Mandatory liability insurance for Amazon sellers: Key changes and their importance
Amazon has implemented significant changes to its seller policies, requiring them to have liability insurance. Although the insurance requirement itself is not new, the platform is now enforcing compliance more strictly. The primary goal of these regulations is to enhance safety for both customers and sellers. Amazon aims to reduce the number of claims, particularly those related to the A-to-Z Guarantee, which covers compensation for property damage and personal injuries caused by defective products.
Who is affected by the mandatory liability insurance on Amazon?
The liability insurance requirement does not apply to all sellers. According to the new regulations, sellers are required to purchase a liability insurance policy only if their gross monthly sales on the platform exceed certain thresholds. These thresholds vary by country:
- Poland: PLN 22,500,
- Germany, France, Spain, Italy, Netherlands: EUR 5,000,
- United Kingdom: GBP 4,000,
- Sweden: SEK 50,000,
- United States: USD 10,000,
- Mexico: MXN 100,000.
If a seller exceeds these limits, they have 30 days to obtain the appropriate insurance policy. Amazon introduced these changes to ensure that sellers have adequate financial protection in case of potential claims.
Insurance policy requirements
Amazon not only requires sellers to have insurance but also specifies what conditions the policy must meet to be accepted. In particular, the policy must cover:
- Scope of coverage: Liability for sold products, bodily injuries, and risks associated with operating on the platform.
- Additional insured parties: Amazon.com Services LLC and its affiliates must be listed as additional insureds on the policy.
- Data consistency: The information on the policy must match the data on the seller’s Amazon account.
- Insurer credibility: The insurer must have a high financial rating, at least S&P A- or AM Best A-. In Poland, PZU meets these criteria.
- Policy signature: The policy must be signed by both the seller and the insurance company’s representative.
In addition to these requirements, the policy must meet minimum coverage amounts depending on the region:
- Poland: PLN 2,225,000,
- France, Spain, Italy, Germany, Netherlands: EUR 500,000,
- United Kingdom: GBP 400,000,
- Sweden: SEK 5,000,000,
- USA and Canada: USD 1,000,000,
- Mexico: MXN 10,000,000.
Furthermore, the seller’s deductible cannot exceed EUR 10,000 or GBP 10,000.
Consequences of not having liability insurance
Failing to have the appropriate liability insurance can have serious consequences for sellers. Amazon reserves the right to suspend the seller’s account if they do not comply with the insurance requirement. Such a suspension means the seller can no longer sell on the platform, which could result in significant financial losses. Reinstating the account may take several weeks, further hindering business operations.
How are customer claims processed?
Claims filed by customers are handled based on their value:
- Claims up to EUR 1,000 or USD 1,000: For claims below EUR 1,000 or USD 1,000, Amazon may handle the reimbursement itself, provided the seller supplies proof of insurance and details about the manufacturer.
- Claims above EUR 1,000 or USD 1,000: For claims exceeding this amount, Amazon contacts the seller directly to resolve the issue together. The seller must provide proof of insurance and manufacturer details, ensuring both parties are protected during the dispute resolution process.
What does mandatory liability insurance mean for sellers?
The introduction of mandatory liability insurance on Amazon represents a significant change for sellers operating on the platform. The new regulations aim to protect both customers and sellers from potential claims. In practice, this means sellers must pay closer attention to their insurance obligations, regularly monitor their sales, and ensure their policies are up to date.
Additionally, for sellers operating in multiple markets, it is important to understand the specific insurance requirements in different countries. For example, in Europe, the minimum coverage amounts vary by country, meaning sellers need to adjust their policies based on the market in which they operate.
Summary
Mandatory liability insurance on Amazon is a crucial element for sellers who want to operate safely and in compliance with the platform’s regulations. The changes are designed to protect both customers and sellers, and non-compliance can lead to serious consequences, such as account suspension. Therefore, sellers should regularly monitor their sales, keep their policies up to date, and adhere to Amazon’s requirements. Only then can they fully enjoy the benefits of this popular e-commerce platform.
Iga Turniak
