Do I Need Insurance to Sell on Amazon?

Do I Need Insurance to Sell on Amazon? Is It Necessary? How Does It Work?

Hi! Thank you for visiting my blog.

My name is Vova Even, and I have been an active Amazon seller since 2016.

I also share tutorials, hacks, and trade secrets on YouTube and Udemy.

My goal is to help new and advanced Amazon FBA sellers save more money while growing consistently.

In today's article, I discuss the most crucial question that every Amazon seller asks.

Do I need to get insurance when selling on Amazon?

The seller insurance policy on Amazon is vital as it protects your business and helps you succeed on the platform.

In this regard, I'll talk about Spott, the latest and innovative tool that eases the insurance getting process.

Spott helps eCommerce businesses get insurance in a super easy and fast manner.

This article will teach you why getting insurance to sell on Amazon is crucial, how insurance saves your online business, and why Amazon makes it mandatory.

Furthermore, you will learn what Spott is, how it works for different marketplaces, mainly for Amazon sellers, and how you can get insurance with their help.

To get a clear picture of insurance for Amazon sellers, I invited the Co-Founder and Chief Product Officer of Spott, Amit Batzir, to my YouTube channel.

The video is attached right below, so you can watch it without leaving this page.

Amit is a seasoned professional who has been working with eCommerce firms for the past decade.

Prior to joining Spott, he was a Data Science Group Manager in the Data Intelligence division of PayPal.

In the video, you will see Amit shed light on the significance of insurance and how Spott helps in the process.

This article essentially covers the video contents in detail.

But if anything's unclear, feel free to bring it up.

I will guide you thoroughly.

Key Resources & Offers I Share In This Article:

1. Free Insurance Quote from Spott (and get a 25$ Amazon gift card if you get insurance)

2. How can Non-US Amazon Sellers Get Product Insurance

Freebies & Additional Resources for Amazon FBA Sellers:

1. 3 eBooks, 3 courses, valued at over $1200

2. Amazon FBA Community on Facebook

Now, without further ado, let's get down to the business and see how insurance and Spott can benefit you as an Amazon seller.

Significance of Getting Insurance

The hype of getting insurance as an Amazon seller has left many novices puzzled!

They are unsure how the system works and when is the right time to obtain insurance.

Will you receive an email requesting that you purchase insurance, or will you be required to do it yourself?

Amit Batzir shared valuable information here.

"When a seller's monthly revenue exceeds $10,000, Amazon's algorithms deem getting liability insurance mandatory," he said.

"Thus, you will be asked to get liability insurance before taking action."

Understanding Liability Insurance

The term product liability insurance is relatively new for many.

Therefore, before we go any further, I'd like to clarify the terminology.

Liability insurance is a form of protection against danger or damage caused by your goods.

For instance, assume that you sell dishwasher-safe glass cups on Amazon.

When some customers put the cup in the dishwasher, it breaks and injures them.

In such a stance, they can sue you. 

However, if they file a claim, Amazon will be sued directly, not you as the seller.

Why? Because customers don't know the seller but the platform from where they made a purchase.

Such incidents have happened in the past, and Amazon has liability insurance in place to defend itself against similar accusations.

Amazon asks every seller to pay for insurance claims and get listed as an additional insurance source.

This way, when customers sue Amazon in court, they will know where to go in order to receive their insurance coverage.

What If I Haven't Reached $10,000 in Revenue Per Month

If we think about it, every seller has a unique product to offer on Amazon.

Some products and gadgets are safe and unbreakable or damage-proof, whilst others are hazardous and breakable if mishandled.

In such a scenario, I asked Amit if the seller should wait to cross the $10,000 benchmark before opting for liability insurance.

He stated that regardless of the circumstances, the seller should highly consider choosing to obtain insurance.

Let me explain why.

For example, if you have under $500 in annual sales and a consumer is wounded by your goods, they have the right to sue you.

So, although you haven't yet produced $10,000 in revenue, you are obligated to pay for the insurance and claim out of your own pocket.

It can be a lot of money.

Would you like to face such situations? No!

The best course of action is to apply for insurance from the beginning.

Even though Amazon requires insurance after you reach a monthly income threshold of $10,000, you should obtain insurance as soon as possible to protect yourself in the marketplace.

Do you know that Walmart requires sellers to get insurance before they enter the business?

It's an intelligent move by the platform that protects Walmart sellers from potential risks.

Possibly someday, Amazon will also make it mandatory to get insurance from the start!

Amit recommended the sellers understand their marketplace first and scrutinize when it's necessary to get insurance.

The criteria for insurance on Amazon are not that high compared to Walmart.

Amazon wants to be listed explicitly as an additional insured with a minimum $1M per claim limit.

What is Spott and How Does it Help Amazon Sellers in Getting Insured?

The world of eCommerce is fast pacing, and its rapid digital growth is monumental.

However, the process of insurance is tedious and convoluted.

Spott is a platform designed to bridge the gap between the two, removing complexity while keeping pace with digitalization.

Spott focuses solely on the eCommerce sector and aims to minimize the customer's dreary journey from department to department in search of appropriate insurance.

They have knowledge of every marketplace and its requirements to protect your business as a seller on every platform.

Specifically for Amazon, they have trained experts to deal with your insurance-related concerns, allowing you to focus on the expansion and profitability of your business.

So, how does Spott work?

The company offers two different types of services.

The first one takes hardly two minutes to finalize.

All you need to do is sign-up for free to Spott and provide your Amazon store information.

In return, it will provide you with a free insurance quote, which you can buy on the spot if you find it feasible per your business requirements.

Spott has special alliances with insurance carriers, so it can conveniently help you get the best possible prices.

The second service is advisory and consultancy.

Send Spott an email at info@spott.co or fill out their support form, click, scroll down, and click "support", and they will happily answer all your ambiguities about insurance, from what you need to how to utilize it!

Real-Time Insurance Process with Spott

If I go back to earlier times – namely before Spott – the insurance process was a hassle.

You were required to contact various insurance providers, obtain a menu from them, exchange multiple emails, and whatnot.

Amit asserted that Spott enables sellers to get a free insurance quote in under two minutes; this is amazing!

He also demonstrated how it works, and I have outlined the steps for you below. :)

You can also see it live in the embedded video at about, minute 08:09.

Or just click here to watch.

A Step-by-Step Guide to Getting Free Insurance Quote from Spott

1. Visit the Spott website and click "Get Started."

2. Sign up for an account. You can do so manually or via Google, Facebook, or Amazon.

3. Once done, click on "Get Your Quote" to begin the process.

4. Find your Amazon store by typing its name in the search bar and move to the next step.

5. The "Liability Coverage Proposed Request" page will load. Enter the information, and make sure to enter your reachable phone number.

6. Click "Next" to proceed.

7. Enter your business address where you operate your Amazon account and click "Next."

8. A new page will pop up requesting that you log in to your Amazon store.

9. Next, add essential details about your business, such as its legal entity name, whether it sells items under private-label or not, its founding year, etc.

10. Submit the data, and voila! Spott will automatically fetch the best insurance quote for your Amazon store.

Here is an exciting part you must know: Spott will provide three quotes to choose from.

The company adds additional carriers to the panel, allowing you to go with the one you prefer.

Factors that Impact the Price of Insurance

There are three essential factors that impact the price of insurance for Amazon sellers.

1. How Do You Sell?

If you are a private-label seller, you will be deemed the manufacturer of your inventory. It's slightly riskier than being an arbitrage seller, where you work with big brands as a reseller. So, higher risk equals more costs.

Consider this example: you sell Sony headphones. It implies you are a reseller. If your sold headphones injure a customer and a complaint is filed against you, you can deflect responsibility for the situation by stating that Sony is covered by insurance. On the contrary, if you sell headphones under your own brand name, that would be deemed private-label selling. In this case, you would be liable for any incidents and accidents. And thus, the cost of insurance would be higher.

2. What Exactly Do You Sell?

This involves the risk and repercussions associated with the products you sell. If you sell innocuous products, the risk factor is low, and so the cost of insurance would be lower. However, if your products have a high value of adverse effects, the involved risk bar would be high, and so will the insurance cost.

Assume being a seller of a pillow or kitchen knife. Which one is risker and involves chances of damage and injury? The knife, indeed! So, the riskier your product is, the higher your insurance quote will be. For an innocent product like a pillow, the insurance cost will be less than anticipated.

3. How Much Do You Sell?

This is where you need to discuss your monthly revenue. The bigger the quantity, the greater chance of exposure to danger.

Take this example: If you sell presumably five sets of kitchen knives a month, the level of exposure to danger is low. There is a chance of only five customers getting injured. In contrast, if you earn $200,000 by selling kitchen knives, this indicates you are a big seller, and the risk associated with your business is greater.

The more quantity you sell a month, the higher the insurance amount is going to be, and vice versa. Considering these aspects and their influence on the pricing, the average quote range for different sellers is presented below:

1. Sellers generating 4-5 figures in monthly revenue can expect a quote between $100 and $300.

2. Sellers with monthly revenue of six figures should anticipate the quote range of $500 to $900.

3. Sellers earning millions in revenue can expect a quote of at least $1,000.

Spott for Non-US Businesses & Amazon Sellers

With such fascinating services, you might wonder if Spott supports Amazon sellers outside the United States.

Amit stated that they do so and plan to expand their operations further.

"If you have a US entity like LLC (Limited Liability Company), location doesn't matter with Spott.

And if you have a local entity, then we serve the US, Canada, and Israel.

We are also planning to expand to the United Kingdom and Europe."

Read my blog post, "How Can Non-US Sellers Get Amazon Insurance?" for more details.

Or watch the video below.

Enjoy!

Do Sellers Work Directly with Spott?

Since Spott gives multiple quotes, you might wonder if it's a broker or a platform that links to other insurance companies.

Let me explain it to you.

Spott is the broker you will work with.

The quotes that you obtain through the platform are from the carriers who offer insurance certificates in case of any claims.

Spott assists you in coordinating with these insurance companies to figure out everything carefully.

Can I Leave Other Insurance Providers to Join Spott

Yes! You can switch from your existing insurance provider to Spott.

The transition can occur without additional costs.

The Spott team will assist you in recouping your insurance premium from your existing insurer, enabling you to join the Spott platform without any complications.

You may also switch from Spott to any other insurance provider if you find a cheaper option.

There are no strings attached, and the company will also return the insurance amount.

Spott Creating a Difference

While explaining the basis of Spott's existence, Amit shared that he joined the company with the intention of helping businesses thrive.

"I know that selling on Amazon isn't easy.

The way is fraught with ups and downs.

And if you don't have the cash on hand to settle a case, you would definitely not like to risk being sued.

Being protected on Amazon is essential, therefore!"

Honestly speaking, insurance is not expensive compared to what you may spend on litigation.

Even if there is a 99.9% probability of not receiving a massive lawsuit, it is best to be safe than sorry!

Since Spott helps in this regard, you can click here to get a free insurance quote from Spott with a $25 Amazon gift card when you get insurance. 

This sums up today's post.

As previously said, feel free to put any issues to my notice.

If you're a struggling Amazon FBA seller, I encourage you to visit my YouTube channel.

I am optimistic that you will find things to learn.

I wish you a wonderful life and a fascinating experience on Amazon – free from any lawsuits.

Take care, and I'll catch back soon!

Yours,

Vova :)