Amazon Sellers | 3 Proven Reasons Why You Need Commercial Insurance

Selling on Amazon has become a lucrative venture for many entrepreneurs, offering a global platform to showcase and sell products. However, amidst the excitement of running a successful e-commerce business, it’s crucial to address potential risks and protect your investment before it’s too late. One often overlooked aspect is insurance for e-commerce. In this blog post, we explore the types of insurance coverage that can benefit individuals engaged in e-commerce.


Why Do Amazon Sellers Need Commercial Insurance?

1.) First off, you need commercial insurance to meet amazon’s legal requirements. Amazon has set requirements that need to be followed in order to be able to sell on their platform. Not complying with their rules can result in being banned from selling your products on amazon or even legal ramifications. One of these requirements is that sellers who do a certain amount in sales a month must carry insurance. This is to protect you, the business owners as well as their customers.

2.) Another reason Amazon sellers need a commercial insurance policy is because it protects you and your business. If an issue were to occur with the products you sell on your store, you are liable for those damages. In the situation that someone sues your business because the item you sold on your store cause injury or property damage, you could be held responsible. Lawsuits are stressful financial burdens on businesses, and having insurance will pay for these costs. Having coverage in place helps safeguard your business and financials by providing legal defense that could protect you from thousands, or hundreds of thousands of dollars in costs.

3.) Another reason your Amazon store should have commercial insurance is that having insurance in place provides credibility for your brand and is reassuring to your customers. If they know they are purchasing from a legitimate company that has coverage in place, it gives them peace of mind and they are likely more inclined to make a purchase from your store.

What Requirements Does Amazon Have?

Amazon mandates that sellers generating $10,000 in monthly sales, designated as Pro Merchants, must possess commercial insurance. Sellers falling under this category are obligated to acquire and sustain insurance coverage within 30 days of reaching their initial $10,000 sales month or upon receiving notification from Amazon. Not complying with the rules set in place could result in penalties such as removing your store from Amazon. If your store makes up a significant amount of your income this could be devastating to your livelihood. Be sure to comply with Amazon’s rules and obtain the proper coverage. Visit this link for more information on the requirements.

What Types of Coverage Should You Have?

Product Liability

Product liability insurance offers protection in situations where products you sell on your Amazon store result in harm or injury to a customer. This coverage is vital as it shields you from potential legal and medical expenses associated with such incidents. Specifically, it protects against claims arising from defects, mislabeling, or any other issues related to the products you have for sale on your Amazon store. Having this type of insurance is essential for mitigating the financial risks associated with product-related liabilities in your business.

Business Personal Property

E-commerce businesses rely heavily on technology such as computers, printers, label printers, cameras and other equipment. The “stuff” that your business owns is called Business Personal Property. It is all of the non-permanently attached equipment in your business. If you operate an Amazon store and have an issue with your equipment, it may cause you issues with continuing your daily operations. Having an insurance policy that covers this kind of equipment can save you thousands if it is ever damaged or stolen.

Cyber Liability Insurance

As an Amazon store owner, your business is susceptible to cyber threats such as data breaches and hacking. Cyber liability insurance provides coverage for expenses related to data breaches, including legal fees, notification costs, and credit monitoring services for affected customers. Safeguarding sensitive customer information is not only ethical but also a legal requirement in many jurisdictions. For more information on cyber insurance, read our blog to discover 6 ways to protect your business.

Shipping Insurance

Shipping is a crucial aspect of e-commerce, and delays, damages, or losses can occur during transit. Shipping insurance protects your business against financial loss due to damaged or lost shipments. While carriers may offer some coverage, it’s essential to assess your shipping volume and consider additional coverage if needed.

Professional Liability Insurance (E&O)

Errors and omissions (E&O) insurance, also known as professional liability insurance, provides protection if your business is sued for professional mistakes, negligence, or failure to deliver on promises. This can be particularly relevant for Amazon sellers who may face claims related to misrepresentations, false advertising, or other issues.

To Conclude

While the world of e-commerce on platforms like Amazon offers tremendous opportunities, it’s essential to be prepared for the unexpected. Insurance for Amazon sellers is a critical component of risk management. By securing the right coverage, you can protect your business, assets, and reputation.

At Narrows Insurance we specialize in providing tailored insurance options for all businesses, including those engaged in selling on Amazon. As you continue to grow your Amazon store, having the proper coverage becomes a must to protect your business against unforeseen challenges.

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