Mandatory Amazon liability insurance – What you need to know

Last update:
Published: 12.08.2024
Read in: 4 min

On July 24, 2024, the American e-commerce giant Amazon introduced changes affecting sellers on its platform. Sellers are now required to have mandatory liability insurance for online sales conducted through Amazon.

The purpose of these changes is to ensure greater security for customers, driven in part by claims related to the A-Z Claim procedure, which covers issues such as property damage or injuries resulting from the purchase of defective products.

It’s important to note that insurance requirements differ between European markets and those in the USA, Canada, and Mexico. However, in all cases, the variables include the currency, the sales threshold on Amazon that triggers the insurance requirement, and the minimum coverage amount specified in the insurance policy.

When does the insurance requirement on Amazon arise?

First, it’s essential to understand that the requirement for liability insurance on Amazon does not apply to every seller. A seller on the Amazon platform is required to have insurance only when the gross value of their sales exceeds the threshold set for their respective country or region.

Additionally, after surpassing these thresholds, Amazon sellers must purchase liability insurance within 30 days.

Amazon Insurance Requirement – Sales Thresholds

Liability insurance on Amazon becomes mandatory when the sales value exceeds:

$10,000 USD in the United States;
100,000 MXN in Mexico;
5,000 EUR in France, Spain, the Netherlands, Germany, and Italy;
4,000 GBP in the United Kingdom;
50,000 SEK in Sweden;
22,500 PLN in Poland.

Insurance policy requirements and key obligations for Amazon sellers

For a liability insurance policy to be accepted by Amazon, it must meet certain requirements, which include:

Coverage that includes liability for the sold product, injuries, and risks associated with operating on Amazon;
Amazon.com Services LLC, along with its affiliates and assignees, must be listed as additional insured parties on the policy;
Consistency of information between the insurance policy and the seller’s Amazon account;
The insurer must be rated at least A- by S&P or A- by AM Best;
The signatures of both the Amazon seller and the insurance agent or insurance company.

Moreover, the liability insurance required by Amazon must include minimum coverage, with the amounts varying by country:

$1,000,000 USD in the United States and Canada;
10,000,000 MXN in Mexico;
500,000 EUR in France, Spain, the Netherlands, Germany, and Italy (Amazon FR, Amazon ES, Amazon NL, Amazon DE, Amazon IT);
400,000 GBP in the United Kingdom (Amazon UK);
5,000,000 SEK in Sweden (Amazon SE);
2,225,000 PLN in Poland (Amazon PL).

The deductible amount must not exceed 10,000 EUR or 10,000 GBP.

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Customer claims

Customer claims regarding purchased products can be categorized into two types. Depending on the category, the process of handling the claim, and the entities involved, will differ.

Claims Below 1,000 EUR or 1,000 USD

For claims related to purchased products under 1,000 USD or EUR, Amazon may independently handle the reimbursement. However, proof of insurance and manufacturer details must be provided in such cases.

Claims Above 1,000 EUR or 1,000 USD

For claims involving amounts exceeding 1,000 EUR or USD, Amazon will contact the seller to jointly review the matter. Proof of insurance and manufacturer details are also required here.

Consequences of not having liability insurance on Amazon

If the requirement for liability insurance on Amazon is not met, the platform may block the seller’s account, and unlocking it could take several weeks. Therefore, it’s crucial to comply with the regulations and requirements imposed by Amazon to avoid potentially problematic consequences for the seller.

Mandatory Amazon Liability Insurance – Summary

Liability insurance on Amazon is a new requirement that sellers must meet. The introduction of this requirement aims to enhance safety for both customers and sellers. Sellers need to be aware of the sales thresholds and policy requirements to avoid account suspension. Regular monitoring and compliance with regulations will allow smooth business operations and help build trust on the Amazon platform.

It’s important to remember that liability insurance is not the only requirement for selling on Amazon. When selling in foreign markets, it is also necessary to provide a local VAT number. If you need support in obtaining this or in handling VAT compliance, schedule a consultation and let us know what the issue is – our specialists will be happy to assist you and your business!

Kamil Maciejewski Kamil has over 14 years of experience in e-commerce and as an implementer of ERP systems. For years, he has been helping online stores automate, integrate and expand to foreign markets.