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Amazon Seller Insurance: How It Works & Best Providers

Amazon has long required its sellers to carry certain forms of business insurance that can pay out on a relatively high level of liability claims from customers. However, it has never really enforced the rule.

Recently, that all changed. Amazon is now requiring sellers to meet the business insurance rules they agreed to when they signed up to sell on the platform. The announcement was a part of a revision to Amazon’s A to Z Guarantee program

Which seller is required to have insurance coverage to continue selling on Amazon?

As of September 1, Amazon changed when a seller needs to obtain certain defined types of insurance to be in compliance with its seller agreements. Previously, a business on the platform had to get coverage when they reached $10,000 in sales for three consecutive months to once they obtain $10,000 in sales in any month. Instead of giving sellers time to meet their insurance requirements once they start becoming successful on Amazon, they now have to comply immediately after achieving success, even if it does not continue at the same level.

When your monthly sales revenue from Amazon platform reaches $10,000, you need to have the insurance coverage immediately. Otherwise, Amazon can kick you out of the platform.

Amazon also said that it will pay A to Z Guarantee claims that seek compensation for personal injury and property damage under $1,000 and will not demand repayment from sellers who hold valid insurance. The types of insurance policies that could meet Amazon’s stringent requirements, which are outlined below, along with coverage details, include commercial general, umbrella, or excess liability insurance.

What is Amazon Insurance Accelerator program?

Amazon Insurance Accelerator program is a marketplace of Amazon vetted and approved business insurance brokers and providers.

Two insurance brokers offer coverage through the Insurance Accelerator: NEXT and Marsh. Each of them has very high quality business insurance providers as part of their networks.

Insurers participating in the Accelerator include: Chubb, Harborway Insurance underwritten by Spinnaker Insurance Company, HiscoxLiberty Mutual Insurance, Markel, and Travelers. The policies are made available digitally by NEXT, Bold Penguin, and Simply Business, Inc.

Does Amazon sellers have to buy their insurance policies from these companies in the Accelerator program?

No, Amazon doesn’t require its sellers to buy insurance coverage from the providers in its accelerator programs as long as they carry the policies with sufficient coverage.

However, the benefits of buying insurance policies from these companies in the accelerator program are the following:

  • You are certain that the policies you buy from these companies meet the requirements from Amazon.
  • You can buy these policies completely digitally from your Amazon seller account.
  • When the policies are renewed or changed, these insurance companies will keep Amazon updated automatically. You don’t need to do additional work

However, it doesn’t guaranteed that you will have better rates from these companies and that you are always approved for a policy from these companies. If you are not approved, you have to get the policy from elsewhere and submit to Amazon to maintain your seller status.

In addition, the policy you have from these companies in the Accelerator program only covers the claims you may receive from Amazon buyers. If you also sell your product elsewhere, this policy doesn’t cover your additional sales. You need to obtain an additional product liability insurance policy.

>>MORE: Best Product Liability Insurance Companies

If you choose to buy a policy from the companies in the Accelerator program, below are the top 3 companies that we recommend:

Top 3 Amazon business insurers

  • Hiscox: Best for Amazon resellers with unique insurance needs
  • Travelers: Best for resellers that want coverage from an industry leader
  • Chubb: Best for resellers who want to limit business risk

Hiscox: Best for Amazon resellers with unique insurance needs

Hiscox offers a complete array of business coverages and is a leading insurer that specializes in small business insurance. They could be one of the providers you get a quote from through the Insurance Accelerator.

It’s a smart move to get a quote directly from Hiscox to ensure you’re paying a fair price for your Amazon business insurance.

Hiscox offers top tier service, provides fast quotes, instant coverage and quick claims processing. If you choose Hiscox for your coverage, you can rest assured knowing you’re entrusting your Amazon business relationship to a firm that’s been in operation since 1901. More than 400,000 companies choose Hiscox for their coverage.

Travelers: Best for resellers that want coverage from an industry leader

Travelers is a leading provider of business insurance in the United States. The company has been in operation for more than 165 years and is the only property casualty company in the Dow Jones Industrial Average. It’s strength and stability makes it clear why it’s a part of the Insurance Accelerator.

Travelers is known for its high level of customer service, flexible solutions and cutting-edge innovation. Travelers also uses the extensive experience of its more than 30,000 employees to help businesses reduce risk, which typically results in lower premium costs. 

If you get an Amazon quote from Travelers, it could be worthwhile to speak with a business insurance agent affiliated with Travelers to find out if you can get Amazon approved coverage from the firm at a better price.

Chubb: Best for resellers who want to limit business risk

Chubb is the largest publicly traded property and casualty insurance company in the world. It’s no wonder they made the Amazon cut.

Because the experts at Chubb have a deep understanding of the risks faced by product manufacturers and sellers, they have programs — and are able to offer advice — on how to reduce product related risks. Not only is lowering risk levels the right thing to do, it can help reduce business insurance costs.

If you get an Amazon quote that has Chubb as the insurer, you can consult with an agent that represents the firm to ensure your premium price is reasonable.

If you choose to buy insurance policy outside of the accelerator program, below is the Amazon’s insurance requirements that you need to meet.

What are Amazon’s insurance requirements?

Apologies for the technical language, but some of this comes direct from Amazon’s highly detailed reseller insurance requirements.

  • Policy limits must be at least $1 million per occurrence and in aggregate, covering all liabilities caused by or occurring in conjunction with the operation of your business, including products and completed operations and bodily injury
  • Coverage can be through commercial general, umbrella or excess liability insurance and must be written on an occurrence basis. Based on the above bullet requirement, Amazon could boot you from the platform if you have an aggregate $1 million limit and experience a single $1 million occurrence claim, which means you should likely secure a higher than $1 million aggregate limit
  • The insurance provider must be able to handle claims globally. Be aware that most business insurers are country or region based 
  • The insurer must have a financial rating of A- or better through Standard and Poors or A.M. Best, or the equivalent at a rating agency for insurance companies outside of the United States
  • Your insurer must provide Amazon with at least 30 days’ notice of cancellation, modification or nonrenewal of your policy. (As of now, only insurers that are part of Amazon’s network are able to do this automatically. If you get coverage outside of it, you’ll have to remember to do this or you’re off Amazon.)
  • The policy must name Services LLC., and its affiliates and assignees as additional insureds
  • The deductible for your policy must not be greater than $10,000 and the deductible amount must be listed on the certificate of insurance. This can be a challenging deductible for businesses that just met the $10,000 monthly sales requirement for seller business coverage
  • The policy must cover all products you sell on the Amazon website
  • The name on your insurance must match the legal entity name you provided to Amazon, which you can find on your account information page
  • The policy must be completed in its entirety and signed
  • The policy must be valid for at least 60 days from the date of submission. 

What are the three types of coverages Amazon requirements allow?

Amazon outlines three types of coverages in its insurance documentation including:

  • Commercial general liability insurance: This coverage typically only covers injuries that happen to customers, clients and passers-by on a business property, or physical harm to client property while conducting business. This has nothing to do with Amazon’s business model. Even though Amazon does not stipulate it in its rules, it’s likely that the affiliates in the Insurance Accelerator will upsell product liability insurance as an add on to general liability coverage to meet Amazon requirements. Learn more about the best general liability insurance companies
  • Umbrella insurance: This provides relatively expensive coverage for additional risk over typical policy limits. It’s one way to meet Amazon’s high coverage requirements. Learn more about the best commercial umbrella insurance companies
  • Excess liability coverage: This is similar to umbrella insurance, but kicks in when your commercial liability coverage reaches its limits, which could help with the very high Amazon policy requirements.

These are all relatively complex coverages with very specific requirements. You will likely want to get a quote through the Amazon Accelerator to make sure you have coverage that Amazon will find acceptable. Then you can see if you can beat the price by getting a quote direct from a provider that meets their stringent requirements.

Amazon sellers insurance: Cost and quotes

It makes sense to get quotes from the Amazon Insurance Accelerator. You may also want to request comparable quotes from the insurers served up by Amazon or the three we outlined earlier in the article. Be careful that you request coverage that meets Amazon’s strict requirements or you could be kicked off the platform you depend on for the success of your business.

>>MORE: How Much does Product Liability Insurance Cost?

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