Many Amazon sellers find themselves in a frustrating cycle: carefully selecting business insurance only to have their applications rejected during verification. With frequent policy adjustments, merchants must stay vigilant to navigate these evolving requirements.
The Ever-Changing Insurance Landscape
Imagine preparing for peak sales season only to have your store operations halted by insurance verification issues. Amazon's commercial liability insurance requirements have become a moving target, forcing sellers to constantly adapt.
In April, numerous U.S. marketplace sellers reported failed Product of Excellence (POE) insurance verifications. The root cause? Unscrupulous insurance brokers selling invalid policies while posing as legitimate providers. Many affected sellers were advised to purchase coverage exclusively through Amazon's official insurance portal for guaranteed compliance.
However, as annual policy renewals approached, merchants who followed this advice encountered new rejection notices. Investigation reveals Amazon has implemented another significant update to its commercial liability insurance requirements.
Key Policy Changes: The $1 Million Threshold
The revised policy introduces a critical sales-based distinction:
- Sales benchmark: Only sellers with over $1 million in Amazon.com sales during the previous 12 months may maintain policies containing deductibles.
This represents a substantial departure from previous standards:
- Previous rules: Amazon originally required commercial liability coverage for sellers exceeding $10,000 in monthly Amazon.com sales, with no deductible restrictions. Many opted for minimal coverage to satisfy basic requirements.
- Current standards: Sellers below the $1 million threshold must now maintain zero-deductible policies. Those exceeding the benchmark may choose between zero-deductible plans or options with $10,000 deductibles.
Operational Impacts and Strategic Considerations
The policy shift carries significant implications for marketplace sellers:
- Increased costs: Zero-deductible policies typically cost $700-$1,000 more annually than equivalent $10,000 deductible plans, directly impacting operating expenses.
- Strategic decisions: Lower-volume sellers now face mandatory premium coverage, while high-volume merchants must evaluate risk tolerance when selecting deductible options.
Critical Compliance Details
Amazon has simultaneously tightened verification requirements for policyholder names:
- With single-member LLC exceptions, insured names must precisely match the "legal entity" name provided in Amazon account information.
- Single-member LLCs may align insured names with either their legal entity name or publicly used business name (DBA).
Discrepancies in this information represent the most common cause of verification failures, requiring meticulous attention during application.
Proactive Compliance Strategies
Successful navigation of Amazon's evolving insurance landscape requires:
- Monitoring official policy updates through Amazon communications and seller forums
- Purchasing coverage exclusively through authorized channels
- Triple-checking all registration details before submission
- Selecting coverage options based on actual sales volume and risk management strategy
While Amazon's insurance requirements continue to present challenges, informed sellers who prioritize compliance can maintain uninterrupted operations and focus on business growth.