Becoming an Amazon seller is a great business opportunity, allowing you to build a consistent and profitable income stream without the hassle of a traditional business model. However, even Amazon sellers without a physical store must get liability insurance and protect their business from unexpected financial losses. Here’s everything you need to know about getting your Amazon seller insurance.
The Amazon business industry, or the Amazon seller industry, is the ecosystem of businesses and third-party sellers that sell their products on the Amazon platform. The seller industry is a huge contributor to Amazon’s revenue and is a profitable source of business for all the sellers engaged in it. It’s a win-win for both parties.
Amazon has around 1.9 million active sellers as of 2023. JungleScout reported that almost 89% of Amazon sellers are profitable, despite rising costs due to economic downturns. This is mostly due to the huge shift in online shopping, with over 300 million active users worldwide shopping on Amazon business. This high demand is encouraging more entrepreneurs to become Amazon sellers and join this lucrative industry.
Why is Insurance for Amazon Businesses Important?
If you sell on Amazon and you’re thinking of skipping Amazon insurance, you might be putting yourself in a risky situation. Here’s why.
Like all commercial businesses, Amazon sellers risk liability claims resulting from defective products, personal injury, or accidents. You have to be particularly vary of product liability risks, as even a small quality issue in a product or business equipment can result in hefty claims.
A comprehensive coverage policy that includes product liability insurance and commercial liability insurance can help cover the costs arising from these claims, such as medical expenses, legal fees, and product recalls.
Amazon sellers often face legal issues and disputes that can rack up quite a lot of money in terms of legal expenses and settlement costs. Insurance, particularly general liability insurance, helps cover these legal costs and offers financial security to businesses that otherwise can’t afford huge sums of money.
Amazon requires pro merchants or sellers with high gross sales or revenue to have specific insurance coverage policies. These can include general liability coverage or commercial umbrella liability insurance with at least a coverage of $1 million per occurrence. You can continue selling on Amazon without worrying about getting shut down or penalized by meeting these insurance requirements.
Online sellers on the Amazon website store sensitive customer information, which can be a valuable target for hackers or cyber criminals. Without adequate insurance, you’re vulnerable to cyber threats and data breaches that can cause significant financial losses and damage your business reputation. Having cyber liability insurance, in this case, is a wise decision to stay on the safer side.
Recommended policies for Amazon Businesses
Amazon Business Insurance Coverage & Policies
These coverages form the foundation of any risk management program for Amazon Business:
This coverage protects against third-party claims of bodily injury, associated medical costs, and damage to someone else’s property. As an Amazon seller, you might be dealing with suppliers, customers, or even third-party service providers, making it crucial to have coverage against potential claims arising from unintended harm or property damage.
This insurance covers businesses against data breaches and other cyber threats, ensuring protection from costs related to recovery, notifications, and potential legal claims. With digital transactions, personal customer data handling, and online communications, Amazon businesses are vulnerable to cyber threats, making this coverage essential.
This insurance provides wage replacement and medical benefits to employees injured during the course of employment. If your Amazon business has employees involved in warehousing, packaging, or any physical activity, they are at risk of on-the-job injuries. This coverage ensures their protection and the company’s compliance with legal requirements.
This coverage protects against claims from employees that their legal rights as employees of the company have been violated. As businesses grow and hire staff, they can face claims of wrongful termination, discrimination, or other employment-related issues. This coverage ensures financial protection against such claims.
Amazon Business Specific Coverage
These policies are essential for or can be tailored to the needs of companies operating in the Amazon space:
Product liability insurance covers the business against claims of injuries or damages caused by products they’ve sold or produced. Amazon sellers distribute products that could potentially malfunction or cause harm. This insurance protects against claims arising from such incidents.
This coverage protects against damage to or loss of physical assets due to hazards like fire, theft, or natural disasters. Whether it’s a home office or a warehouse filled with inventory, any physical space or equipment crucial to the business needs protection against unforeseen damages.
This insurance covers goods in transit, protecting against potential loss or damage while products are being transported from one place to another. Amazon sellers often rely on shipping their products, either to Amazon fulfillment centers or directly to customers. This coverage ensures that goods in transit are protected against potential losses or damages.
Amazon Business Insurance Costs
The costs of your Amazon seller insurance will vary depending on your product category, the estimated annual revenue or gross sales of your business, your deductible amount, insurance coverage, and even your insurance company.
The insurance costs for Amazon sellers can be anywhere from a hundred dollars to over several thousand dollars, depending on their risk profiles. For example, if you have a small business that sells a low-risk product, you will have lower insurance costs than a more extensive operation.
You can get an accurate assessment of your insurance options and how much they’ll cost by getting a quote from your insurance provider.
Why Choose Founder Shield?
Founder Shield is a leading insurance provider that specializes in offering comprehensive coverage for e-commerce companies, offering numerous benefits and advantages over traditional insurance providers. Here’s a breakdown of some of the key features and benefits that you’ll enjoy with us:
Benefits of Choosing Founder Shield
- Industry Expertise: Founder Shield is focused on protecting rapidly evolving e-commerce startups. We ensure that our products are tailored to meet the unique needs of Amazon businesses.
- Customized Solutions: Founder Shield offers bespoke insurance policies that are designed specifically for each client’s needs, ensuring comprehensive coverage that addresses the unique risks associated with Amazon business operations.
- Fast Quotes: With Founder Shield’s streamlined quoting process, you can receive a personalized quote for your Amazon business insurance quickly, allowing you to make informed decisions fast.
- Ease of Use: Founder Shield’s user-friendly digital platform makes it easy to manage your insurance policies, submit claims, and access important documents whenever you need them.
- Dedicated Support: Founder Shield provides exceptional customer service, with dedicated account managers who are always available to assist you with any questions or concerns you may have about your insurance coverage.
- Scalable Coverage: As your Amazon business grows, Founder Shield’s insurance policies can grow with you, ensuring you always have the right level of coverage for your changing needs.
Founder Shield is a preferred choice for Amazon businesses because of our specialization in the industry. We offer flexible and customized insurance policies, a speedy quoting process, and exceptional customer service with dedicated account managers.
Amazon Business Insurance Frequently Asked Questions (FAQ)
The cost of insurance for Amazon businesses will depend on several things, including the company’s size and development stage. Other factors include:
- Exposures: risks being insured
- Company practices: views on safety, compliance, and risk management
- Program structure: the amount of deductible and willingness for a company to assume more risk
- Claims history: the type and amount of past claims against the company
While Amazon itself does not universally mandate insurance for all sellers, they do require sellers with a certain volume (typically exceeding $10,000 in transactions within any given month) to have Commercial General Liability insurance. However, even if it’s not mandated, insurance is always a good idea to protect your business from potential risks.
The amount of Amazon sellers insurance you need will depend on various factors, including the nature and volume of your products, the size of your business, and where you operate. It’s best to consult with an insurance agent who can assess your specific needs and provide tailored advice.
To get Amazon seller insurance, you should reach out to local insurance companies and brokers. Many providers offer insurance policies tailored for e-commerce and Amazon sellers, ensuring you get the right insurance coverage matching your business model.
Business liability insurance protects a company against claims of bodily injury, property damage, and in some cases, personal and advertising injury that can arise from business operations. It’s essential to shield a business from potential financial burdens if they’re found liable for such damages.
Yes, Amazon sellers insurance policies can often be customized to suit the specific needs and risks associated with your business. Whether it’s adding coverage for specific product categories, adjusting coverage limits, or adding riders for unique situations, insurers typically offer flexibility to meet the unique needs of Amazon sellers.
Types of Amazon Businesses that Need Insurance
- Pro Merchants
- Amazon sellers with employees
- Sellers of physical products
- Private Label Sellers
- Retail Arbitrage Sellers
- International Sellers
Amazon Business Claims & Examples
Navigating a commercial insurance claim is often challenging, often fraught with confusion and multiple unknown factors. The following four-part series outlines the ins and outs of commercial insurance claims: