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Thu Oct 7 2021 21:38:19

Small Sellers Getting Sucked into Amazon Insurance Mandate

By: Ina Steiner

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Small sellers say Amazon is warning them they must purchase product liability insurance despite being significantly under the threshold for the newly revised mandate. 

As previously reported in EcommerceBytes, Amazon is requiring sellers to take out a liability insurance policy once they reach $10,000 in sales in one month on Amazon.com. Previously, the requirement had applied only to sellers who met that threshold for three consecutive months. But it now appears Amazon is enforcing the policy more broadly.

A seller of specialty collectibles wrote to EcommerceBytes today after getting an email notification with the subject line, "Action Required: Provide proof of liability insurance coverage."

"We are a small family owned business that has never, I repeat never, come even remotely close to selling $10,000 a month on Amazon," he said. "Wish we did, and we don't sell any products that are hazardous, we sell mostly paper collectibles."

Thinking it was a mistake, he called Amazon. "Even though they say the threshold is $10,000 in sales, in the same breath they say that they are now starting to require all merchants to provide the expensive liability coverage."

In the email Amazon sent the seller this morning, it included the following FAQ:

Why did I receive this message?
You are required to provide proof of liability insurance, and our records show you have not done so.  As of September 1, 2021, Section 9 of the Business Solutions Agreement (https://sellercentral.amazon.com/gp/help/G1791) requires you to obtain and maintain at least $1 million of commercial general, umbrella, or excess liability insurance, within 30 days after exceeding $10,000 in gross proceeds in sales in one month on Amazon.com or if otherwise requested by Amazon.

The last phrase - "or if otherwise requested by Amazon" - leaves the door open for Amazon to require any and all to obtain insurance.

Other sellers posted on various threads on the Amazon discussion boards, reporting they also received a notice despite being under the threshold.

One seller said they would probably only reach $9,000 in sales for the entire year, "So not sure why the mandate for insurance!"

Another seller who reported they have sold new and used books on Amazon for 10 years may be a victim of their early success. They said in the early years of selling they brought in 6-digit sales on Amazon, but only grossed $45,000 last year and were expecting under $25,000 this year.

"Amazon is requiring I carry $1,000,000 of liability insurance to continue selling books. When I call seller support I have a person speaking very poor english telling me I must buy the insurance or Amazon will close my selling account in 30 days, if they feel like it. (Random, unknown factor)."

The seller said they took it as a request from Amazon to bow out gracefully and sought advice from others

The EcommerceBytes reader said, "If Amazon no longer wants small merchants and only wants the big guys, they need to just tell everyone the truth."

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