For professional sellers on Amazon, a key operational threshold is $10,000 in gross monthly sales. The moment your business crosses this figure in any given month, a 30-day countdown begins. Your objective is to secure a valid Certificate of Insurance (COI) and submit it to Amazon before that deadline expires, or risk account penalties.
This insurance requirement is not a negotiable term buried in the seller agreement; it is an automated, strictly enforced policy. It exists to protect Amazon, your customers, and your brand from liability claims arising from your products. When you sell on the platform, you enter a professional ecosystem where risk management is a fundamental component of operations. Neglecting this responsibility can lead to immediate and severe consequences for your account's health and cash flow.
Core Requirement Breakdown
Many brand owners view the Amazon insurance mandate as an avoidable expense. This is a critical error in judgment. With millions of products sold daily, a single defective item can create significant legal and financial exposure. Amazon mandates seller insurance to ensure your policy acts as the primary defense, shielding their own corporate assets. This is a standard commercial practice, and a basic understanding of liability insurance for contractors provides a solid foundation for any business owner. (For those just starting, our guide on how to become an Amazon seller covers these initial steps.)
The process is triggered automatically, and the deadlines are rigid.
1. Triggers and Deadlines
The table below outlines the events that initiate the insurance requirement and the associated compliance timeline.
| Triggering Event | Requirement | Compliance Deadline |
|---|---|---|
| Gross proceeds exceed $10,000 in any calendar month | Seller must obtain and maintain commercial liability insurance. | Within 30 days of crossing the $10,000 threshold. |
| Amazon requests proof of insurance (at any time) | Seller must provide a valid Certificate of Insurance (COI). | Within 30 days of receiving Amazon's request. |
| Policy expiration or cancellation | Seller must submit a new, updated COI. | Immediately, before the old policy lapses to avoid gaps. |
Crossing the $10,000 monthly sales mark is the primary trigger. It signifies your transition from a small-scale operation to a professional business in Amazon's view, subjecting you to stricter operational standards. Missing the 30-day compliance window can result in payment holds or account suspension.
Deconstructing the $1 Million Coverage
The central pillar of Amazon's insurance mandate is the $1 million coverage rule. This is not a flexible guideline; it specifies exact limits your policy must meet. Correctly reflecting these details on your Certificate of Insurance (COI) is the difference between a swift approval and a cycle of rejections from Amazon's verification system.
Your policy must provide at least $1 million per occurrence, which is the maximum payout for a single incident. Additionally, it needs $1 million in the aggregate, representing the total amount the policy will pay out over its annual term, regardless of the number of claims. These limits apply to both general and product liability.
1. Key Policy Types
Amazon's automated system scans your COI for specific policy types. A general business policy is insufficient. You must have a Commercial General Liability (CGL) policy that explicitly includes product liability coverage. This protects you if a product you sell causes bodily injury or property damage.
Securing the correct policy is especially important if you operate in restricted categories. Our guide on how to get ungated on Amazon can assist with navigating those initial barriers.
2. Additional Insured and Deductibles
A frequent point of failure for sellers is the "additional insured" clause. Your policy is required to name "Amazon.com Services LLC., and its affiliates and assignees" as additional insureds. The wording must be precise, as even minor deviations can cause an automated rejection.
The policy’s deductible is also closely examined. Your deductible cannot exceed $10,000. A policy with a $15,000 deductible, for instance, will be rejected automatically. This rule ensures the insurance provides meaningful coverage without a prohibitive out-of-pocket cost barrier.
These requirements create a predictable risk management framework. As this overview from The Hartford notes, consistent coverage minimums are essential. Communicate these specific requirements clearly to your insurance agent to obtain a compliant COI on the first attempt.
Securing and Submitting Your COI
Obtaining a compliant policy is only the first step. The next is submitting your Certificate of Insurance (COI) correctly through Seller Central. Amazon's verification process is automated and intolerant of errors. A single typo or a mismatch in business details can lead to immediate rejection, forcing you to restart the process with your insurance provider. This can consume valuable time as your 30-day compliance deadline approaches.
1. COI Submission Process
With your COI ready, navigate to the Business Insurance page within your Seller Central account settings to upload the document. For a quick orientation of the platform, you can review our guide on what is Amazon Seller Central.
The upload tool requires you to enter information exactly as it appears on your COI:
- Insurance Provider's Name: The complete, official name of the insurer.
- Name of Insured: This must match the legal entity name registered in your Amazon seller account.
- Policy Number: The full policy number, verified for accuracy.
- Policy Start and End Dates: Ensure the policy is active and covers the upcoming year.
The ACORD 125 form is a standard document in commercial insurance applications, and familiarity with it can be beneficial.
2. Common Rejection Issues
Amazon’s system cross-references the submitted information with your account details. Discrepancies are the primary cause of rejection.
The most frequent error is a mismatch between the business name and address on the COI versus the information in Seller Central. Your insurance provider must list your business precisely as Amazon has it registered, including suffixes like "LLC" or "Inc."
Before your agent finalizes the COI, verify these common problem areas:
- Incorrect "Additional Insured" Language: The text must be exactly: "Amazon.com Services LLC., and its affiliates and assignees." No variations are accepted.
- Mismatched Business Address: The address on the COI must be identical to the one in your Seller Central legal entity settings.
- Invalid Policy Dates: Submitting an expired policy or one with a future start date will result in automatic rejection.
By working with your insurance provider to confirm these details, you can achieve a first-time approval and maintain your account's good standing.
Risks of Non-Compliance
Disregarding Amazon's insurance requirement is a fast track to business disruption. The consequences are not minor warnings but a series of automated penalties that can halt your sales. Ignoring the initial notification or submitting incorrect documentation places your account at immediate risk.
Previously, enforcement was inconsistent. Now, Amazon uses an automated system to screen every COI. An analysis on FounderShield.com highlights that this new process flags non-compliant COIs for human review, which is often followed by direct threats of suspension.
1. Path to Suspension
The process typically begins with a performance notification giving you a 30-day window to upload a valid COI. Failure to meet this deadline triggers escalating actions that directly impact your finances and operations.
The penalties accumulate quickly:
- Payment Holds: Amazon may freeze your disbursements, restricting cash flow while expenses like storage fees and ad spend continue to accrue.
- Listing Deactivation: Your active listings can be suppressed, rendering your products invisible and causing your sales rank to plummet.
- Full Account Suspension: Repeated failure to provide proof of insurance leads to a complete revocation of selling privileges.
If you find yourself in this situation, a clear action plan is necessary. Our guide on what to do when your Amazon account is suspended provides steps for reinstatement.
2. Policy Rejection Reasons
Even sellers with seemingly correct policies can face rejection. Amazon's automated system is highly specific, and certain policy types are automatically disqualified. The most common issue is a claims-made policy that lacks a sufficient extended reporting period, also known as "tail coverage."
A standard claims-made policy only covers claims filed while the policy is active. However, a customer could file a lawsuit two years from now for a product purchased today. To address this gap, Amazon requires a minimum three-year tail coverage. A policy without this provision will be rejected.
For this reason, an occurrence-based policy is nearly always the more straightforward and secure choice for Amazon sellers. It covers any incident that occurs during the policy period, regardless of when a claim is filed. Understanding these policy distinctions is key to protecting your business from an avoidable suspension.
Policy Costs and Options
Budgeting for insurance is a necessary operational cost for any serious Amazon seller. This should be viewed as an investment in your brand's long-term stability rather than a simple expense. The cost is not a flat rate but is calculated based on a risk assessment of your business, focusing on your product category and projected annual revenue.
Selling low-risk products like home decor will result in a lower premium than selling high-risk items like children's toys or dietary supplements. A seller with $250,000 in annual revenue will pay less than a brand generating $2 million. A clean claims history will also help reduce your premium.
1. CGL vs. BOP
You will encounter two main policy types that meet Amazon's requirements: a standalone Commercial General Liability (CGL) policy or a more inclusive Business Owner's Policy (BOP).
Commercial General Liability (CGL): This is the core policy covering third-party bodily injury and property damage claims. It is the most direct and affordable way to meet Amazon's mandate.
Business Owner's Policy (BOP): This is a practical upgrade for most sellers. A BOP combines CGL coverage with other protections, such as commercial property insurance for your inventory and business interruption insurance. It is typically more cost-effective than purchasing each coverage separately.
For sellers holding inventory at their own location or a 3PL, a BOP is often the more logical choice. Insurance is one of several operational costs to consider, as detailed in our analysis of the cost to sell on Amazon.
2. Estimated Annual Premiums
The following table provides ballpark estimates for annual premiums. Your final quote will depend on your chosen insurer and specific business profile.
| Seller Profile (Annual Revenue) | Product Risk Category | Estimated Annual Premium (CGL) | Estimated Annual Premium (BOP) |
|---|---|---|---|
| Up to $250,000 | Low Risk | $400 – $700 | $600 – $1,000 |
| Up to $500,000 | Medium Risk | $750 – $1,500 | $1,200 – $2,200 |
| Up to $1 Million | High Risk | $2,000 – $5,000+ | $3,000 – $7,000+ |
Obtain quotes from multiple A-rated insurance carriers experienced in the e-commerce sector. They understand Amazon's specific requirements and can provide a compliant policy without unnecessary add-ons.
Frequently Asked Questions
Even with clear guidelines, practical questions often arise. Here are answers to common inquiries from Amazon sellers.
1. I have an LLC. Do I still need insurance?
Yes, absolutely. This is a common point of confusion. An LLC (Limited Liability Company) creates a legal separation between your personal assets (home, savings) and your business. If your business is sued, an LLC generally protects your personal property. It's a shield for you.
However, it does not protect the business itself. A lawsuit targeting your company can still go after your business's assets. The commercial liability insurance required by Amazon is what protects your business from claims, regardless of your legal structure.
2. I’m not in the US. How do I get insurance?
International sellers have the same insurance requirement as US-based sellers. The key detail is that your policy must be from an insurer authorized to conduct business in the United States. This ensures the provider can handle claims within the US legal system, which is Amazon's primary concern.
Many global carriers like Chubb or Hiscox have US branches that can issue a compliant policy. Alternatively, you can work with an international insurance broker specializing in e-commerce. They are familiar with Amazon's specific "additional insured" language and can efficiently source a compliant policy for sellers operating outside the US.
3. Amazon rejected my COI. What next?
A rejection is not final, but it requires immediate action. First, carefully review the rejection email from Amazon; it usually specifies the exact reason for the denial. Do not re-upload the same document.
Forward Amazon's email directly to your insurance agent or broker. Most rejections stem from clerical errors that can be quickly corrected, such as:
- Incorrect "Additional Insured" Wording: A typo in "Amazon.com Services LLC., and its affiliates and assignees."
- Business Name Mismatch: The name on your policy must exactly match the legal entity name in Seller Central.
- Address Discrepancy: The business address on the COI differs from what's on file with Amazon.
Your insurance provider should issue a corrected COI, often within one business day. Once you have the updated document, you can resubmit it to Seller Central for verification.