Why Amazon sellers need insurance

If you’re an Amazon seller, chances are you’ve noticed some seismic changes in the e-retail landscape these last few years.

Online sellers have seen a significant uptick in sales since the start of the COVID-19 pandemic, as more shoppers swap traditional brick-and-mortar shops for virtual shop fronts.

Lockdown or not, it’s a trend that seems here to stay. Consumers have embraced the speed and convenience of shopping online. And that’s nothing short of good news for your bottom line, of course.

That said, there’s a balance to be had. If something goes wrong and your business takes a hit, you could see your funds drain away quicker than you can say Jimminy Click-it.

What’s more, Amazon US sellers have to tread especially carefully ever since the site tightened the insurance requirements for its UK-based sellers (more on this further down).

So, now might be the time to bag a little something for yourself for a change. Something in the shape of online retailers' insurance, perhaps. Here’s why.

Who'd have thunk it?

If readjusting to life after a pandemic has taught us anything, it’s to expect the unexpected.

Like a kitchen gadget that sparks a fire in someone’s home after its batteries overheat. Or a customer who sues you after the heavy ornament they’ve ordered slips out of its safety packaging and injures their foot.

Thankfully, accidents like these aren’t in the main. But it takes only one of them to make a sizeable dent in your business.

Rightly or wrongly, you’ll have to defend yourself – and pay out of your own pocket to do it, too. Plus you’ll need to figure in court costs, legal representation and possibly also compensation. It could amount to several £thousands.

Unless you have an online retailers' policy, that is, that can do all that for you.

Why do Amazon sellers need insurance?

As a third-party seller, you can’t assume the platform you sell on will pick up your legal tab. Or that the injured party will chase after the bigger boys for compensation, and not you.

Also, if you occasionally ship to countries that err on the litigious side, like the States, there’s every reason to be careful there too.

That’s where online retailers' products liability insurance comes into play. It covers you if someone claims against you for damages. In other words, where something you’ve sold has injured someone, damaged their property, or made them sick.

You have a case to argue – but you don’t have to do it yourself. Products liability insurance covers the costs of a lawyer who’ll represent you in court. If it turns out you have to pay damages to the injured party, it’ll cover that too.

Insurance requirements for selling on Amazon US

A few years ago, Amazon.com made selling with products liability and public liability insurance a must-have for its UK-based sellers. Specifically, those that make over $10,000 (roughly £7,300) of sales in a calendar month.

If you make less than that, then Amazon US doesn’t require you to cover your products with insurance. But, as selling to the US can be risky, we’d recommend it anyway.

Two things to remember when selling on Amazon US:

1. Your insurance must be valid (i.e. must cover the dates you’re trading and have been bought through a reliable insurer)
2. You must name Amazon.com as an additional insured on your policy.

To reflect this, we’ve updated our online retailers’ insurance to protect UK-based Amazon sellers looking for safe, reliable cover for their products.

So, whether you trade on Amazon US or across a number of platforms, you’re covered if a customer accuses your products of causing them loss, damage or injury. If things escalate and sparks start to fly, you can bank on knowing your insurer will step in to settle the claim.

Tough break

Because of how they do things, most Amazon sellers have little to no contact with the public or anyone else connected to their business. So there’s no need for insurance there.

Except that’s not true, is it?

You might pack and ship everything from home. But you'll still have couriers arrive at your door (and often in a rush). And though you might not be meeting face-to-face with suppliers now, there’s every chance you might do in the future.

Public liability insurance covers you if a member of the public gets injured when they come into contact with your business.

So, if the postie trips over a loose paving slab in your driveway and breaks a hip, or your pop-up stall topples over and takes someone down with it, you’re not left shouldering the bill. Because public liability covers occasional selling at events and markets too.

Good buy or goodbye?

Lastly, it’s worth thinking about one of your most important assets: your stock. Without it, you can’t sell. And if you can’t sell, you don’t have a business.

If you store, sell, pack, and ship most of your products from home, you might assume your home insurance policy would compensate you if any of it gets lost, damaged, or stolen.

Except there’s every chance it won’t. Home insurance is designed to cover your home contents. Insurers generally won’t cover your business losses as well.

Stock and property insurance, on the other hand, takes care of any stock or equipment connected with your business.

It pays to repair or replace your stock if light fingers or a burst pipe mean you don’t have any to sell. And it also covers the things you need to sell in the first place (your PC, printer, desk etc.)

One last thing to wrap up

Before deciding what insurance you need, it’s worth checking up on Amazon’s requirements for selling in the UK and Europe. It's all set out in their sellers’ agreement (or 'Europe Business Solutions Agreement').

According to that, if your sales typically tip over £4,000 a month, then you should be insured for ‘products liability and bodily injury’. You should also be able to offer a certificate of proof if Amazon asks.

In other words, public liability and also products liability, up to a minimum of £400,000 per claim.

You should also add Amazon as an ‘additional insured’ to your policy. It covers their back as well as yours.

Most public liability policies come with cover for up to £1 million as standard, but it’s worth having a conversation with your insurer or broker if you’re unsure of anything.

For more info on why Amazon sellers need insurance, or for help with online retailers' insurance, call us on 0345 222 5391.

Image used under license from Shutterstock.