When most sellers first start their Amazon business, they often don’t realize that if you’re a Pro Merchant Amazon will require you to have liability insurance.
This may sound intimidating to some, but e-commerce insurance isn’t as complicated (or expensive) as you may think.
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If you’re selling on Amazon, you need to treat it like any other business, and having the proper insurance to protect yourself and your business is part of that.
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Why do you need insurance to sell on Amazon?
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The reason is very simple: To protect yourself/your company’s assets and cover any financial obligations resulting from accidents, injuries, or litigations.
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Should you form an LLC for added protection?
It’s not required to have an LLC to sell on Amazon*. Having an LLC plus product liability insurance will give you more peace of mind, especially if you are a bigger seller.
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Now on to Amazon's requirements (and where to find that information)!
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In Seller Central, it is a little unclear where to find information on Amazon’s insurance requirements.
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So basically this means if your sales are over $10,000 in one month, you will need to carry insurance with at least $1,000,000 in coverage.
Even if you’re just starting out or are a little below the insurance threshold, we still recommend being insured.
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So where do I get liability insurance and how much does it cost?
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Applying for Commercial General Liability, Umbrella, and/or Excess Liability Insurance coverage is pretty straightforward. Simply contact insurance companies such as Wells Fargo, Progressive, Geico, etc. to receive quotes. The average cost is typically around $500-$1,000 per year.
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And that’s it!
As you can see, getting insurance for your Amazon business isn’t as difficult as you might think. Plus, it will give you and your business some much-needed protection.
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In other words, have peace of mind so you can focus on growing your business.