When Insurance is Required for Selling on Amazon FBA

One of the confusing things about selling on Amazon FBA is knowing what exactly is required and what isn’t. One topic where this is especially confusing is when as a seller that you need to have product liability insurance. You might not even be aware that you need insurance when selling on Amazon, but after some digging, the quick answer is, if you are an Amazon Seller using any of their professional selling plans that you are required to have insurance.

Amazon’s Official Stance on Insurance

Any time you hear anything about Amazon and Amazon FBA, it’s best to do your own research or hear it directly from the source. You can find Amazon’s official stance here on Professional Selling Plan Insurance Requirements.

On that page they specifically say:

“Sellers with professional selling plans on Amazon.com must provide proof of Commercial General Liability insurance. This insurance, obtained at the seller’s expense, shall cover up to $1,000,000 per occurrence and in the aggregate and must include products liability, bodily injury, or personal injury, property damage, and other requirements as stated in the Amazon Services Business Solutions Agreement. The insurance must indicate that “Amazon.com, Inc., and its affiliates and assignees” are added as additional insureds.”

Having Insurance Vs Providing Proof of Insurance

Do note that while it says you must provide proof of insurance, it doesn’t say that you need to have it in order to start and open  professional selling account. Basically, Amazon is saying that you should have it and should the occasion arise, you should be able to provide proof that you have insurance that meets their requirements. This is good news for new sellers who want to get started quickly without having to jump through more hoops by having to obtain insurance right from the start.

Purchasing Insurance When Exceeding the Insurance Threshold

Digging even deeper into Amazon’s insurance requirement, you’ll find listed in their Business Services Agreement a specific line about when you might be asked to provide proof of liability insurance.

With regards to insurance it says:

“If the gross proceeds from Your Transactions exceed the applicable Insurance Threshold during each month over any period of three (3) consecutive months, or otherwise if requested by us, then within thirty (30) days thereafter, you will maintain at your expense throughout the remainder of the Term…”

Your next question would be, what is the Insurance Threshold? Further down the page it states:

“Insurance Threshold” means the applicable one of the following:

  • Ten Thousand Canadian Dollars ($10,000) (if the Elected Country is Canada),
  • One Million Japanese Yen (¥1,000,000) (if the Elected Country is Japan),
  • One Hundred Thousand Mexican Pesos ($100,000) (if the Elected Country is Mexico),
  • Ten Thousand U.S. Dollars ($10,000) (if the Elected Country is the United States).

Putting everything together, Amazon is saying, if you are a US seller – that if you sell over $10,000 in sales for 3 months in a row you need to have liability insurance. While you might not be asked to show proof of insurance when asked to provide proof, Amazon says they’ll give you 30 days to provide proof. So while you can get lucky and not ever be asked to provide insurance, it’s probably best to have it not only to satisfy Amazon’s requirements, but to have it in case there is ever an issue with one of your products with a consumer.

To Sum it All Up

  • Technically Amazon requires any seller with a professional account to have product liability insurance
  • Amazon will probably not ask you for proof of insurance if you make less than $10,000 gross a month
  • Higher chance of being asked for proof of insurance if you sell more than $10,000 a month for 3 months in a row
  • You have 30 days to provide proof of insurance from when they ask to see proof


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1 comment

  1. Hi. Thank you for the great info. Do youhabe any suggestions on companies that specifically provide liability ins. For amaz sellers?

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