How To Renew Your Product Liability Insurance Policy with Better Rates
As an Amazon seller currently immersed in Q4, the last thing you probably want to think about is what’s happening next year – least of all un-sexy things like how to get better Amazon insurance rates. Hell, you probably don’t even have the time or energy to read this article, so we’ll make it quick.
You may feel perfectly content with your current insurance plan, but there is ALWAYS room for improvement, so here are some actions you can take when renewing your insurance policy or shopping for a new plan/insurer.
- Insurance policies are not one-size-fits-all
Insurance companies – any kind of insurance company – have an odd business model: They want you to pay for services they have all intention of backing out of. This is why you kind of need to “read between the lines” when it comes to reading over benefits and comparing plans.
Many of the comparison sites just show you the bottom line of Amazon Seller Liability policies as opposed to helping match the right product with the right insurer. Low-risk products (like, i dunno, socks) should have relatively low premiums, deductibles, and limits when compared with, say, a chainsaw’s insurance plan. Pretty straightforward stuff, right?
But even within insurance providers that may have a higher-risk tolerance, we can’t whitewash all of them as being ideal for chainsaws. It’s really important to get to the meat-and-bones of the policy to determine – not just the cost – but if it makes sense to your particular product.
- Finding Insurers that Meet Amazon Requirements
As you are probably well aware, whatever insurance plan you decide to bleed you dry (kidding – we make sure not to let that happen), you have to make sure that it adheres to all of Amazon’s insurance guidelines.
But that shouldn’t be your only prerequisite.
Just because you find a carrier that meets all of Amazon’s check boxes, that doesn’t mean you should jump on that like a divorced mom on Jason Momoa.
Here are some elements which not only align with Amazon’s requirements but are also beneficial to your company:
- You may want to make product liability part of your commercial liability insurance. This is simplifying the difference, but Amazon only requires general liability insurance which just covers the people involved in your chain of operations. A product liability clause helps cover your booty if a customer sues you for damages or death (yes, even if it appears as innocent as a sock).
- Adding Amazon as an “extra.” Since Amazon demands to be included as an insured on your policy, find a plan that adds any insured with no additional charges.
- Adding a product listing. Yes, you read that correctly. If you try to add a new product onto your insurance policy once you’ve launched, this will likely increase the rates you are currently paying. If your carrier has an online DIY platform to update the policy, that is favorable.
- DO NOT LIE. Okay, this isn’t an issue of “morality” – this is an issue of “stupidity.” We’ve seen cases where non-US businesses change names and addresses to appear US-oriented in order to be accepted by an insurer. Problem is, if you show any signs of lying upon being sued, your insurance company can deem it fraudelent and then you will get zero help.
- The Amazon category your product is in can drop your insurance rates
Unfortunately, you don’t have the luxury as one did back in “the good ol’ days’ ‘ where insurers would be able to see and use your product to determine its riskability. For practicality purposes, insurers now determine your products riskability based on the category you product is in.
Now, you 100% choose the best category for your product based on relatedness and saleability. However, you may want to consider changing category nodes if two categories are basically interchangeable but one category is deemed more risky than another because your premium and deductible could be lower.
- Your business model affects the price of your policy
As mentioned in other articles, your business model is how you do business. Are you a Dropshipper? Wholesaler? Private Labeler?
If, for example, you do private label overseas, you are considered a manufacturer and will likely pay higher rates because if something were to go wrong, your carrier couldn’t say something like, “well, it was really the factory’s fault, so you should sue them instead of us.” Every part of the chain of custody lies within your brand, so you are responsible for all of it – even something that is the fault of some worker in Shanghai.
Make sure you give your insurance carrier as much detail as possible regarding your business model to help minmize cost. It really helps to work with a third-party that understands the business, inside and out.