Product liability insurance for Amazon sellers
Whether you use Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM) to deliver your products to customers, Amazon requires all sellers to carry insurance.
Product liability insurance is designed for any business that sells, manufactures, or distributes a product to consumers. It is essential coverage for online retailers, e-commerce businesses, and brick-and-mortar stores because it protects against claims alleging third-party property damage or bodily injury caused to the buyer by any product you sell, manufacture, or distribute.
Do I need insurance to sell on Amazon?
Yes. As of September 1, 2021, Amazon requires all sellers to carry liability insurance who earn more than $10,000 in monthly sales. Amazon seller insurance from Zensurance helps Canadian retailers meet Amazon’s insurance requirements, including:
- A policy with a limit of at least $1 million per occurrence and in aggregate covers liabilities caused by or occurring in conjunction with your business operations, including products, property damage, and bodily injury.
- The insurance policy type can be either commercial general liability, umbrella, or excess liability and be occurrence-based.
Whether your business is a private label seller, wholesaler, or retail shop that uses Amazon or any online marketplace, including eBay, Etsy, and Wayfair, it’s vital to safeguard your company against any unknown risks that may arise.
What does it cover?
A comprehensive Amazon sellers insurance package will typically include the following coverages:
- Product Liability Insurance: Product liability coverage is a must-have for retailers. It is typically included in a CGL policy, and it protects against claims alleging third-party property damage or bodily injury caused by a product you manufacture, distribute, or sell to a consumer.
Damages covered by product liability are usually the result of a defect in the design, manufacturing, or marketing, such as an incorrect label or a lack of safety warnings. Also, if you import or export products outside of North America, check with your broker to ensure that the products meet industry standards.
- Commercial General Liability Insurance (CGL): As an Amazon seller, you conduct your business online. CGL insurance, best known as slip-and-fall insurance, protects you against the day-to-day risks that can happen when interacting with third parties, such as claims of bodily injury or property damage. However, CGL is actually an amalgamation of a number of coverages that are designed to allow your business to grow. Specifically:
- Distribution contracts as per the Amazon insurance requirements
- Event, kiosk, or trade shows to allow you to promote your business through additional sales channels
- Landlord requirements
- Cyber Liability Insurance: For any online business or Amazon seller, cyber liability insurance is one of the most critical coverages to have for selling products online, especially if you’re storing your customers’ data. Cyber liability insurance covers costs associated with electronic incidents, such as cyber-attacks.
For example, suppose an employee clicks on a malicious link and accidentally gives hackers access to your customer database, compromising their financial data. In that case, cyber liability insurance could cover the cost to notify your customers and repair your data systems, as well as any legal expenses that result from a data breach.
- Commercial Property Insurance: If you store your product inventory in a location like a warehouse, have a brick-and-mortar shop, or operate your business from home, you need commercial property insurance.
Commercial property insurance protects your physical location, as well as its contents (including your inventory) from insured risks that occur beyond your control, like a fire, theft, or flood. It’s a common misconception that home-based businesses are covered through a personal homeowner insurance policy. Most home insurance policies exclude business-related claims.
Carrying commercial property insurance gives you the option of getting business interruption coverage, which reimburses the net income lost following an insured event. It may also cover overhead costs, employee wages, and other costs associated with temporarily closing your business. However, business interruption coverage does not cover income lost due to a pandemic, infectious disease, or government-mandated closure.
How much does it cost?
Amazon sellers can expect to pay anywhere from $1000 to $3000 per year for a commercial general liability insurance policy with a $2 million limit, but the precise amount you pay is based on several factors, including:
- Your business’s location
- The products you sell
- Your annual and projected revenue
- Your years of experience
- How many employees you have
- Any previous insurance claims you may have made
How Zensurance helps Amazon sellers in Canada
Zensurance helps Amazon sellers get the customized insurance coverage they need to manage their risks.
More than 100,000 Canadian entrepreneurs and small business owners trust Zensurance to protect them and cover their needs with comprehensive coverage. We make it straightforward to get a fast, online quote, speak to one of our licensed brokers, and get your certificate of insurance.
Common claims scenarios
Frequently asked questions