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Learn the importance of Amazon insurance and the coverage you need to sell online.
As an e-commerce entrepreneur, you may find the topic of business insurance confusing and daunting. Insurance is full of insider jargon like “additional insured.” And you may wonder, “Why do I need insurance? My products aren’t dangerous.”
Don’t worry; we’re here to break down the basics of business insurance, why it’s important and what you need to meet Amazon’s requirements. In this post, we’ll answer the following questions:
- Why is business insurance important?
- Why do Amazon sellers need business insurance?
- What types of business insurance do online sellers need?
- What are Amazon’s insurance requirements?
- What should you look for when buying e-commerce insurance?
- Why is business insurance important?
Think of business insurance as a safety net. It protects your business by helping cover expenses related to accidents, injuries, property damage and other risks — from damaged inventory to loss of income due to business interruptions.
When you don’t need to cover those unexpected costs, you can put that money back into growing your business.
- Why do Amazon sellers need business insurance?
If you sell products to customers, you run the risk of being sued for selling a defective product or a product that may cause harm. And if you sell on Amazon, they could also be held liable or sued if you’re not insured. The more you sell, the greater the risk that something you sell causes an accident or damage. Even if you are careful and sell products considered low-risk, you could still be accused of wrongdoing.
Having insurance transfers that risk of financial harm from you — and Amazon. Even if you don’t sell a lot or you’re new to selling online, insurance can be crucial in protecting you from financial losses if something goes wrong.
- What types of business insurance do online sellers need?
We see all kinds of e-commerce risks and claims from defective products to copyright infringement. These are the most common — and helpful — types of business insurance for online retailers:
General liability. The most common type of insurance for all businesses, this covers a wide range of accidents and basic risks.
General liability coverage includes product liability and personal injury coverage.
Product liability. This coverage protects you from financial losses if someone accuses you of selling a defective product that causes harm. This includes claims of bodily injury and property damage.
Personal injury. Although it sounds like bodily injury, personal injury is different. It provides protection if you are accused of slander, libel and invasion of privacy.
For example, if another seller accuses you of making inaccurate statements about their products (so buyers are more likely to shop with you), personal injury coverage will help pay for your legal costs and any settlement that might be awarded.
Additional coverage options for retailers:
Commercial property. This coverage helps protect all the things you need to do business, including your equipment, inventory and the building itself if you own it. It can protect against theft, fire or water damage and any repairs or replacements associated with the damage.
Commercial auto. Personal auto insurance may not be enough protection if you get into an accident while driving to the post office with shipments. This coverage can help pay for towing, car repairs, injuries and property damage due to an accident. Most states require commercial auto insurance for business-owned vehicles.
Workers’ compensation. If you’re more than a one-person operation, most states will require workers’ comp. It helps cover medical expenses and lost wages if you or an employee gets sick or hurt on the job.
- What are Amazon’s insurance requirements?
Amazon requires sellers with a Pro Merchant account and gross sales of $10,000 or more to carry insurance. This limits Amazon’s liability if you sell something on their platform that causes an injury or property damage.
You need $1 million in liability coverage, per occurrence and in aggregate, to meet Amazon’s seller insurance requirements for Pro Merchants.
Your policy (or policies) must include coverage for:
- Products liability
- Products/complete operations
- Bodily injury
- Personal injury
- Broad form property damage
- Broad form contractual coverage
When you purchase coverage, you must list Amazon and its assignees as additional insureds on your policy. All that means is Amazon will have protection from your insurance provider if someone sues them because of something you did.
Even if you’re not a Pro Merchant, you may want to purchase coverage anyway to ensure you are always protected.
- What should you look for when buying e-commerce insurance?
When considering insurance options, here are some questions to think about.
- What’s included in this provider’s insurance coverage? Does it satisfy the platform’s requirements? Can I customize my coverage?
Customers have more options than ever, so a one-size-fits-all approach to coverage won’t cut it anymore. Be wary of policies that charge for more coverage than you need and aren’t tailored to your specific business.
- Do I need to talk to an agent to get a certificate of insurance or to file a claim? Can I make changes to my coverage online by myself?
You can handle everything online these days, insurance included. User-friendly online accounts and mobile apps allow customers to manage their coverage with self-service tools. From getting quotes to adding or canceling coverage, customers can get what they need without speaking with an agent.
- What is the insurance provider’s customer service like? Can I get my questions answered by a human?
Sometimes you want the freedom to DIY and not have to call support. Other times you want to consult with an agent for clarification. Maybe you want to get answers by asking a question via social media. Look for providers that offer multiple ways to conduct business and support customers.
Protect your e-commerce business while meeting Amazon sellers insurance requirements with NEXT Insurance. Get an instant quote today.
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