this business income will help to absorb those, and help make those go away, so to speak. Next slide, please.

Matt We also have cyber liability. Cyber ability is a relatively new coverage in the insurance world. It's for any business that uses any electronic information, or transmits any electronic information. The business could potentially be sued for data breach and other cyber crimes. This could include legal fees, judgements or settlements. A general liability policy typically does not cover these properly. Cyber liability, they continue to evolve in the ever changing nature of the threats, and the ever changing nature of online industry as a whole, not only do these policies pay for the judgments and the fees that may be put on a business, they also help to repair the reputation of business or brand. So those are very important coverages as well. Next slide, Liz.

Matt And last that we have to offer here is the Amazon suspension insurance, the expense defense policy. This is the policy that Lori came to us about 18 or 19 months ago and said, "You know, if my business or suspended by Amazon, do I have any coverage for it?" Well, now you, as a seller, you have coverage. This is the first ever insurance policy to help you protect, to help protect your business for normal operating expenses. We've worked really hard to bring you affordable, scalable suspension insurance. That is just right for your business. We think that this policy is a very valuable asset to any online retailer, specifically an Amazon online line retailer. The policy is a 30 day policy, which will automatically renew every month. It does say a five day waiting period or a five day deductible, it's not a monetary deductible, but a time deductible. There are five daily coverage options to choose from. We'll see those on the next slide.

Matt We have plans one, two, three, four, and five. Coverages start out at a 1000 dollars a day, all the way up to 10,000 dollars a day. There's also some coverage, the R-S-R. That is the reinstatement specialist reimbursement. We require you to let us know in the event of a suspension within 24 hours, that you have been suspended. You're also required to hire a reinstatement specialist within that 24 hour window, so they can get the letter sent to Amazon to try and get you reinstated as quickly as possible. You'll see as the daily coverage amounts increase, the reimbursement for the specialists also increases. Those will be paid, whether you meet the five day window or not. Once the five day window is expired, the five day time period, then we will start paying for your losses for expenses. And those expenses are 12 items, and they are on the next slide. Let's take a look at those Liz.

Matt Again, we have, we have 12 items that our policy will pay for. The cost of goods. So advertising, insurance, payroll, shipping and delivery expenses, property taxes, license of subscriptions, rent, utilities, amortization, service agreements, and interest expense. All of these items, they will be declared on the profit and loss statement for the business. I hope we've been informative here. I hope we've given you a little bit of insight on what every eCommerce business needs, as far as your insurance goes. I know these were very basic. We would love to talk to you in the future, if you've got more detailed questions. I'm going to turn it back over to Liz and we will address your questions just as soon as she's finished.

Liz: Thanks Matt. Thanks, Lori. I anticipate that you all are going to have quite a few questions. So please put those into the questions section of GoTo webinar, and we will get those to Matt and Lori. I'm going to talk to you for a couple of minutes about how eComEngine can help you. And then at the end, we'll address all your questions.

Liz: So how can eComEngine help you? You might know. I told you at the beginning that we have three different software tools that we designed specifically for sellers on the Amazon Marketplace. They'll not only help you automate your business, but they can help you follow best-selling practices.

Liz: FeedbackFive is an easy to use feedback, automation and monitoring tool. Your seller reputation is important for a number of reasons. One, it can help you win the buy box. That's great and all, but monitoring your feedback and product reviews is so important to your seller health, and your customer happiness. FeedbackFive provides at a glance information about your feedback and product reviews so that you can respond to customers quickly. Allowing you to provide the level of service that Amazon expects from sellers on their marketplace.

Liz: An organized seller is often a successful seller. RestockPro helps you get a handle on your supply chain and keep track of your inventory. So you can avoid annoying out of stock situations and unhappy buyers. And finally eComSpy can help you choose items to sell that are in high demand with low competition. It's super simple. You just basically upload a list of ASINs and you'll receive a report real quick, that includes product ranking, number of FBA sellers, lowest FBA price, potential profit, and more.

Liz: Don't get stuck with a bunch of inventory that isn't right for your business. We have a couple of special offers that we would like to extend to you. The WELL17 coupon code will get you a 30 day free trial with FeedbackFive and RestockPro or 150 free credits with eComSpy. The folks at WELL Insurance are happy to talk to you to see how they can meet your needs, and see how they can answer your questions. I'm just going to leave this up here, so you all can take note of that. You've got the web address for WELL Insurance right there on your screen. And we're going to start diving into your questions right now. So I'm going to turn things back over to Matt and Lori.

Matt Okay. Good. Thank you, Liz. First question is, "As a dropshipper do I need this kind of insurance?" Absolutely. I mean there may be some of the coverages that you may not need, probably the business auto, possibly the cyber liability, but that business still has an exposure. Still has a liability exposure for those products that they're moving through their business. So to answer that question, yes, even though a business may be a dropship business, there can still be a lawsuit that could result from something that one of those products did to somebody et cetera. So yes, the answer to that is yes, they do need that.

Matt Next question is, "Can you recommend a reinstatement specialist in the event that I'm suspended?" Absolutely. We have a very, very short list. We're actually in negotiations now with a service that will work directly with WELL Insurance. So basically we will be a one stop shop, and they have also agreed in principle to do the reinstatement for what the reimbursement amount of the policy is for. So that's great news to the sellers. They shouldn't be adding any additional expenses for that reinstatement specialist to go to work for them. And it's our ultimate goal as it is that the sellers, to get them turned back on as quickly as possible.

Matt Next question is, "Suspension insurance cover any reason for suspension or only specific ones?" Basically, this policy is going to cover you as long as that suspension was not intentional. You know, as long as you're not selling something that's in violation of Amazon's terms of service, it's typically going to be a covered policy, going to be a covered loss. Again, it goes back to Amazon suspend sellers, and then they ask questions later, the insurance policy is going to pay the loss then they're going to ask the questions. We've partnered up with Lloyds of London on this. So the Lloyd's of London, this is actual underwriting company. They're the oldest insurance company in the world, and they're financially strong enough to pay these losses. And we feel like we've got a great product here and it's a great service for any Amazon seller.

Matt "What should I look for in an insurance agent?" You need an agent that knows not only your home and your cars, but somebody that understands the eCommerce world. There's different coverages, there's different exposures. Going back to the, if you're selling a private label that's manufactured in China. Again, you're not an internet retailer anymore. You're now the manufacturer because the insurance companies, they can't subrogate back against the Chinese manufacturer if there is a default or a problem with your product. You become the manufacturer. So just make sure that your agent understands what your business is and what you're doing.

Lori: Hi Matt, I'm going to chime in there. This is Lori. I'm just going to say as a seller, I think you guys can appreciate this, that we've gone through the gamut of lawyers and CPAs and warehouses and... Time is money and I just think too part of it is, if you have to educate your insurance agent on your business, I just don't think that that's probably the right place for you.

Lori: And so I think there's, there are definitely insurance agents out there who do already work with eCom sellers. And I would try to find those insurance agents. So whether it's WELL or someone else that you hear about through your networking, but the reality is you should not.. If you're having to educate your agent on FBA and private labeling and compliance, that might be a good sign that they might be a good agent for your personal insurance, but probably not your business insurance. So I would just say, from a seller's perspective definitely keep looking, the same way you do with other services you shop out. Because nobody's go time for that, right?. But I just want to chime in on that subject.

Matt Okay. Thank you, Lori. The next question is, "What are the daily dollar amounts for suspension insurance are those total sales or profits?" They are not total sales or profits, they are expenses. Those 12 items are expenses basically to keep your business afloat. We want to help pay your payroll. We want to help pay your advertising, your insurance, your cost of goods. So you're going to have daily expenses based on that profit and loss statement that you need coverage for in the event of the suspension. It's an income replacement. It's not based on sales. It's simply for the expenses.

Matt I've got a question here as far as, "Can you define suspension? Does this cover, if your products put it in a hazmat review and delisted for a week?" The suspension is an account as a whole. It's not only individual ASIN level. And also if your account is put in the hazmat review and delisted for a week, you're probably not going to meet the five day waiting period anyway, so that's probably going to be a moot point, but it is for an account as a whole.

Matt Let's see... "Policies applicable to individual seller accounts or businesses only?" These policies can be so to an individual, an LLC corporation, as long as they are a US based business, you can purchase a policy. So that's very good. We don't limit it to just LLCs or corporations.

Matt Let's see... "What happens if you don't tell the insurance after 24 hours?" You need to, it's part of the policy agreement, part of the contract that you signed on your side, as well as our side, that you must tell us within 24 hours of the suspension. That's 24 hours of... And simply notifying us is sending an email, calling an 800 number to the claims team and say, "Look, my account has been suspended." This could even be on a Saturday or Sunday, or on a holiday. We realize things happen at bad times, but that's part of the contract is we do require that you notify us within 24 hours.

Matt Now, we also understand that the reinstatement specialist may not be able to be hired within 24 hours, or they may not be able to start to go to work for you within 24 hours. But as long as you, if you talk to them, you've sent that email to them, notified them. Then everything should be good.

Matt "Policies cover hijacked accounts, hacked bank accounts?" We do cover the account suspension for the hacking. We don't cover the funds that may have been compromised, but we do cover the expenses. While the the account has been suspended.

Matt Let's see here... "In the event, the account suspension, when do we get paid?" That's going to be shortly after your account has been reactivated. The claims team will work with you during the suspension, as well as your reinstatement specialist to get you turned back on as quickly as possible. So say your account was suspended for 15 days. We're going to take the first five days off as the deductible. Then you're going to be paid a daily expense rate based on your profit and loss statement. We will take the profit and loss statement simply divide it by 30, as far as the expenses go, to get you a daily rate on all of those items. Then we will pay you for, on this example, we will pay you for the 10 days that you were suspended.

Matt I've got a question, "Does the insurance cover specific ASINs or is it only accounts as a whole?" It is, like I said before, it is accounts as a whole. Let's see...

Matt There's a question here. It says, "On the InsureTech website, they say the max coverage period is 90 days. I thought you offered 180 days." This is the third generation of this policy. The first policy we had was very confusing for sellers. It was confusing on how it was paid. It was an income replacement policy. That policy has gone away. And now this policy is very simple to understand, very affordable. The other policy was for any seller that was over a couple million dollars a year was not. It was not affordable for the smaller seller. Less than a couple million dollars in gross sales a year. It was a very nice little policy, but simply put that that policy has gone away, and this expense policy, the expense defense policy is now taking its place.

Matt Let's see here... "Does WELL offer insurance to high-risk sellers, example, toys, et cetera?" We have a market for just about all eCommerce sellers. Premiums may be more expensive as you know, for toy manufacturers, toy sellers, anything baby related, but those generally fall on a very high class. But yes, we do have a market for, 99.9% of the online sellers.

Matt "In the event of account suspension, does Amazon suspension policy pay the full day coverage or is it based on potential earnings from inventory?" We're going to pay you the 12 items again, that are declared on your profit and loss statement. And it's going to be paid to a maximum of your daily amount. The 1000 dollars, the 2500, the five, to 7500 or the 10000 dollars. We'll pay you up to that limit for that policy that you purchased.

Matt The easiest way to contact us to start the process for the suspension insurance is simply visit our website. At WELL-insurance.com there's a link there, there are two links on there. One is a general liability form if you need a general liability quote. There's some questions to get us started on that.

Matt There's also an expense defense. The expense defense, the link will take you to the InsureTech website, where you can work through the application. It literally takes less than three minutes to complete the application, pay for the policy, download a copy of it, and have everything activated and policy bounded in force. Very, very simple process.

Matt "What does the policy cost?" The premiums are very cheap. They range from the 1000 dollar a day policy, which is 26 dollars and 77 cents a month, up to the 10000 dollar a day policy, which is 120 dollars a month. So as you can see, these policies are very, very affordable, even for a small seller who's just getting started.

Matt "Reimbursement specialists have a higher rate to work weekends, holidays for an expedited turnaround. You only reimburse for their basic grade or their immediate action?" We actually have a list of the specialists that we recommend. Again, WELL Insurance has partnered with a reinstatement specialist, and they're going to do the reinstatements for the reimbursement amount of that specific policy for that specific business. They've agreed to do it on a volume basis, and they will work basically around the clock to get that reinstated as needed.

Matt "What happens if you do not get reinstated?" It's a good question. The policies, the 30 day policy, and if for some reason that you do not get reinstated, then we will pay you up to the 30 days for whatever your daily limit is. So that's a pretty straightforward question, but it's a very simple answer.

Matt "Is there a possibility to read the policy prior to buying it?" Yes, you can. If you go to our website, and you click on the expense defense league link, complete the application with InsureTech. You will actually see a copy of the policy before you have the opportunity to pay for it. So you can run through the policy, but again it's a very, very simple to understand policy. We're going to pay you for the 12 expenses listed on your profit and loss statement.

Matt See... "Do you ensure European sellers or US only?" Currently, this policy is for US based businesses only. We hope to expand the program into Canada, Europe, and also Australia within the near future. But, that is not available as we speak. We hope that it's coming very soon though.

Matt "What 30 days is looked at for the profit and loss statement? Previous 30 days or 30 day period from a year ago? This matters a lot during Christmas. We're going to look at the profit and loss statement for the month of suspension. We want actual expenses for that month. We understand that, eCommerce businesses grow, and the expense vary month to month. They also vary year to year. As businesses grow, we understand your expenses are not the same today as they were a year ago. So we're going to look at real time data on those profit and loss statements.

Matt "We sell on both our website and Amazon. How does payment for losses work when a company is not a hundred percent selling on Amazon? Is it prorated somehow based on a percent of Amazon versus other sellers?" They are going to look at what your breakdown is, as far as your Amazon expenses, versus your in house expenses. But when it comes down to it, if the majority of your sales are coming from Amazon, they're going to pay you. They're not going to shortchange you in any way. We're not looking for ways to not pay for your expenses if you're shut down. I can guarantee you that. It will be a very, very fair, very, very agreeable value to you and your business.

Matt And I believe that's about all of the questions. Let's see here. One more. One more just popped up, "How do you determine the cost of the expenses? Using this specific month profit and loss?" Yes, that is correct. We are going to use real time data. We're going to use that particular month's profit and loss statement. Whatever that might be for that month. The cost of goods sold. Maybe you just placed a huge order that's coming in. So we've got some manufacturing costs there for the cost of goods. Maybe you gave your employees a raise last month. We're going to pay real time expenses in the event of a shutdown.

Matt I think I just touched on this question with the part of the last one, it says, "If you look at the 30 day suspension, there will be no new sales from Amazon. So there'll be no cost of goods. So how does this work?" Simply put you still might have some manufacturing costs for those times being shut down. The cost of goods, simply put is beginning inventory, less purchases with... You're not going to have any purchases there. But you still could have some costs from beginning. You still could have some manufacturing costs. So those will go in there to determine and help pay for those, for the days of suspension.

Matt Looks like that's about all of our questions. I'm going to turn things back over to Liz here and let her wrap things up.

Liz: All right.

Matt Appreciate you having us on, Liz.

Liz: Thank you so much, Matt. Thank you, Lori. I think this was a great amount of information. I think we got a lot of really good questions. So thanks to all of our participants today for having such great questions for the team. If you have more questions, you can definitely reach out to WELL Insurance at their web address WELL-insurance.com. I'm going to be sending out a recording of this webinar in a little while. So feel free to share that with any of your friends who might've missed it today. Thanks everybody so much for attending, and we will see you next time.