Online Seller Insurance
As an online seller, you need insurance to cover your business in case of a lawsuit. If you are a reseller, wholesaler, or private labeling and selling products under your own brand, you need both general liability and product liability insurance.
If you look carefully at your Amazon TOS, you will find this is a requirement though seldom enforced. This could change at any time so best you get into the detail so you understand why you need this for your business:
Login to your Seller Central account and look for the Amazon Services Business Solutions Agreement.
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 for each applicable Elected Country commercial general, umbrella or excess liability insurance with the Insurance Limits per occurrence and in aggregate covering liabilities caused by or occurring in conjunction with the operation of your business, including products, products/completed operations and bodily injury, with policy(ies) naming Amazon and its assignees as additional insureds. At our request, you will provide to us certificates of insurance for the coverage to the following address: c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management…”
Further down, you will see details of the Threshold listed per market:
“…”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)….”
So what’s this all about?
Commercial General Liability Insurance: This is specifically designed to cover your business operations where there is no product and/or consumer involved. If you ever become involved in a lawsuit, you can file a claim under your insurance. Without it, you will have to pay out of your own pocket to defend yourself.
Product Liability Insurance: Simply put, this is a “must have” when there is a product being sold. If a claim happens to occur that resulted from a product you sold, you must have product liability insurance in place to cover your business. Having commercial general liability insurance is not enough.
Product liability could pay out for covered claims that have some bodily harm, property damage, or any illnesses that resulted from your product or a resold product.
You may find yourself getting a phone call or email from a consumer who bought your product months back or even years back that now are claiming they have an injury.
You are still liable to that consumer for the product you sold, whether you still sell that product or not. If you sold it, you are responsible for it since you put it in the consumer’s hands.
As a private label seller or brand owner, you are not only the retailer but the manufacturer as well. In a lawsuit, you are responsible for any product defects, design flaws, improper marketing, etc. Without it, you will find yourself having to pay out of pocket for all court cost, legal fees and payout to the consumer any and all judgments bestowed upon you by the judge.
As an online seller, you’re not only required to have both general and product liability, you WANT to have both. Your business is an investment and it needs to be protected as such. Having general and product liability in place is an essential part of protecting yourself and your business assets.
We met with a broker specializing in this area, Ashlin Hadden to prepare this blog. Add her company to your list as you do your due diligence on this: https://www.ecom.insure/
You need a broker who is an expert in this area of insurance to ensure you have the right cover in the event of a claim. So get into the detail and make sure you understand as best you can exactly what cover you need.
As always, ask us anything. If we don’t know the answer, we’ll know someone who does! Back to Blog
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