Paul Sanchez
Amazon requires its Pro Merchants and third-party sellers with over $10,000 in monthly sales to have small business insurance. This includes general liability insurance, commercial umbrella insurance, and in some cases, commercial auto insurance. Amazon sellers need to be insured to protect themselves from financial losses in the event of accidents, property damage, bodily injury, or lawsuits. Even if sellers don't meet Amazon's insurance requirements, it is still recommended to have business insurance to protect against various risks. Amazon Flex drivers are also required to have specific insurance coverage as independent contractors.
| Characteristics | Values |
|---|---|
| Type of insurance | Hire & Reward insurance, Social, Domestic & Pleasure insurance, Commercial insurance, Commercial auto insurance, Business Owner's Policy, Commercial property insurance, Workers’ compensation insurance, Commercial umbrella insurance, General liability insurance, Product liability insurance, Professional liability insurance, Business interruption insurance, Cyber liability insurance, Cargo insurance, Sellers’ suspension insurance, Inventory insurance, Private hire taxi insurance |
| Who needs insurance | Amazon sellers with a Pro Merchant account and gross sales of $10,000 or more per month, Amazon Flex drivers |
| Requirements | $1 million in liability coverage per occurrence and in aggregate, coverage for products/complete operations, broad form property damage, broad form contractual coverage, bodily injury, personal injury, property damage |
| Proof of insurance | Sellers must mail a certificate of insurance to Amazon |
What You'll Learn
Amazon's insurance requirements for Pro Merchants
Amazon has specific insurance requirements for its Pro Merchants to ensure they are protected from financial losses and liabilities. Pro Merchants on Amazon are required to have business insurance if they have gross sales of $10,000 or more per month for three consecutive months. This insurance requirement is in place to limit Amazon's liability exposure if a seller's product causes injury or property damage.
Pro Merchants must carry general liability insurance with a minimum of $1 million per occurrence and in aggregate limit. This insurance covers common third-party lawsuits, such as slip-and-fall accidents and product liability claims. It is important to note that product liability insurance may need to be added as an endorsement to the general liability policy.
Additionally, Pro Merchants must name Amazon and its assignees as additional insureds on their policy. This means that Amazon will be protected by the seller's insurance provider if they are sued due to the seller's actions.
To comply with Amazon's requirements, Pro Merchants should review their policy options carefully and ensure they have the necessary coverage, including:
- Products/complete operations coverage
- Broad form property damage coverage
- Broad form contractual coverage
- Personal injury coverage, including libel and slander
Amazon may request a certificate of insurance as proof of coverage. This certificate must be sent to the address provided by Amazon: c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management.
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General liability insurance
Amazon requires its Pro Merchants and sellers with over $10,000 in monthly sales to have small business insurance, including general liability insurance. This type of insurance helps cover common third-party lawsuits, such as slip-and-fall accidents, and typically includes product liability insurance, which offers financial protection against harm caused by products sold by the insured.
The minimum requirements for general liability insurance for Amazon sellers are $1 million per occurrence and $1 million aggregate limits of commercial general liability insurance and product liability insurance. Amazon requires sellers to name Amazon and its assignees as additional insureds on their policies. This means that Amazon will have protection from the seller's insurance provider if someone sues them because of something the seller did.
Amazon sellers can obtain general liability insurance through various insurance companies, including NEXT and Insureon. The cost of general liability insurance varies depending on factors such as the type of product sold, the size of the business, and revenue. The average cost is typically around $500-$1,000 per year, with some providers offering policies as low as $300 per year.
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Commercial auto insurance
Amazon Flex drivers must carry the proper insurance to drive legally in their state. Amazon will check to ensure drivers carry the proper coverage by requesting proof of insurance before they can drive for them. Amazon's commercial auto insurance policy covers Flex drivers while actively making deliveries, but drivers need a personal liability policy to receive that coverage.
In addition, some companies may require Amazon Flex drivers to get rideshare insurance. All drivers in New York need additional rideshare insurance, as Amazon's commercial coverage does not extend to NY drivers. Amazon Flex drivers should consider carrying more than a liability-only policy to ensure they have adequate protection in the event of an accident. Collision coverage and comprehensive coverage can help protect drivers and their vehicles even if they are at fault in an accident.
Amazon's commercial car insurance coverage includes additional liability auto insurance coverage and uninsured motorist coverage. Comprehensive and collision coverage are also included, contingent upon each situation. Amazon specifies that its commercial coverage only covers Amazon drivers and does not cover passengers.
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Amazon Flex insurance
Amazon Flex drivers are independent contractors, or self-employed drivers, who use their own vehicles to make deliveries. As such, it is the driver's responsibility to ensure they have the right insurance coverage.
To drive for Amazon Flex, you will need Hire & Reward insurance, a type of commercial auto insurance policy that covers you for making deliveries in exchange for money. You will also need Social, Domestic & Pleasure insurance, which is the usual personal auto insurance policy covering personal use, such as driving to the shops or commuting.
Amazon Flex drivers need a commercial insurance policy, which includes public liability cover. This type of insurance protects you if you are in an accident and you injure someone or damage their property. It is worth noting that this is not included in your usual Social, Domestic & Pleasure personal auto insurance policy.
Amazon no longer provides insurance for Amazon Flex drivers. It stopped providing ‘Additional Cover’ commercial insurance in 2022, which covered drivers while making deliveries and included cover for any damage to third-party vehicles.
Therefore, it is important for Amazon Flex drivers to arrange their own insurance coverage with an approved insurer. The cost of insurance will depend on the type of vehicle, where it is driven, and its use. Insurers will also consider the driver's history and any previous insurance claims.
Amazon Flex drivers should also be aware of the rules regarding passengers or pets while making deliveries. Although Amazon allows passengers or pets in the vehicle, there are restrictions on their interaction with customers and they cannot accompany deliveries.
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Amazon seller insurance
Amazon requires its sellers to have insurance, especially if they are Pro Merchants or have sales of over $10,000 in a month. This insurance should have a minimum of $1 million per occurrence and in aggregate limit.
The main types of insurance that Amazon sellers need are:
- General liability insurance
- Commercial umbrella insurance
General liability insurance covers common third-party lawsuits, such as slip-and-fall accidents, and usually includes product liability insurance. This is important for financial protection against harm caused by your products. For example, if a customer claims that a sweater they bought was treated with a chemical that caused an allergic reaction, general liability insurance can help you pay for legal fees and judgments. It also covers property damage to someone else's belongings and personal injury, like libel or slander.
Commercial umbrella insurance boosts coverage on a seller's general liability, employer’s liability, or commercial auto insurance policy once the limit is reached on a claim. This is useful for customer injury lawsuits, property damage lawsuits, and employee injury lawsuits.
Other types of insurance that Amazon sellers may want to consider include:
- Workers’ compensation insurance, which is required by most states and gives benefits to employees if they get a work-related injury or illness.
- Commercial property insurance, which helps protect your owned or rented building, tools, equipment, and inventory.
- Commercial auto insurance, which is required for business-owned vehicles and covers accidents involving a company vehicle.
- Cyber liability insurance, which is recommended for shops that handle credit card numbers or other sensitive information.
Amazon has an insurance accelerator that makes it easier and more affordable for sellers to obtain insurance. They partnered with Marsh to offer a network of vetted insurance providers so sellers can quickly obtain quotes and get insured fast.
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Frequently asked questions
Yes, Amazon requires some third-party sellers to provide proof of insurance. If you are an Amazon seller with a Pro Merchant account and gross sales of $10,000 a month or more for three months in a row, Amazon requires you to have business insurance.
Amazon requires sellers to have a minimum limit of $1,000,000 per occurrence and in aggregate, covering bodily injury, personal injury, and broad form property damage arising from products or business operations. The policy must also cover all available product listings on Amazon.com.
Amazon sellers need insurance to protect their business from costly accidents and to comply with Amazon's policies. Business insurance helps Amazon sellers recover from incidents such as a fire that destroys inventory or a product malfunction that leads to property damage.
You can obtain Amazon seller insurance by purchasing coverage from an approved insurer and providing proof of insurance to Amazon. This can often be done through a simple online process, and some companies offer customized coverage for third-party Amazon sellers.
