5 min read

Choosing Amazon Insurance for Sellers

Written by
Vanessa Hung
January 25, 2024

Understanding the risks inherent to online business is critical. Potential issues range from customer complaints and lawsuits to lost or damaged inventory, which could threaten your business's stability.

To safeguard against these potential pitfalls, you must secure an insurance. Amazon Insurance offers a tailored solution for sellers on its platform, covering product liability, property damage, and bodily injury.

What Are Amazon's Insurance Requirements?

Amazon's insurance policies are designed to protect both the seller and the customer in case of any unforeseen events. Here's an overview of Amazon's insurance policies for sellers:

Amazon’s Insurance Policies for Sellers

Under the Amazon Services Business Solutions Agreement (Section 9), obtaining commercial liability insurance is compulsory within 30 days of surpassing $10,000 in gross monthly sales or upon Amazon's request.

Additionally, product liability insurance with a minimum of $1 million in coverage per occurrence is required, covering all listed products with no deductible exceeding $10,000.

Amazon also stipulates that insurers have global claims handling capabilities and hold a financial rating of 'S&P A-' and/or 'AM Best A-' or higher.

Liability Insurance for Amazon Sellers

Liability insurance is indispensable for Amazon sellers, as it provides financial protection in various scenarios, such as customer injuries or property damage resulting from sold products.

It covers legal fees, medical expenses, and other lawsuit-related costs, shielding your business from significant financial hardship.

Due to the number of insurance carriers and plans available, sellers are advised to select the right coverage to meet both their needs and Amazon’s stringent requirements, thus securing their business future and adhering to legal obligations.

Types of Insurance for Amazon Sellers

As an Amazon seller, procuring the right insurance coverage is a crucial step in safeguarding your business. Below are the key insurance types you should consider to mitigate various risks:

General Liability Insurance

General liability insurance offers broad protection for your business, covering incidents involving bodily injury, property damage, and personal injury.

This coverage is vital in defending against potential lawsuits and claims from accidents associated with your products or operations.

Product Liability Insurance

Should issues arise from the use of products you sell, product liability insurance is designed to shield you from resulting lawsuits and claims. This coverage specifically addresses injuries or damages attributed to products sold by your business.

Commercial Auto Insurance

For business activities that require vehicle use, commercial auto insurance is essential. It protects against financial losses from accidents or damages incurred while operating your business vehicle.

Cyber Liability Insurance

In our digital age, cyber threats like data breaches and cyber-attacks are a growing concern. Cyber liability insurance provides a safeguard against the financial repercussions associated with these cyber risks.

Commercial Property Insurance

To protect physical assets against risks such as fire, theft, and vandalism, commercial property insurance is necessary to cover your business property and assets against various perils.

Determining Your Insurance Coverage Needs

When determining your insurance coverage needs as an Amazon seller, consider the following factors to ensure you have appropriate protection:

Scale of Your Business

Small sellers with low sales volumes might require less coverage than larger businesses with higher transaction rates.

Regardless of size, it’s essential to get at least the minimum coverage mandated by Amazon.

Product Category Risks

Items with a higher likelihood of causing injury or damage, such as electronics or heavy equipment, necessitate more comprehensive coverage.

Less risky product categories may warrant lesser coverage.

Business Model Variations

Sellers who handle their own order fulfillment and shipping need coverage tailored to those responsibilities. Those using Amazon's fulfillment services may have different insurance needs due to Amazon's liability policies.

To identify your specific insurance requirements, you must do the following:

Having the right insurance coverage is vital for any Amazon seller to safeguard against potential risks and liabilities.

Costs Involved With Amazon Seller Insurance

The cost of your insurance policy will depend on several factors, including the type of coverage you need, the level of coverage you require, and the size of your business.

Factors Affecting the Cost of Insurance Policies for Amazon Sellers

The following are some of the factors that can affect the cost of insurance policies for Amazon sellers:

Average Cost Ranges for Different Types of Insurance

The average cost of general liability insurance for Amazon sellers is around $40 per month or $600 per year for a $1 million policy. However, the cost of your policy may vary depending on the factors mentioned above.

Product liability insurance can cost anywhere from $500 to $1,500 per year, depending on the size of your business and the products you sell.

Professional liability insurance, also known as errors and omissions insurance, can cost around $1,000 per year for a $1 million policy.

Step-by-Step Guide To Acquiring Amazon Seller Insurance

If you're planning on selling on Amazon, it's important to protect yourself and your business with the right insurance coverage. Here's a step-by-step guide to help you acquire Amazon Seller Insurance.

  1. Find Reputable Insurance Providers
  1. Conduct Provider Due Diligence:
  1. The Application Process:
  1. Await Approval:

Processing Amazon's Proof of Insurance

To maintain compliance with Amazon's insurance policies, you need to submit proof of insurance to Amazon. Here's how to do it:

  1. Log in to your Seller Central Account and navigate to "Account Info" from the dropdown menu.
  2. Click the gear icon in the top right corner and scroll to "Business Insurance."
  3. Fill in the name of your insurer and make sure it is spelled exactly as listed in your insurance document.
  4. Under "named of insured," click on "legal entity name" and upload your proof of insurance.

Amazon requires sellers to list Amazon as an Additional Insured on a Certificate of Insurance. This means that Amazon will be covered under your policy in the event of a claim.

Maintaining compliance with Amazon's insurance policies is crucial for your business. If you fail to provide proof of insurance or if your coverage lapses, your account may be suspended or terminated.

In addition to protecting your business, having insurance coverage can also benefit your employees.

If you offer health insurance, make sure to provide your employees with information about your plan, including coverage for chronic conditions, preventive care, and urgent care.

Best Practices for Amazon Sellers To Manage Risk

Here are some best practices to help you minimize the need to rely on insurance and safeguard against common risks.

Strategies to Minimize the Need to Rely on Insurance

  1. Research Your Products: Before selling a product on Amazon, it's crucial to research it thoroughly. Check for any safety concerns, recalls, or legal issues that could risk your business.
  2. Take Quality Control Measures: Implement quality control measures to ensure your products meet the required safety standards. This can include testing, inspections, and product certifications.
  3. Monitor Customer Feedback: Monitor customer feedback to identify any potential issues with your products. Address any concerns promptly and take corrective actions to prevent similar issues from arising. 

Proactive Measures to Safeguard Against Common Risks

  1. Use Secure Packaging: Proper packaging can help prevent damage to your products during shipping. Use sturdy boxes, bubble wrap, and other protective materials to safeguard against common shipping risks.
  2. Keep Accurate Records: Maintain accurate records of your sales, inventory, and customer interactions. This can help you identify any potential issues early on and provide evidence in case of a liability claim.
  3. Obtain Insurance Coverage: While taking proactive measures can help minimize the need to rely on insurance, it's still essential to obtain coverage to protect your business in case of unexpected events. Consider purchasing commercial general liability insurance, product liability insurance, and other types of coverage that are relevant to your business.

Frequently Asked Questions

Can I Use a Personal Insurance Policy for My Amazon Business?

No, personal insurance policies are not acceptable for Amazon businesses. You must have a commercial liability insurance policy that meets Amazon's requirements.

Do I Need Insurance if I Only Use Amazon FBA?

Yes, even if you use Amazon FBA, you still need to have insurance that meets Amazon's requirements.

How Often Do I Need to Update My Insurance Information With Amazon?

You must update your insurance information with Amazon every time you renew or make changes to your policy. It is important to keep your information up-to-date to avoid any issues with your account.

What Happens if I Don’t Have the Proper Insurance as an Amazon Seller?

If you lack adequate insurance, Amazon may suspend your account until you comply with their insurance requirements. Essential for risk protection, appropriate insurance is key for your business.

Proactively minimize risks by correctly labeling, packaging, and ensuring legal compliance of your products. Utilize insurance navigation services and secure messaging for optimal insurance management and provider communication.


Amazon's entry into the insurance space indicates its vast and diverse offerings that cover an array of customer needs, from everyday risks to specialized product protection. Mandatory insurance for Amazon sellers highlights the platform's commitment to security and trust in e-commerce.

Getting one is a smart choice for peace of mind and a business necessity for long-term success.

Ensuring that your insurance policies align with Amazon's stipulations will fortify your business against unforeseen events while helping you focus on growth and customer satisfaction.

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