Selling on Amazon offers access to millions of customers – but it also comes with legal and financial responsibilities that many sellers underestimate. One of the most misunderstood (and frequently mismanaged) requirements is Amazon seller insurance.
This guide explains exactly when Amazon requires insurance, what type of policy you need, how enforcement works, and how to avoid costly mistakes that can put your Amazon Seller Central account at risk. It’s written for US-based Amazon sellers, from early-stage private label brands to established FBA businesses.
If you’ve ever wondered whether insurance is really mandatory – or how to get compliant without overpaying – this article is for you.
Why Amazon Requires Seller Insurance
Amazon’s insurance requirement is not arbitrary. It exists to manage product liability risk across a marketplace with millions of third-party sellers.
When a customer is injured or experiences property damage from a product sold on Amazon, claims often involve:
- The seller
- The manufacturer
- Amazon itself
To reduce its own legal exposure, Amazon requires certain sellers to carry commercial general liability insurance that explicitly names Amazon.com Services LLC as an additional insured.
In short:
👉 If your product causes harm, Amazon wants assurance that claims can be paid – without Amazon footing the bill.
When Amazon Seller Insurance Is Required
Amazon does not require every seller to have insurance from day one.
You are required to carry insurance only when all of the following are true:
1. You sell on Amazon.com (US marketplace)
This requirement applies specifically to the US marketplace. Other regions have separate rules.
2. Your gross sales exceed $10.000 in any rolling 3-month period
Once you cross this threshold – even temporarily – you are required to comply.
Important: Amazon tracks this automatically. There is no grace period once notified.
3. Amazon sends you a formal insurance request
You’ll receive a notification in Seller Central → Performance → Account Health.
Failing to respond can result in:
- Listing suppression
- Account suspension
- Removal of buy box eligibility
What Type of Insurance Amazon Requires
Amazon does not accept just any business insurance. Your policy must meet specific technical criteria.
Required Policy Type: Commercial General Liability (CGL)
Your policy must include coverage for:
- Product liability
- Bodily injury
- Property damage
- Personal and advertising injury
Minimum Coverage Limits
- $1.000.000 per occurrence
- $1.000.000 aggregate per year
Higher-risk categories (e.g., supplements, electronics, children’s products) may warrant higher limits, even if Amazon doesn’t explicitly require them.
Amazon’s Additional Insured Requirement (Critical Detail)
Your policy must list Amazon as an Additional Insured using this exact wording (or extremely close):
Amazon.com Services LLC and its affiliates and assignees
This is non-negotiable.
Common Mistake:
Many sellers purchase insurance but forget to:
- Add Amazon as additional insured
- Upload the certificate correctly
Result: Non-compliance, even though you technically have insurance.
Products That Carry Higher Insurance Risk
While Amazon applies the same baseline requirement across categories, some products are far more likely to trigger claims.
High-risk categories include:
- Dietary supplements and food
- Cosmetics and skincare
- Electronics and batteries
- Toys and children’s products
- School supplies
- Home goods with moving parts
- Fitness equipment
If you sell in these categories, insurance isn’t just about Amazon compliance – it’s about business survival.
FBA vs FBM: Does Fulfillment Method Matter?
Short answer: No.
Whether you use:
- FBA (Fulfillment by Amazon)
- FBM (Fulfilled by Merchant)
You are still considered the seller of record and remain legally responsible for the product. You can read Amazon FBA vs FBM: Complete comparison to know more about FBA and FBM.
Many FBA sellers mistakenly believe Amazon’s logistics shield them from liability. They don’t.
How Amazon Verifies Insurance Compliance
Amazon does not manually review every policy line by line – but it does check:
- Coverage type
- Coverage limits
- Policy expiration date
- Additional insured language
- Consistency with seller legal name
Once approved, Amazon may re-request documentation annually or after major account changes.
What Happens If You Don’t Comply?
Failure to meet insurance requirements can lead to escalating enforcement:
- Account health warning
- Listing deactivation
- Account suspension
Amazon rarely negotiates timelines once enforcement begins.
How Much Does Amazon Seller Insurance Cost?
For most US Amazon sellers:
- $25 – $60 per month for standard private label products
- Higher for supplements, electronics, or high revenue brands
Factors that affect pricing:
- Annual revenue
- Product category
- Claims history
- Domestic vs imported goods
Cheap insurance that doesn’t meet Amazon’s requirements is more expensive in the long run.
How to Choose the Right Insurance Provider
When evaluating insurance providers, don’t just ask “Is this Amazon-compliant?”
Ask:
- Do they understand Amazon marketplace sellers?
- Will they issue certificates quickly?
- Can they easily add Amazon as additional insured?
- Do they scale with revenue growth?
A policy that becomes invalid as your sales grow creates recurring compliance risk.
Do New Amazon Sellers Need Insurance Immediately?
No – but waiting until Amazon notifies you is risky.
Proactive insurance makes sense if:
- You’re scaling ads aggressively
- You sell regulated or high-risk products
- You plan to exceed $10.000/month quickly
Insurance is easier to secure before a claim or enforcement action occurs.
Common Myths About Amazon Seller Insurance
Myth 1: Amazon covers liability for FBA sellers
False. Amazon may assist in certain cases, but liability remains with the seller.
Myth 2: A general business policy is enough
False. Many general policies exclude product liability.
Myth 3: Insurance is only for big sellers
False. Claims often target smaller brands with fewer legal defenses.
Expert Insight: Why Insurance Is a Growth Tool, Not Just a Requirement
Experienced Amazon operators view insurance as:
- A prerequisite for brand scaling
- Protection against catastrophic loss
- A signal of operational maturity
Insurance doesn’t slow growth – it protects it.
Final Thoughts: Treat Insurance as Part of Your Amazon Infrastructure
Amazon seller insurance isn’t just a checkbox – it’s part of running a legitimate ecommerce business in the US.
If you:
- Sell physical products
- Control branding or packaging
- Intend to scale beyond hobby level
Then insurance isn’t optional—it’s foundational.
At SwanseaAirport, we recommend treating compliance proactively, not reactively. Sellers who build with protection in place grow faster, safer, and with fewer disruptions.
Frequently Asked Questions
