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Product liability insurance for Amazon sellers
Product liability insurance is required by Amazon for all sellers, regardless of whether you use Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM) to deliver your goods. This coverage is essential for any company that sells, produces, or distributes a product to consumers.
This insurance protects against claims of third-party property damage or bodily harm brought on by a product you sell, make, or market. As a result, it is crucial for online stores, e-commerce companies, and traditional businesses.
Is product liability insurance required by Amazon? Yes. Amazon requires all sellers to have commercial general liability (CGL) insurance, which includes product liability coverage. This requirement kicks in after you exceed a certain sales threshold, which is typically $10,000 in gross sales for three consecutive months. Even if you haven't reached this threshold, having coverage is a wise business practice to protect your company from potential lawsuits.
Product liability insurance protects your business from claims of third-party bodily injury or property damage caused by a product you sell. This includes claims related to manufacturing defects, design flaws, or inadequate warnings and instructions. For example, if a customer is injured by a faulty electronic device you sold or if a product you sold damages their home, this insurance would cover the associated legal fees, medical expenses, and settlements.
Amazon has several key requirements for a seller's insurance policy. The policy must:
Have a minimum limit of $1 million per occurrence and in aggregate.
Cover all products you sell on the platform.
Name "Amazon.com Services LLC and its affiliates and assignees" as an additional insured.
Be completed and signed in its entirety.
Have a deductible of no more than $10,000.
Be issued by an insurance provider with a strong financial rating (S&P A- or AM Best A- or better).
The cost of insurance varies based on several factors, including the type of products you sell, your annual revenue, and your claims history. High-risk products like electronics, supplements, or children's toys will have higher premiums than lower-risk items. On average, many Amazon sellers can expect to pay anywhere from a few hundred to a couple of thousand dollars per year for a compliant policy.
Amazon's requirements can be met with a commercial general liability (CGL), umbrella, or excess liability policy. Product liability coverage is often included as part of a CGL policy. It's crucial to confirm with your insurance provider that your policy meets all of Amazon's specific requirements before you submit it to them.
Selling platforms where insurance is recommended
- Amazon.ca
- eBay.ca
- Etsy
- Kijiji
- Facebook Marketplace
- Mercari (Canada)
- VarageSale
- Newegg.ca
- Bonanza
Our partner brokers work for you
- Our partner brokers are dedicated to your business's best interests, not those of an insurance company. Our advice is always honest and unbiased, ensuring you get the right coverage for your unique needs without any unnecessary extras.
- We take the stress out of shopping for insurance. Our partner brokers compare quotes from top commercial insurance providers to find you the best possible rate, saving you time and effort while securing excellent coverage.
- We know business insurance can be confusing. That's why our partner brokers take the time to clearly explain your options, helping you understand your policy so you can make a confident choice that fits your business and budget perfectly.
Why choose GETRATES?
Why great insurance doesn’t have to cost more
- Our partner brokers work with over 40 trusted insurance providers to offer a wide range of business coverage options. They compare policies side-by-side to find the protection that best fits your company’s needs and budget.
- By looking at multiple quotes for you, they make sure you get the most cost-effective coverage without giving up any of the protection you need. It’s about finding the right policy at the right price. Our advanced technology makes the process of getting insurance quick and efficient. This keeps our costs down — and those savings go straight back to you.
- Our partner brokers extensive portfolio of commercial clients gives them substantial negotiating power with insurers. They use this advantage to secure exclusive rates and enhanced coverage for your business—often resulting in a better overall value than you can find on your own.
Common claim scenarios for Amazon sellers
Product liability insurance is crucial for Amazon sellers because it protects against the financial repercussions of claims arising from injuries or damages caused by the products they sell. Claims can stem from three main types of product defects: manufacturing defects, design defects, and marketing defects (failure to warn). Here are some common scenarios that can lead to product liability claims
