22 September 2021

Online Sellers Insurance

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For many people, starting e-commerce is as simple as sourcing goods and advertising them for sale on a platform like Amazon.com or Wayfair. However, what many sellers do not realize is that a majority of e-commerce platforms require vendors over a certain revenue threshold to obtain Commercial Goods Liability Insurance coverage.

CGL Insurance, also known as Product Liability Insurance, is designed to cover legal expenses for the entire supply chain of a product that is deficient, defective, or which has caused bodily injury or property damage.

E-Commerce Insurance Requirements

On September 1st2021 Amazon.com introduced new requirements for all Professional Seller accounts with over US$10,000 in monthly revenue mandating the purchase of product liability coverage.

Reading the Amazon.com Seller Terms and Conditions, the new insurance requirements are as follows:

“Sellers with professional selling plans on Amazon.com must provide proof of Commercial General Liability insurance. This insurance, obtained at the seller’s expense, shall cover up to $1,000,000 per occurrence and in the aggregate and must include products liability, bodily injury, or personal injury, property damage, and other requirements as stated in the Participation Agreement. The insurance must indicate that “Amazon.com, Inc., and its affiliates and assignees” are added as additional insureds.”

The required Additional Insured wording must be as follows:

“Amazon.com., Inc., its affiliates and assignees are additional insureds, as their interests may appear”

Additional requirements for insurance protection needed to satisfy Amazon’s insurance mandate include:

  • Insurance must be provided by the seller on the original document/certificate of insurance
  • Insurance should contain an additional insured endorsement
  • All seller subsidiaries/DBAs (Doing Business As) must be covered by the insurance
  • Sellers must provide 30 days notice of cancellation, modification, or non-renewal
  • Insurance must list legal underwriter name as listed in the A.M Best Property & Casualty Guide
  • Insurance must be completed in its entirety and signed

This is a fairly comprehensive list of requirements for the insurance coverage online sellers are required to possess in order to use the Amazon.com.

Why does Product Insurance matter?

If you’re starting a shop on a platform like Amazon.com, you may be surprised to learn that at some point you will likely be required to obtain insurance. Many inexperienced Amazon sellers may even be thinking that in a worst-case scenario they are protected by Amazon – after all, the seller is using the Amazon.com platform to distribute their goods, and Amazon.com is one of the biggest e-commerce websites in the world. Amazon is surely protecting their sellers.

Unfortunately, this assumption is wrong.

Under the terms and conditions of a seller account on a site like Amazon.com, it is up to you as the business owner to deal with, and manage your legal risks. This means that you should be obtaining the proper insurance to protect against any exposures you may have as a business/amazon.com seller.

When it comes to selling products, either physical or through an online webstore, all entities involved in the supply chain and distribution of that product have legal liability in the event that the defective product causes physical harm or financial loss. A perfect example of this can be seen in the Class Action Law Suit for defective solar eclipse viewing glasses sold through Amazon. In this case, Amazon simply facilitated the connection between the seller and the customer. But because the goods being sold led to physical harm, by facilitating that connection Amazon has become part of the supply chain for the product, and consequently may be legally liable for any damages.

Because global supply chains and distribution systems are so vast and interconnected in the modern world, many companies may be involved in the distribution and handling of a product before it reaches the end consumer. All of those entities are at risk should the product be defective, necessitating the purchase of Product Liability Cover.

Get a Free Product Liability Insurance Quote from CCW Global Today!

If you’re participating in any online selling activities you should strongly consider protecting against all your risks, including the risk of the products you are providing being defective, faulty, and causing physical harm or financial loss.

If you would like to receive a free quote for a Product Liability Insurance plan for online sellers, please complete the short form at the top of this page. Alternatively, you can Contact Us and speak to an expert Hong Kong insurance broker today.

About Author

Michael Lamb is an insurance industry professional with many years of experience within the Hong Kong Insurance market. Focusing on APAC coverage issues, Michael is able to provide extensive analysis and insight to a range of pressing topics. Previously, Michael provided insurance broker Globalsurance.com with their most highly valued articles and was a key influence in the development of all the content on Pacificprime.com, Michael has a passion for insurance matched by few others in the region.

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