Protecting Your Amazon Business: Understanding Product Liability Insurance

If you are an Amazon seller, it is crucial to have a thorough understanding of the potential risks and the importance of product liability insurance. Getting sued can have significant implications and may threaten your business. Let's explore why you need Amazon Product Liability Insurance and how it can protect you.

Why Do You Need Amazon Product Liability Insurance?

Despite the cold, official nature of acquiring an insurance policy for your Amazon business, it is a necessary step. Amazon requires sellers to have an insurance policy to mitigate the risks that can jeopardize the success of your business.

Understanding the Risks

Imagining a scenario where a customer buys a lipstick from your Amazon store, only to wake up with an allergic reaction the following day, and heads to the emergency room, underscores the potential risks involved. In this case, the customer may sue you for the medical bills. The makeup was your product, after all.

A Real-life Example: The Exploding Hoverboard

Despite following safety guidelines, incidents can still occur. For example, the explosively dangerous hoverboard incident that many customers purchased and used on Amazon highlights the risks of selling products online. The hoverboard caused significant property damage and an injured customer, yet Amazon denied responsibility for the expenses. This incident resulted in a policy change from Amazon.

What is Product Liability Insurance?

Amazon Product Liability Insurance specifically protects sellers like you if something you sell causes property damage or injury to a consumer. Even if your item did not cause significant damage to put you out of business, having this type of insurance can provide peace of mind and financial security.

Liability Coverage Requirements

If your gross earnings are over $10,000 per month, you are required to have at least $1,000,000 in liability coverage. To meet this requirement, you need to get Amazon Seller Insurance and ensure that Amazon is added as an additional insured on the policy.

Consequences Without Insurance

The decision to acquire this coverage can have drastic financial implications if you don't. If you do not have the required insurance, you may be personally responsible for the costs of any valid claims made against you. This could be catastrophic, especially if the claims exceed $1,000.

Amazon's Current Policy

Amazon is now ensuring that sellers who gross more than $10,000 monthly add liability coverage to their insurance policies. This coverage will help cover the claims. If you do not comply or if claims exceed $1,000, you can expect to receive a payment demand from Amazon.

Claims and Reimbursements

Specifically, Amazon will:

Pay up to $1,000 for claims involving property damage or personal injury in their store. Not pay for claims over $1,000 unless you have valid insurance.

Final Word

In the e-commerce marketplace, where businesses thrive and the litigation environment is prominent, it is imperative to have an Amazon product liability insurance policy. This policy can safeguard your business from potential lawsuits and provide the financial stability needed to continue operating successfully on the platform.

To conclude, always consider having liability insurance regardless of your gross sales earnings. It is a proactive step in ensuring the sustainability and growth of your Amazon business.