Amazon Seller Insurance: Essential Coverage for a Thriving Business

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Did you realize that without the proper insurance, your company could be at risk for monetary damages brought on by unanticipated events? It is real! And a lack of insurance can be disastrous in the event of a product liability claim, a cyberattack, or a natural disaster.

Let’s imagine a scenario. You’re a renowned Amazon seller with a famous product line. A customer sues you for product liability, claiming you hurt them. Without insurance, you cannot cover your costs for legal fees, medical care, and damages. This could hurt your personal finances and your company’s financial health.

A Small Business Association Office of Advocacy report states small businesses suffer heavily in a lawsuit. The average cost of defending against a lawsuit can range from $3,000 to $150,000. Unfortunately, only a few businesses have insurance protection to lessen these costs.

This blog post briefly explores the types and importance of Amazon seller insurance and why it’s crucial protection for a successful company. We’ll help you understand the risks of operating as an Amazon seller without insurance. Learn why investing in Amazon seller insurance is crucial to safeguarding your company’s finances and protecting your business.

Understanding Amazon Seller Insurance

What is Amazon Seller Insurance?

Amazon Seller Insurance is a type of insurance that provides coverage for Amazon sellers, protecting them from potential financial losses resulting from unexpected events. Amazon sellers could be vulnerable to financial losses from accidents, injuries, product liability claims, cyber-attacks, or natural disasters.

Amazon Seller Insurance provides different types of coverage to protect your business, including general liability insurance, product liability insurance, commercial liability and commercial property insurance, cyber liability insurance, and business personal property insurance.

Understanding the types of coverage available can help you make informed decisions about what coverage you need to safeguard your business.

Importance of Amazon Seller Insurance

Investing in Amazon Seller Insurance is essential to securing your business’s financial stability and ensuring your success as an Amazon seller. Insurance can help protect your business from devastating financial losses by covering unexpected events and potential risks.

It’s crucial to carefully consider your insurance needs and choose the right coverage to meet the unique needs of your business.

Types of Insurance Policies For Amazon Sellers

There are several types of insurance available for Amazon sellers, including:

A. General Liability Insurance: This insurance covers claims for bodily injury and property damage, including legal fees, medical expenses, and compensation for damages. This liability coverage also includes Product Liability Insurance.

B. Product Liability Insurance: This liability coverage protects claims related to defective or dangerous products, including legal fees and compensation for damages.

C. Business Property Insurance: This insurance covers damage or loss to your business’s physical assets, such as equipment, furniture, packaging material, and inventory.

D. Shipping and Cargo Insurance: This policy covers the loss or damage of goods during transit. It can be helpful for Amazon sellers who rely on shipping to deliver their products to customers, as it protects against potential financial losses resulting from damage, theft, or loss of goods during transit.

E. Commercial Umbrella Insurance: This provides additional liability protection besides your commercial liability insurance policy limitations. It can be helpful for Amazon sellers who require additional security against significant claims that exceed their usual coverage limitations.

F. Cyber Liability Insurance: Cyberattacks, data breaches, and other internet security concerns are all covered by this insurance. Cyber liability insurance should be a top priority for protecting Amazon sellers because they are particularly susceptible to these dangers as an online company.

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Amazon Seller Insurance Requirements and the Benefits

The insurance requirement is stated explicitly by Amazon (words of Amazon as the rephrased quote below):

You must obtain and maintain commercial liability insurance within 30 days of exceeding $10,000 in gross profits from sales in a month on Amazon.com, or sooner if we so request, per section 9 of the Amazon Services Business Solutions Agreement.

You can acquire excess, umbrella, or commercial general liability insurance, and your insurance should cover all of the products you list for sale on Amazon when you choose coverage.

Insurance Policy Requirements:

According to the Insurance Requirements page, your insurance coverage must satisfy the following requirements:

A. The insurance coverage must be at least $1 million per occurrence and total for all liabilities, including those involving products, products/completed operations, and physical damage originating from or arising in connection with the operation of your business;

B. Commercial, auto, general, umbrella, or excess liability insurance are all acceptable policy types that must be written on an occurrence basis;

C. Your insurance company must be capable of handling international claims and have a financial rating of S&P A- and AM Best A- or better (local equivalents are acceptable if S&P or AM Best are not recognized or used in the country where you are required to obtain insurance);

D. The policy must list Amazon.com Services LLC and any affiliates as additional insureds;

E. Your insurance provider must give Amazon at least 30 days notice of any cancellation, modification, or nonrenewal;

F. Any policy’s deductible must not exceed $10,000, and any deductible sum must be disclosed on the certificate(s) of insurance;

G. The policy must cover all sales from the items you’ve listed on Amazon;

H. Your insured name must match the “legal entity” name (you can examine this information on the Account Details page);

I. The policy must be completed, signed, and in effect for at least 60 days following submission.

The Benefits of Having Amazon Seller Insurance

  • Claims protection: Insurance covers unforeseen expenses from accidents or claims, helping you avoid out-of-pocket costs.
  • Credibility: Having Amazon Seller Insurance can also help establish your credibility as a responsible and professional seller in the eyes of Amazon and your customers.
  • Peace of mind: Insured means focusing on growing online business without worrying about potential liabilities. Knowing that you have coverage in place can provide peace of mind and allow you to focus on creating and delivering excellent products and services to your customers.
  • Protection against lawsuits: Besides claims protection, Amazon Seller Insurance can also protect against lawsuits. For example, if a customer files a product liability claim against your business, insurance can help cover legal expenses and compensation for damages.

The Costs of Amazon Seller Insurance

Understanding the costs of Amazon seller insurance is crucial to help protect your business from potential financial risks.

How Much Does Amazon Product Insurance Cost?

Amazon product insurance costs can vary widely, depending on the type of products (high & low risk) you sell and the coverage you need.

Factors Affecting the Cost of Insurance

Different elements contribute to the cost of insurance, including:

  • Your product type and its perceived risk
  • Projected sales revenue
  • Geographical distribution and coverage area

Comparing Prices Among Different Providers

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As with other insurance types, comparing quotes among different providers is essential. This allows you to find the best coverage for your business at the most competitive price.

Where to Buy Amazon Seller Insurance and How Much It Costs?

You can obtain Amazon seller insurance from local insurance companies or online providers. The cost depends on your business size, products, and desired coverage limits. Generally, online insurance agents or vetted insurance providers collect $23 to $60 per month.

Shopping for the Best Coverage and Rates

To find and contact insurance companies with the best coverage and rates, consider the following tips:

  1. Shop around and request quotes from multiple providers.
  2. Ensure the policy suits your specific needs and product niches.
  3. Review the fine print to understand exclusions and limitations.

Managing Your Amazon Seller Insurance

Keeping on top of your Amazon Seller Insurance can ensure your enterprise’s success. Here are some tips for successfully managing your insurance coverage.

Providing Proof of Coverage to Amazon

As an Amazon seller, providing proof of your insurance coverage is essential, and Amazon requires this to protect both buyers and sellers from potential risks. Maintain an updated copy of your insurance policy, ensuring it meets the minimum requirements Amazon sets.

Upload Proof of Insurance to Amazon (Certificate of Insurance)

Uploading proof of insurance is a crucial step for professional Amazon sellers. While the process may differ based on your geographical location, it’s vital to follow the guidelines provided by Amazon to avoid any potential issues or account suspensions.

Submitting the proof of insurance is simple:

  1. Log in to your Amazon Seller Central account and navigate the settings.
  2. Go to “Account Info
  3. Go to “Business Insurance
  4. Enter your name, insurer’s name, and legal entity name.
  5. Click “Choose a file” to upload.
  6. Click submit after uploading.

Add Additional Insureds to Your Policy

Amazon requires sellers to list Amazon as additional insured. Contact your insurance provider and request to add Amazon as an additional insured, such as “Amazon.com Services LLC and its affiliates and assignees,” with the address. Doing this strengthens your coverage and keeps your account compliant with Amazon’s requirements.

Exploring Additional Protection Strategies

Exploring additional protection strategies beyond basic insurance policies is crucial.

Let’s delve into the pros and cons of forming an LLC for your Amazon business and whether you should consider this an added protection layer.

Should You Form an LLC for Added Protection?

Setting up a Limited Liability Company (LLC) can provide add-on legal protection and a separate legal identity for your Amazon business. As an Amazon seller, segregating your assets from your business assets can help shield you from certain liabilities in case of legal issues.

However, weighing the benefits against potential drawbacks is essential before deciding if forming an LLC suits you.

Pros & Cons of Forming an LLC for Your Amazon Business

Let’s take a closer look at some significant advantages and disadvantages of forming an LLC for your Amazon business:


  • Reduced liability risks: Forming an LLC can mitigate personal liability, protecting your assets from business debts or lawsuits.
  • Potential tax perks: Depending on your location and business model, an LLC could offer tax benefits, such as pass-through taxation, which helps avoid double taxation.
  • Enhanced credibility: Operating under an LLC may give your Amazon business a professional appearance, potentially attracting more customers and partnerships.


  • Increased paperwork and costs: An LLC typically requires more paperwork and fees than a sole proprietor.
  • Ongoing compliance requirements: Running an LLC involves maintaining annual reports, adhering to state regulations, and staying up-to-date with tax requirements, which can be time-consuming.
  • Possibly limited protection: Although an LLC offers reduced liability, it doesn’t eliminate all risks. Personal assets could still be at stake in certain situations in legal disputes.

Ultimately, it would be best to consider whether forming an LLC aligns with your Amazon business goals and needs. Consulting with legal and financial advisors can help you make an informed decision.


As an experienced Amazon seller, you know the importance of protecting your business. Amazon seller insurance is crucial to preserving your mental health and allowing you to focus on growing your operation.

Taking the time now to understand your insurance options and securing the proper coverage can save you significant stress and financial burden in the long run. Protect your business and your livelihood by investing in Amazon seller insurance.

Frequently Asked Questions

Q. What is the difference between Amazon Business and Product Liability Insurance?

A: Amazon Business Insurance covers claims such as slips & falls, property damage, and false advertising. Also, it has a pre-occurrence limit of  $1,000,000.

On the contrary, Product liability insurance explicitly covers product-related injuries and those that general liability does not cover. The pre-occurrence limit is around $1,500,000.

Q. How much does Amazon seller insurance cost?

A: Amazon Seller Insurance costs vary based on product offerings, business operations, size, and location. Generally, annual premiums can range from a few hundred to several thousand dollars.

Researching and comparing insurance providers is crucial to find the best coverage and pricing options for your unique situation.

Q. Is it necessary to provide proof of insurance to Amazon?

A: Yes! Amazon requires certain sellers—such as those with a Professional selling plan or achieving specific sales thresholds—to provide proof of insurance. Failing to comply with Amazon’s insurance requirements can result in account suspension or other penalties.

Q. Can I add additional insureds to my Amazon seller insurance policy?

A: Adding additional insureds to your Amazon Seller Insurance policy is often possible and recommended. You can add Amazon and its assignees as additional insureds in your policy.

Consult your insurance provider to discuss your needs and potential policy adjustments.

Q. Will Amazon cover any claims related to my products or business?

A: Amazon Seller Insurance is designed to protect your business from potential claims related to your products, including product liability claims, property damage, and personal injury.

However, your specific coverage will depend on your policy details, and not all insurance providers may offer complete protection.

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