As an eCommerce seller, you’re likely always looking for new marketplaces to sell on. Walmart is an excellent option because of its high traffic volume and low barrier to entry. But before you start selling, it’s essential to understand Walmart’s liability insurance requirements set forth by the big box retailer – both as a platform and as a vendor.
Any seller working with Walmart – whether online, in-store, or both – is classified as a vendor. And like any other business relationship, there are certain risks involved when it comes to the products or services you provide. That’s why Walmart’s insurance requirements state that all vendors must have both general liability insurance and product liability insurance. This way, if something goes wrong with the product you sell or if a customer is injured while using it, you (and Walmart) are protected.
There are other types of insurance recommended for marketplace sellers, like shipping insurance and warehouse insurance, which we’ll get to in a minute. But first, let’s take a closer look at why insurance is necessary when selling online, Walmart vendor insurance requirements, and what precisely general liability and product liability insurance covers.
Why Insurance is Necessary When Selling Online
Insurance is the holy grail of risk management. It’s a way to financially protect yourself and your business in the event that something goes wrong. Whether it’s a product malfunction, damage during shipping, or a customer getting injured while using your product – if you have insurance, you won’t have to worry about footing the bill for repairs or medical expenses.
The importance of insurance is magnified when selling online. That’s because when you sell through a marketplace like Walmart, you’re not just dealing with one customer – you’re dealing with hundreds or even thousands. And with that many people using your product, the chances of something going wrong are much higher.
It’s in a seller’s best interest to have insurance, even if it’s not required by the marketplace. The cost of a single lawsuit can easily bankrupt a small business, but with insurance, you’ll have peace of mind knowing that you’re protected.
The Different Types of Insurance Recommended for Marketplace Sellers
Now that we’ve established why insurance is crucial for marketplace sellers, let’s take a look at the different types of insurance that are recommended. While not all of these policies are required by Walmart, they’re still worth considering to help minimize risk.
- Shipping Insurance: This type of insurance protects you in the event that your product is damaged or lost during shipping. Shipping insurance is a good idea for any seller, but it’s especially important if you sell fragile items like electronics or glassware.
- Warehouse Insurance: If you store inventory in a warehouse, this type of insurance will protect you in the event of damage or theft. This is a good option for sellers who don’t have the space to store inventory in their homes or offices.
- Business Insurance: Also known as commercial general liability insurance, this policy covers a wide range of risks, including property damage, personal injury, and advertising injuries like copyright infringement. This is a good catch-all policy for any business, but it’s especially important for online sellers who are at risk of lawsuits.
There are many other types of insurance available, but these are three of the most important for marketplace sellers. Now let’s take a look at the insurance requirements set forth by Walmart.
Walmart Insurance Requirements
As we mentioned earlier, Walmart insurance requirements state that all vendors must have both general liability insurance and product liability insurance.
General liability insurance protects you from third-party claims of bodily injury or property damage. Product liability insurance, on the other hand, protects you from claims arising out of a product defect.
These are just the basics. The Walmart contract goes into more detail about the specific coverage amounts and limits that are required. Let’s look at an overview of the Walmart Vendor Agreement so you can get a better understanding of what’s expected.
For all Suppliers providing goods for resale in the United States on any platform of WalmartInc., Supplier shall have and maintain in full force and effect, the following insurance in the amounts and with the conditions set forth as follows(1):
- Commercial General Liability insurance, including Personal and Advertising Injury, Products/Completed Operations, Medical Payments, Bodily Injury, and Property Damage, with minimum limits of $1,000,000 per occurrence / $2,000,000 aggregate.
- Product Liability insurance with limits sufficient to meet the requirements as outlined in the Matrix of Product Liability Limits below. This insurance may be obtained as standalone coverage or as part of the Commercial General Liability. This insurance must provide coverage for claims occurring worldwide.
- Workers Compensation/Employer’s Liability insurance, for any Supplier whose employees will be entering Company’s premises, with statutory limits, or $1,000,000 if no statutory requirement, and $1,000,000 in employer’s liability coverage.
- Automobile Liability insurance, for any Supplier whose employees or agents will be driving on Company’s premises or making a delivery to Company’s premises, with minimum limits of $1,000,000 per occurrence.
- Umbrella/Excess Liability insurance is acceptable to meet the above-defined requirements. Supplier shall cause each insurance company to provide the insurance on an umbrella basis in excess over and no less broad than the liability coverages required herein (including as to Company’s additional insured status), with the same inception and expiration dates as Commercial General Liability insurance, and with coverage that “drops down” for exhausted underlying aggregate limits of liability coverage.
As you can see, Walmart vendor insurance requirements that vendors must meet are specific. But while they may seem like a lot, it’s actually fairly standard for large marketplaces. You can dive deeper into the Walmart Vendor Agreement here for a full overview of the terms and conditions.
Walmart Liability Insurance: The Most Important Coverage for Marketplace Sellers
Of all the different types of Walmart insurance services recommended for marketplace sellers, liability insurance is by far the most important. That’s because liability insurance protects you from lawsuits – and as we all know, lawsuits can be very expensive.
Jake, a third-party seller on the Amazon marketplace, knows this better than anyone. He racked up a significant amount in legal fees after being sued by a client who used his product operating a ladder, and fell while clutching the hook needed to complete the installation. As he fell, he cut the palm of his hand, and the rest is a long and costly history. Find out more about this intriguing case here.
If Jake had liability insurance, his insurance company would have footed the bill – not him. Which, in turn, would have saved him a lot of money, time, and stress.
The world of online selling is full of risks, and it’s important to have the right insurance in place to protect your business. When you leave yourself unprotected, you’re putting your business at risk – and that’s just not worth it.
Read all about Liability Insurance in our recent blog, “Why You Should Buy Liability Insurance From A Broker Who Knows ECommerce.” This will give you a better understanding of why Walmart liability insurance is so crucial for marketplace sellers.
Where to Get Walmart Liability Insurance
Now that you know what types of insurance are recommended for Walmart marketplace sellers, you’re probably wondering where to get it. The good news is that there are plenty of options out there – and one of them is Spott.
Spott offers insurance that is especially suited for eCommerce sellers. We do the heavy lifting for you, as we shop around, compare plans, and provide you with competitive quotes from leading carriers. Our quotes can be with you in just 3 minutes, all because we know how to explain your business to insurance carriers.
Moreover, we don’t just stop at getting you the best price. We also provide ongoing support and advice, so you can be sure that you have the right protection in place for your business – now and in the future.
If you’re ready to get started, all you need to do is click here to get started. We’ll help you find the right insurance for your business so that you can keep selling on Walmart without worry. Save 30% or more on your liability insurance in 3 minutes; get started today and sleep better tonight, knowing that your business is protected against whatever comes your way.
