Overview

Amazon sellers are now confronting noticeably higher insurance premiums needed to protect their storefronts from product‑related liability claims. The rise is driven by tighter Amazon policies, an uptick in claim frequency, and the requirement to cover potentially huge payouts—such as lawsuits that exceed $1 million for a single defective item. Understanding why costs have spiked enables sellers to secure adequate protection while keeping expenses in check.

Key Points

• Liability exposure — A single injury claim can surpass $1 million, forcing sellers to purchase coverage that matches that worst‑case scenario; for example, a malfunctioning electric grill that causes burns could generate a multi‑million judgment.
• Marketplace mandates — Amazon now obligates sellers in most categories to maintain a minimum of $1 million in product‑liability limits, pushing previously under‑insured merchants into higher‑priced policies.
• Risk‑based pricing — Insurers set premiums according to product type, monthly sales volume, and past claim history, meaning high‑risk categories like battery‑powered toys or electronic accessories attract steeper rates than low‑risk home décor.
• Limits versus deductibles — Selecting a higher liability limit or a lower deductible directly raises the premium; opting for a $500,000 limit with a $25,000 deductible can cut costs but may leave a seller exposed if a claim exceeds that amount.
• Bundled coverage — Some carriers combine product liability with general business insurance or cyber‑risk endorsements; while this streamlines claims handling, the bundled price is often higher than purchasing stand‑alone policies.

How Amazon Store Insurance Works

1. Risk assessment — The insurer evaluates the seller’s catalog, average monthly sales, and any prior claims.

   • Example: A vendor selling silicone kitchen utensils with 10,000 units moved each month is rated moderate risk, whereas a vendor offering battery‑operated remote‑control cars at the same volume is flagged as high risk due to the electrical component.