It can be a smart decision for all Amazon sellers to protect themselves with business insurance. However, Amazon might not give you the choice, as they require some sellers to carry active coverage.
Recently, the Amazon Service team has been sending emails to sellers reminding them to provide proof of liability insurance for products sold on Amazon. Sellers are asked to provide this information within 30 days of receiving the email reminder.
Who Needs Business Insurance
As of September 1, 2021, Section 9 of the Business Solutions Agreement requires sellers to “obtain and maintain at least $1 million of commercial general, umbrella, or excess liability insurance, within 30 days after exceeding $10,000 in gross proceeds in sales in one month on Amazon.com or if otherwise requested by Amazon.”
In other words, Amazon requires sellers with over $10,000 in gross sales to protect themselves (and Amazon) with business insurance. Amazon also requires the commercial liability insurance policy to meet certain conditions…Jump to the “Insurance Requirements” section to review the criteria.
Why does Amazon Require Business Insurance?
Business insurance provides you with protection. For example, it can protect you if someone claims you caused an injury or property damage. Additionally, your coverage can usually protect you from financial losses if you do business on websites or locations other than Amazon.
Amazon requires higher-earning sellers to have business insurance because it protects them too. Amazon doesn’t want to assume responsibility for lawsuits filed by your customers. When you purchase coverage, you are required to list Amazon and its assignees as additional insureds on your policy. This means Amazon will have protection from your insurance provider if someone sues them because of something you did. More specifically, your insurance policy would help pay for the cost to defend them in a lawsuit and any settlement that may be awarded, up to the policy aggregate limit. (Source: Next Insurance)
How to Provide Proof of Liability Insurance Coverage
After the Amazon Services Team sends you an email requesting proof of liability insurance coverage, you are asked to upload your Certificate of Insurance (COI) within 30 days of receiving the email. The COI is issued by your insurance company and details what is covered, the amount of coverage, and any exclusions or deductibles.
You can upload your COI on the Business Insurance page in Seller Central account settings. The document can be uploaded in .pdf, .doc, or .docx format.
You can also send a physical copy to Amazon at: c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management.
Amazon states that your commercial liability insurance policy must meet all of the following criteria:
- The policy limit must be at least $1 million per occurrence and in aggregate, and cover liabilities caused by or occurring in conjunction with your business operations, including products, products/completed operations, and bodily injury;
- The insurance policy type can be either commercial general, umbrella, or excess liability and be occurrence based;
- Your insurance provider must have global claim handling capability and a financial rating of S&P (https://www.spglobal.com/ratings/en/sector/insurance/insurance-sector) A- and/or AM Best (https://www.ambest.com/home/default.aspx) A- or better (if S&P or AM best is not valid or used in the country where you are required to obtain insurance, a local equivalent is allowed);
- Your insurance provider must give Amazon at least 30 days’ notice of cancellation, modification or non-renewal;
- The policy must name "Amazon.com Services LLC and its affiliates and assignees" as additional insureds;
- The deductible for any policy(ies) must not be greater than $10,000 and any deductible amount must be listed on the certificate(s) of insurance;
- The policy must cover all sales from products you have listed on the Amazon website;
- Your insured name must match the “legal entity” name you provided to Amazon (view your legal entity name) (https://sellercentral.amazon.com/sw/AccountInfo/LegalEntity/step/LegalEntity);
- The policy must be completed in its entirety and signed; and
- The policy must be valid for at least 60 days from the date of submission.
Need liability insurance
You can choose any insurance provider that meets Amazon’s requirements shown above. To easily find a provider that meets these requirements, you can check out Amazon Insurance Accelerator, a network of insurance providers who offer liability insurance at competitive rates to qualifying selling partners.
Find More Information
For additional information, please go to Amazon’s Help page.
To check if you have not yet provided proof of liability insurance and need to do so, check the Account Health page. The Account Health page shows how well your account is performing against the performance metrics and policies required to sell on Amazon.
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