How Can Non-US Amazon Sellers Get Product Insurance

Vova Even Aug 30, 2022
2 People Read
How Can Non US Sellers Get Amazon Insurance

Disclosure: Some of the links in this article may be affiliate links, which can provide compensation to me at no cost to you if you decide to purchase. This site is not intended to provide financial advice and is for entertainment only. 

A 101 Guide for Non-US Amazon Sellers To Get Product Liability Insurance

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 this article, I'll get into the specifics of Amazon seller insurance. Especially if you are a non-U.S. Amazon seller, I will provide you with significant information regarding the Amazon protection plan, including what it is, why you need it, how much it may cost, and whether it's worth the purchase or not. I'll also have a nice way to get a free insurance quote and an Amazon gift card, so stick around.


As a part of this article, I invited Amit Batzir to my YouTube channel (the video is embedded right below). Amit is the co-founder of Spott, an eCommerce-exclusive insurance solution that prevents unforeseen losses from affecting online businesses.



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. Amazon Product Insurance Playlist

  3. Interviews With Entrepreneurs Playlist


A Few Words About the Guest, Amit Batzir

Amit is the Co-Founder and Chief Product Officer at Spott. He has more than two decades of experience online (previously been a part of PayPal) and has been assisting eCommerce businesses in their growth for the past 10 years. I also have other video tutorials with him about Amazon Insurance. You can click on the image below to access the entire playlist on YouTube.

Insurance for Amazon Sellers - Click to Access the Playlist


What is Liability Insurance for Non-US Amazon Sellers

Amazon mandates that all sellers on amazon.com, i.e., in the US marketplace, have liability insurance. For sellers based in the United States, this is not an issue because the brokers they work with are already familiar with Amazon. The issue pertains to foreign sellers — how will they purchase a protection plan for their products on Amazon? Let's explore!


How to Get Liability Insurance if You are a Non-US Seller

If you reside outside the United States, you have three options to obtain liability insurance. The first option is to open a US entity.


What you can do is, open an LLC (Limited Liability Company) and move your business entity to the US. This wouldn't be a physical relocation but legal for tax reasons. When you start selling as an LLC, you will be able to obtain insurance like any other business in the United States.


Spott has partners that can guide you through every step of the process and assist you in forming an LLC. They will provide you with the best possible service, so you can complete the process with the least hassle.

I can also help you with that!

My friend Sam Mollaei (business lawyer for entrepreneurs) from
Mollaeilaw helps people get EIN, ITIN, US bank account, LLC, etc!

Here's my interview with Sam Mollaei.

You can learn more about Sam's services
here.

You can book a free call with Sam's team
here.


The second option involves opening a semi-US entity. It's relatively simpler than the previous approach. To get things rolling, all you need to do is get a physical location in America. It will cost a few tens of dollars every year, but in turn, you will be able to obtain an EIN within a day.

I got my EIN from Sam, it was faster and easier for me. I also share my story in the video above.


EIN stands for Employer Identification Number. It's a unique nine-digit number that includes all information about the state where your business will be registered, allowing you to complete all of the paperwork without any hassle. Consequently, you will be able to file as a US entity. Spott can work with you through this process as well.


The third option is to work with your local carrier. Let's suppose you live in Canada. In this case, it is likely that you will prefer to obtain insurance from a Canadian insurance company because that will cover you both in Canada and the United States (if the policy is global). Likewise, if you're located in the UK, you would like to get insurance from a UK carrier.


Spott helps with that! Here's what Amit said: "Currently, we deal with Canadian sellers, and in the coming days, we will also begin working with vendors from the United Kingdom. So, you may outsource us to find the UK or Canadian insurance provider that will assist you in acquiring coverage both domestically and internationally."


This seemed the best option to me, but since Amit only mentioned two countries in his example, I questioned if Spott could aid sellers in other countries as well. He nodded and said, "We generally work with specific companies listed on our website. But even if you are an international seller, we will try to find a local solution for you. We have a network of connections and will try to find the best match for you."

Learn more about the countries that Spott works with
here.

What is Product Liability Insurance

Since the last year, Amazon has made it mandatory for sellers to have liability insurance. This insurance protects you against all bodily and material damages a consumer may sustain as a result of utilizing your goods.


For instance, let's say that you sell barbeque equipment. A customer purchases an item from you and uses it, but it heats up to an unsafe degree, resulting in burns or maybe property damage. Without having liability insurance in place, such incidents can end up in you paying steep penalties to the court.


In the same way, Amazon began to be sued for products sold on the marketplace. Therefore, in order to prevent any issues in the future, it decided to require all sellers to carry product liability insurance.


How to Get Product Liability Insurance in Under 2 Minutes

Amit shared that if you are a non-US vendor from a country Spott deals with, you can receive liability insurance in no more than two minutes.


This "two-minute" thing really piqued my interest because, manually, it's a long process and requires a lot of back-and-forth via email. Hence, I asked Amit how the Spott technology might expedite the process and make it possible for vendors to secure liability insurance so rapidly.


He shared that it can be done in two ways. Option one is to sign up for Spott's One-Click Liability Insurance using your preferred method.

We show how to go through this process in the embedded video above, on 07:40 (7 minutes, 40 seconds into the video).


In case you're based in the UK, Canada, or any other country Spott serves, you will receive a quote straight into your inbox. Otherwise, one of Spott's representatives will contact you in a few hours and take care of your needs.


The second way is in case you're not sure where or how to get started. You can reach out to the company via info@spott.co or by scheduling time with an expert on their website. Scroll down on their website and you'll find it.

A company representative will contact you as soon as possible and will be more than happy to help you, lead you through the process, and aid you in locating the most suitable insurance provider.

How Spott Works

There are multiple ways to sign up for a Spott account, either manually or through Google, Facebook, or Amazon. Amit essentially shared his screen to explain how to create an account on the platform in order to get a quote. I have provided a step-by-step breakdown of what he presented below, but you can watch the video for visual reference.


  1. Sign up for your free Spott account.


  1. Select the marketplace where you primarily sell your products. (Since this article is geared toward Amazon sellers, I assume that you picked Amazon.)


  1. Enter your store name.


  1. Provide your profile and contact information (Make sure to input the correct information because it will be mentioned on your insurance policy).


  1. Connect your Amazon store with Spott. Although it's optional, yet highly recommended. Amit said that doing so will enable his company to determine your actual sales volume. Thus, it will be able to relay this information to the carriers in the most exact manner and get you the lowest rates possible.


  1. Input your business details, including your years of experience, the founding date of your company, your annual gross revenue, etc. This section will also have a question asking if you are a private-label seller. That's because private-label vendors typically pay a bit extra to be considered the manufacturers of the items they sell.


  1. Once you've entered all the information accurately, press the Submit button. If you are a native of a country that Spott serves, you will be able to obtain an immediate quote(s). Spott will find the best carrier to provide you with a quote and a policy.


Amit entered demo data, and after pressing the Submit button, he received three quotes. "Based on the country or the marketplace," he remarked, "there may be fewer or more quotes. We work solely with the top carriers to ensure that you have the best service possible, but you are free to select the one that best suits your needs and budget."


If you do not already have product liability insurance, I recommend obtaining a free insurance quote from Spott. It will also grant you a $25 Amazon gift card when you get insurance.


Cost of Insurance

I questioned Amit on how the price may fluctuate based on the information businesses provide. For instance, if I'm selling a product with a smaller annual income, will the price be slightly lower, and vice versa? He informed me that there are three elements to determine the cost of insurance. I've explained them in detail below.

3 Factors that Influence the Price of Insurance

First, what is your sales volume? The more you sell, the greater your risk and the higher your insurance costs will be.


Second, what do you sell specifically? If you sell extremely risky products, such as trampolines, which are the most dangerous category on Amazon, the price may be higher.


Toys and objects that children can put in their mouths, creams and ointments, sport and outdoor equipment such as e-scooters and camp stoves, etc., can all be deemed hazardous. If you sell something less harmful, you will receive a lower-price quote.


Third, how do you sell? If you're a private label seller, you are considered the manufacturer of the goods you sell. So, it's slightly riskier than being a retailer where you work with big brands. So, higher risk equals more costs.


Do Online Arbitrage and Wholesalers Need Insurance

The last factor prompted me to ask Amit a question "It seems logical that private label sales are riskier and thus require insurance. But what is the case for Online Arbitrage and Wholesalers? Since they are not regarded as the manufacturers, do they still require insurance?"


He responded affirmatively. "Yes, definitely! Let's say you are an online arbitrageur or wholesaler. Now, if a consumer purchases a branded product from you and it causes them injury or is defective, your insurance provider will take care of that and deal with any repercussions."


Put simply, insurance is critical to the smooth running of your Amazon business. You don't give it much thought, and you seldom hear about it until Amazon sends you an email requiring you to get insurance immediately.


Having insurance in place makes sense, too. After all, what's wrong with protecting yourself and your business from potential problems? Even if you don't think so and something bad happens (which may happen), you would never want to be exposed to the danger.


No one desires to ever face a lawsuit, much less a massive lawsuit. I, myself, would rather prefer to shell out a few hundred dollars and live in peace.

Insurance can do that for you! And it's not compulsory that you get it through Spott only, but they have competent insurance carriers who take the burden off your shoulders and address the issues professionally.


If you're still uncertain about whether or not you need insurance or if you think your case is different, I highly recommend watching the video below.



In this video, Amit and I had a detailed discussion on the necessity of insurance for Amazon sellers. We also talked about how I obtained insurance for my business and compared the costs of different alternatives. Feel free to look around my YouTube channel. There are more than 400 video tutorials to help you become a successful seller on Amazon.


You may also visit Spott's blog page. There are a variety of resources out there that explain insurance, its benefits and limitations, who qualifies for it, where to get affordable policies, and similar information.


Have a fantastic day, and I'll see you in my next great article!


Yours,

Vova :)

Disclosure:  Some of the links in this article may be affiliate links, which can provide compensation to me at no cost to you if you decide to purchase. This site is not intended to provide financial advice and is for entertainment only.