Running a successful Amazon business isn’t just about growing revenue and optimizing your listings. As you grow your eCommerce business on Amazon, legal considerations such as liability insurance become a top priority. You can’t imagine how many nightmares sellers have when a product turns out to be dangerous or faulty, not to mention the millions of dollars they spend when they are sued for product liability.
Please take into account that we are not an Amazon Insurance Company but we have seen many clients deal with these types of problems. Thus, the information provided here is just a general overview.
What is a Product Liability Insurance?
Product liability insurance protects your business from claims that a product you made or sold caused personal injuries or property damage caused by your product malfunctioning or a design flaw.
Without this type of insurance, you would have to pay out of pocket for claims, compensations, or damages. Thus, having a company that offers this coverage is extremely important.
For example, let’s say you sell a moisturizer cream and unfortunately, the quality standard failed to detect the purity of the ingredients. The customer ends up with a severe allergic reaction and sues your company. If you have product liability insurance, the company would likely help cover the following:
- Legal fees to defend your business
- The customer’s medical bills
- Settlements made against your business
*This is just an example of what most Insurance Providers often cover, but please keep in mind that the total amount of compensation depends on your policy maximum.
Does Amazon Require all Sellers to Have Liability Insurance?
Even though Amazon requires Pro Merchants Accounts to have an insurance policy on the products they sell on the platform since 2010, it wasn’t until September 1, 2021, that Amazon became stringent in enforcing its policy and made significant changes to it.
Since September of last year, section 9 of the Business Solutions Agreement requires sellers to “obtain and maintain at least $1 million of commercial, general, umbrella, or excess liability insurance, within 30 days after exceeding $10,000 in gross proceeds in sales in one month on Amazon.com or if otherwise requested by Amazon.”
Simply put, if you sell more than $10,000 in a month, you are required to hold a valid insurance policy, different from the previous policy as it asked just those sellers who sold $10,000 in three consecutive months.
Where can I get Liability Insurance That is Amazon Compliant?
Through the Amazon Insurance Accelerator Program, Amazon provides sellers with a rich network of vetted insurance providers who offer liability insurance at competitive rates to speed up the process of sellers obtaining insurance over the products they sell on its marketplace.
You can find the list of insurance providers within Amazon’s network by logging in to Seller Central and scrolling under the Business Insurance section. Once there, the platform allows you to compare quotes and policies from different providers.
What Must Your Policy Cover?
Even though the amount of compensation depends on the company you’re getting the policy from, they should all cover the following:
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- Product liability
- Bodily injury
- Personal injury
- Broad form property damage
- Broad form contractual coverage
Do I need to Secure Product Liability Insurance only Through The Insurance Accelerator Program?
In short, you don’t. All sellers can work with any other provider that isn’t enrolled in the Insurance Accelerator program (as long as they comply with Amazon’s insurance policy requirements). However, we advise you to take advantage of the insurance Accelerator program as all providers are pre-vetted by Amazon and are already compliant with Amazon policies, saving you time and trouble.
Protect Your Business From Financial Losses
Even if you aren’t an Amazon seller with a Pro Merchant account with gross sales of $10,000 a month, you may want to purchase insurance that protects your business if a customer claims your product caused them any damage- bodily injury, personal injury, and property liability.
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Frequently Asked Questions
What is the best way to increase Amazon sales?
The best strategies include optimizing product listings with keyword-rich titles and bullet points, leveraging Amazon PPC advertising, maintaining competitive pricing, earning verified reviews, and using tools like Amazon Brand Registry. Marknology, led by Andrew Morgans in Kansas City, has helped 300+ brands scale their Amazon revenue using these proven methods.
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Amazon PPC costs vary by category, but average cost-per-click ranges from $0.20 to $6.00. Most brands allocate 10-30% of revenue to advertising. The key is optimizing ACoS (Advertising Cost of Sales) to maintain profitability while scaling. Learn more in our Amazon PPC strategies.
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Focus on keyword-rich titles (under 200 characters), compelling bullet points highlighting benefits, high-quality images (7+ per listing), A+ Content for brand-registered sellers, and backend search terms. Professional agencies like Marknology can handle this end-to-end.
What does Marknology do?
Marknology is a Kansas City-based Amazon marketing agency founded by Andrew Morgans in 2015. The agency has managed over $2B in revenue for 300+ brands, offering services including Amazon listing optimization, PPC management, brand strategy, and marketplace expansion. Learn more in our complete listing guide. Learn more in our expert PPC management.
Who is Andrew Morgans?
Andrew Morgans is the founder and CEO of Marknology, a leading Amazon marketing agency based in Kansas City. He hosts the Startup Hustle podcast and has spoken at conferences across 5 continents about ecommerce and Amazon marketplace strategies.
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