How to Insure Your Amazon business?

One of the most common mistakes Amazon sellers make is thinking that they do not need insurance coverage! What they forget is that it is indeed a business, even if operated online, and any business big or small requires some type of insurance coverage.

Amazon business insurance is not as complicated as it may seem, but in fact, e-commerce insurance is very easy to understand and buy the right coverage.

How to Insure Your Amazon business?

Why Do I Need Amazon Business Insurance?

As an Amazon seller, you have to understand that you do not directly work for the company, but are considered a third-party seller.

This means that if anything does go wrong such as injury to a customer as a result of your product malfunction, Amazon will not cover any medical or legal fees.

In fact, if you read Amazon’s terms and conditions diligently, it does state that sellers must have at the minimum product liability insurance or Amazon FBA insurance.

To summarize Amazon’s insurance lingo, the company states that as a third-party seller, you should have:

  • An insurance policy with at least $1 million coverage, and one that covers the cost of liabilities, resulting from your business such as bodily injury.
  • Next, the policy you buy must cover any products you sell via the website
  • The policy must also be valid for 180 days from the date of submission

What is Amazon Product Liability Insurance?

 Product liability insurance is one of the basic forms of insurance coverage, and covers you in case your business, its products, and/or services causes damage or injury to third parties, that is anyone other than yourself or your employees.

You may not necessarily be selling dangerous items, but one or more items can always turn out to be defective, and cause injury to others.

What is Amazon General Liability Insurance?

Amazon product liability insurance and Amazon general liability insurance are often confused with one another, but they are two different types of insurance coverages.

As mentioned earlier, Amazon product liability insurance protects even one or more of your products that causes damage or injury to a third party.

Contrarily, Amazon general liability insurance covers you against third-party property damage or personal injury.

For example, say you are dealing with vendors who help with packaging your orders, and one of them slips and injures themselves in your garage, Amazon general liability insurance will cover their medical costs and any legal costs resulting from that particular incident.

Amazon general liability insurance also covers you against advertising injury.

If a competitor claims that you stole their logo design, and decides to sue your Amazon business, general liability will cover your legal costs.

Workers’ Compensation Insurance

Most states will require you have workers’ compensation insurance if you have two or more employees in your Amazon business.

Just like you are a third-party seller, so are your employees, so they are not covered under Amazon’s company insurance policy.

Workers’ compensation insurance covers your employees for any medical costs and a portion of their salary in the event they are injured on the job.

Shipping and Cargo Insurance

Cost of theft or damage to your products before it gets to the Amazon warehouse is your responsibility, therefore buying shipping and cargo insurance is always a good idea.

But before you do so, check if your carrier if they offer shipping and cargo insurance by default, and if so you do not have to pay more for an additional shipping and cargo insurance policy.

Final Thoughts

If you operate an Amazon business, you are considered a third-party seller, hence need Amazon seller insurance.

Look closer at your Amazon business terms and conditions, and you see the type of coverage that is mandatory for third-party sellers.

The cost of amazon business insurance varies across insurance companies and generally depends on your location and the amount of coverage you wish to buy.

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