Private Label – Selling on Amazon – Do I need Product Liability Insurance?
I’m going to get right to it… 100% yes you need product liability insurance as a business selling products. You know this is not a hobby, right? You moved on from basic dropshipping and retail arbitrage of other brands? Now that you have your own brand, it is time to do things right before you get sued and have ZERO protection! (Oh, and I hope you already have an LLC set up)
Frankly, I am just amazed at some of the ignorance out there on this issue. Take it from someone who has been part of product lawsuits. People sue over hot coffee. You could be selling dirt and someone will try to sue you at some point. By selling on Amazon, you agreed to their Seller Agreement before opening your Seller Central and or Vendor Central account. The lawsuit buck has now been passed to you!
Granted Amazon has (sort of) made it a bit confusing. Here is a link to their general Amazon’s Policies and Agreements. (Linky) Follow: Help -> Policies and agreements -> Amazon Services Business Solutions Agreement -> Insurance.
Amazon mentions “insurance threshold.” The threshold is $10,000 in sales. BUT, this does not apply to “professional selling accounts.” If you own a brand, you are a commercial business! Welcome to the profession. Your business is no longer a hobby. If you are researching this topic, well you already knew it, didn’t you? 😊
The following part of the agreement applies to YOU:
Commercial General Liability insurance – Amazon.com (Linky) “Sellers with professional selling plans on Amazon 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.”
Even if your “manufacture” has insurance, you are the brand owner, and ultimately the lawsuit will be served to you as the responsible selling party. TIP: if you want to save money on your commercial general liability insurance policy, have your manufacturer add you to their certificate of insurance (COI) coverage. Having this will greatly reduce your policy expense. But you will still need your own policy. Do not assume this is your protection. Again, you will still get sued, plus it is against Amazon’s TOS not have your own insurance naming them as additional insured.
Reach out to me today if you have any further questions. I’ll pass you the information for my insurance broker if you need one. He works directly with insurance companies and for me has the best-valued in the industry with his subject matter expertise and quotes.