How To Ensure Your Amazon Company is Legally Insured Going into 4th Quarter

It should come as no surprise to anyone that, year-after-year, Amazon continues to gross significantly more revenue in its 4th quarter (October through Dec) than any other quarter. 

Sellers know this. Shoppers know this. Hell, my 6-year-old kiddo who still believes in monsters and giggles when someone says “butt” knows this. (I just asked him). 

And while the 4th quarter is rightfully designated as the season to be merry, gracious, and giving, it also is the season to get sued. With the significant uptick of shopping, money circulation, production, and supply-chain operations, ecommerce sellers are more exposed to liability claims and financial extortion than any other time of the year. 

In June of this year, Amazon updated its commercial liability insurance program  policies. If you haven’t been privy to these changes or simply haven’t found the time to make changes to your own products in accordance with said requirements, now is a great time to do so – before you’re “fa-la-la-ing” to your company lawyer. 

It would behoove you to read through all of the recent liability updates in Seller Central, but here’s a breakdown of the two major changes that have been added:

You May Not Have To Pay For Liability Insurance Deductibles

Now, this is the kind of Christmas present we can get behind! Except that (true to Amazon’s endless crusade of bleeding third-party sellers dry), this change in policy can actually end up costing you more.  

Before, Amazon required third-party sellers to hold commercial liability insurance with deductibles up to $10,000. As of June 2022, Amazon sellers whose gross yearly sales cap at $1M may be dismissed of any deductibles

Sounds great right? It may not be. 

Typically, deductibles are standard in liability policies. Deductibles significantly reduce the overall cost of policies because such policies are only covered by insurers for damages above a set amount. A non-deductible insurance plan comes with a higher premium, meaning that third-party sellers like yourself will have to acquire insurance policies at much higher costs.

Thanks, Amazon Grinch. What other kind of gifts have you bestowed upon us? 

Amazon Sellers Can Use Their DBA Name on Commercial LIability Policies

First: What is a DBA (Doing Business As) Name? 

Also referred to as “assumed” or “fictitious business” names, your DBA name is used If a person or company runs their Amazon business under a different name than the one they filed their business with.  

Up until recently, Amazon required that only the names of your legal entity can be used on your insurance policy; the reason being that – were you to be sued – your insurer wouldn’t pay out if the wrong company was named on the policy.

The purpose behind registering your DBA name is for consumer protection – to notify the public that a particular person or business entity is conducting business under a name that differs from their legal one. 

Now, with recent re-writes to the rules, Amazon will allow you to use your DBA title on your commercial insurance policy. This ultimately is good because it means more coverage and flexibility for you and your business.

What Can Merchants Expect in the Future from Amazon’s Commercial Liability Insurance Guidelines? 

It was less than 2 years ago when Amazon announced that third-party merchants who sell more than $10K/month have to carry liability insurance. While this implementation flustered the majority of Amazon sellers, nearly all took the proper measures to safeguard their business and keep the wolves of Amazon at bay.  

After two years of implementation, Amazon is “evolving” the insurance mandate – for better or for worse. And their guidelines will probably continue to change as the behemoth grows and opens itself to more and more potential lawsuits. 

While commercial liability insurance can be costly, it’s absolutely vital for the well-being of your business – particularly if you are in categories like Baby, Electronics, and Medical Equipment. If your product poses even the slightest chance of jeopardizing a consumer’s health or quality of life, it’s worth the hassle and money to cover your ass-ets.