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5 tips to get better rates before renewing your Amazon seller insurance

So it’s that time of year: renewing liability insurance coverage for Amazon sellers! Have you given it any thought? Are you considering renewing with your current provider or are you interested in receiving a better-priced quote and one that is more suited to your Amazon store?


While you’re pondering, we’ve put together 5 valuable tips to help you find the best Amazon liability Insurance to protect your business.



Table Of Contents

1. Insurance policies are not one-size-fits-all

The market has become super competitive, and insurance companies are scrambling to adjust, as you will notice is happening in most comparison sites. 

But some comparison sites just show you the bottom line instead of finding the amazon seller liability insurance cost that is tailor-made for your product. Low-risk products should have a lower insurance rate but if you sell high-risk products, it’s best to have a policy with a higher limit – so you are ready for any situation.

But how do I know which comparison sites to trust?

We at Spott help you to compare insurance rates from the best insurance companies. With a few clicks, you can see how much you can save per month, even if it means switching to another carrier. If it saves you money, it’s a no-brainer.  

And do all these carriers provide insurance policies according to Amazon’s TOS?

Great question! All the carriers we work with offer Amazon business liability insurance policies that align with the Amazon seller insurance requirements. And that leads us to the second way you can save money. And that is… drum roll:

2. Amazon requirements 

Remember when Amazon announced insurance policies as mandatory for all third-party sellers who made over 10K or by request?

How can I forget that? It was a shock to the system, scrambling to find a policy that stands up to Amazon’s standards.  

But is the right policy for Amazon also right for you? 

Ok, that’s a trick question. If you don’t adhere to Amazon’s TOS, you will be suspended from their platform. 

Very true, we encourage all online sellers to be in line with Amazon’s terms and conditions 24/7. And the insurance policy has to be exactly how Amazon demands it. 

Here are some elements which still align with Amazon’s requirements as well as being worthwhile for you

Here’s what we mean:

  • Product liability as part of your commercial liability insurance plan:

As an eCommerce seller, your product is the center of everything. Any product can cause injury and even death. If you get sued, having an Amazon product insurance will provide you with a higher occurrence rate, (the amount of money the insurance company will pay for a single incident,) so you won’t have to pay millions of dollars out of pocket. So make sure the general liability insurance you chose includes product liability in their policy with no extra cost. There is a difference between general liability and product liability. 

  • Amazon as an insured:

The same thing goes for an extra insured. As Amazon demands to be included as an insured in the policy you purchase, find a plan that adds any insured with no extra charge

Ok, that all makes sense to me. I wouldn’t want to mess with Amazon or insurance companies! What if I add a product listing? 

That’s a good question, and we just happen to have the answer!

  • Adding a product listing

Adding new products to your insurance policy after you launch them might affect your rates. If the insurance company you work with has an online DIY platform to update the policy that would be ideal. If not, look for one with good customer support – because that will add hours to your life, time you wished was dedicated to doing other things.

  1. Adding lies – will lead to destruction. 

We hear about many cases in which international sellers, i.e companies based outside of the U.S, give fake names and addresses, so their company seems American based, and therefore covered by American insurance companies. 

But if you get sued, and the insurance company sees the details on your policy are fake, (and they will) you won’t get a dime. Be honest with every detail you give your insurance company when you purchase your policy. Every detail counts when you are sued, which in these sue-crazy days, happens more often than not, in many shapes and sizes.  



3. Your category risk can drop your insurance rates.

Let’s say that you sell teddy bears on Amazon. Seems innocent enough, no?

It is, and perfect for all seasons, from Q1-Q4!

Exactly! But do you know according to this company’s insurance plan, they are currently paying the same rate as another client of ours who sells battery-based toy cars? Both toys, the teddy bear and the battery-based car, are categorized under toys, a high-risk category, so the insurance company gave the two the same rate. But in reality, the teddy bear is of a lower risk and therefore, we got this company a much less expensive insurance rate, monthly!

Holy Moly! That’s crazy! 

I know, it comes as a shock to many of our sellers. Here’s the thing: before eCommerce, insurance agents would physically walk into a brick-and-mortar store, assess the products and decide on the insurance rates. Done. But nowadays, products have become harder to assess as agents can’t physically walk into a virtual shop. So they guesstimate. They see your product as “Children’s toys” and immediately give you a high-risk rate. 

Generally,  “risky categories” such as toys, pharma, baby products and many others which are more likely to cause injury and even death get much higher rates. Your product is in a risky category – but not risky.

And that’s where our AI comes in. When we find your insurance plan, we will make sure carriers understand precisely what you sell, including the risk precision, and find you a lower rate. Your teddy bears, though under the high-risk children’s toy category, will get the lower rate after all. O-la-la!

4. Your business model affects the price of your policy 

Private label sellers that manufacture their products overseas are considered “manufacturers.” Their rates will be higher than retail or drop shipping sellers because if something goes wrong, the insurance company will not be able to defer the claim to their brand. 

For example, if a customer is injured by a Daihatsu dryer you sold them, the insurance company can turn to Daihatsu on the claim. But if this hair dryer was sold under your brand, even if the factory is at fault, they can’t turn to them – only you. Like a general, the seller must be responsible for what his soldiers do. 

Make sure you give every detail possible to your insurance carrier because that can lower your insurance rate. Work with people who understand exactly what you sell and what you do.


5. Go fully digital!

Since COVID-19, sales on Amazon have skyrocketed, changing the face of commerce entirely. Insurance companies are following suit which is a huge plus for any third-party seller. By going digital, you get the exact quote quickly, efficiently and hopefully, never to be dealt with again.

Ok, I have a trick question for you. (Didn’t expect that, did you?)


We admit, sensei, we have taught you well!


What happens if I just don’t get insurance at all? That’s a cost I could do without.  I can take my own chances, and assess that I will ever get sued – since teddy bears are not only cute but harmless!


Ha! You got us there. Well, almost… Here’s what we know, as we have a lot of ground experience with online sellers. There is no clear answer as to what will happen if you don’t provide an insurance policy – but we have heard from quite a few sellers that Amazon shut down their stores entirely. 


Up until 2021, Amazon turned a blind eye to sellers who didn’t produce commercial liability insurance policies, but when Amazon began to get hefty lawsuits, with third-party sellers paying millions of dollars out of their pocket, as well as Amazon, they made it mandatory. When sellers realized they could be paying up to $1M out of pocket, which for some meant selling their houses, ruining their families, houses and business, it seemed that paying a few dollars monthly to avoid all that, makes them sleep better at night. 


Ok, I see where all this is going. And sleep is important for business! But is there a way I can get all this goodness by spending as little time as possible and with the least hassle possible?


Ah, just for asking that question you get a bonus tip!


Instead of answering a million questions, choose an insurtech company that will get you liability insurance for amazon sellers which is right for your company. Like Spott. In just a few clicks:

ONBOARD: Provide us with a few basic details.

GET A QUOTE: Our system will assess your store and help insurance carriers understand the data and provide you with best-priced quotes.

STAY UPDATED: Spott monitors Amazon’s policies continuously, so if there are any changes that may be relevant to you and your store, we will alert you in real time and adjust your policy accordingly, at no extra cost.

Hey, that was not as difficult as I thought it would be!

Hey, we know eCommerce, it’s what we do! Glad to be of help. If you want another talk, maybe discover more eCommerce products from our suite, such as suspension coverage and inventory boost – let us know. 

Click here to onboard and get your Amazon seller liability insurance policy, with just a few clicks. 

Contact us for any questions you have about your insurance!  


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