Are you interested in selling on the Amazon platform? Or, are you an Amazon seller already and have been selling on this platform for some time?
If yes, then this blog post is a must-read for you! Here, we will explore what product liability insurance is and why every Amazon seller, or any business for that matter, should have it as a crucial part of their risk management strategy.
Let’s start with the basics then!
Product liability insurance- Definition
Put simply, product liability insurance protects companies from claims resulting from damage or injury caused by their products. With this coverage, your company is shielded from claims or lawsuits arising from bodily injury or property damage caused to a user by defective products produced, distributed, or sold by your company.
This insurance coverage aims to safeguard the insured from legal obligation to pay compensation (such as claimants' costs, fees, and expenses) for damage or injury to third parties and the claims referenced above.
The following factors are taken into account when determining the amount of indemnity granted:
• "Injury" shall mean death, bodily harm, illness, or disease.
• Damage includes any damage to the atmosphere, land, water, or other tangibles.
• A product is a tangible property that the insured has designed, manufactured, installed, formulated, sold, distributed, modified, treated, or repaired- once it has left its possession and control.
• Accidents should be unexpected, sudden, and unintentional events. These may include repeated or continuous exposures arising from the same incident.
• Pollution or pollution in the atmosphere is considered if contaminates land, water, or other tangible properties, for which the insured is held liable.
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Why do Amazon sellers need product liability insurance?
To succeed, Amazon sellers need to treat their business like any other, and that includes securing business insurance. No matter if you are a newcomer or a seasoned one, online sellers should have business insurance, regardless of how long they have been operating.
Do not quite agree with this? Have a look at the scenarios below-
1. Mr. A is an Indian seller. He is purchasing goods from an Indian manufacturer and selling them on the Amazon India platform. After a month, the manufacturer complained to Amazon and even filed a lawsuit against Mr. A for selling fake items under their brand name.
2. Mr. B is selling inverters on the Amazon India website. A client purchased inverters from his store on the Amazon India portal. Due to an injury, the client filed a lawsuit against Mr. B for selling a fake product.
You may have or will come across many such situations during the course of your business operations. The truth is, no matter how careful you are, your business is vulnerable to various risks such as product liability claims or shipping damages. It is always possible for something to go wrong with your products regardless of how safe or well-tested they are. Therefore, sellers like you should always look for ways to minimize risks and protect their businesses and this is where the ‘safety net’ named product liability insurance comes in handy!
It’s common these days for Amazon sellers to experience customer issues relating to defective or damaged items, which may range from just a bad review to a full-blown lawsuit. No matter how unreasonable or shallow the customer's claim is, if it is pursued in a lawsuit, it may cost your business a lot, both in monetary and non-monetary terms. In such situations, product liability insurance will be there to safeguard you from possible losses or damages.
Certain important benefits of product liability insurance for Amazon sellers can be listed as follows-
· You would be protected against any potential legal issues that could arise from selling products on Amazon. This could include things like product liability claims or copyright infringement claims.
· You would be covered for any loss or damage to your stock that occurs while it is in transit to Amazon warehouses or customers.
· Your business would be protected if Amazon were to suspend or close your account for any reason. This could happen if you were alleged to be violating their terms of service, for example.
· You would have absolute peace of mind knowing that your business is properly protected against any potential risks. This can help you to focus more on growing your business and increasing sales.
Just like any other Amazon merchants, third-party sellers are also obliged to comply with Amazon’s insurance guidelines. As of September 1, 2021, Amazon Global has mandated that if a seller reaches $10,000 in gross proceeds in any month, he must carry liability insurance, as per the Amazon seller agreement. This means that in case of any complaints or lawsuits, Amazon is just as free as you are from any liability or damages that the customer is claiming. Amazon, just like you, would not like to have any form of responsibility fall on its shoulders. A Certificate of Insurance will be requested by Amazon to ensure that you adhere to their standards and guidelines.
Product liability insurance is an important part of running a successful Amazon business. It can protect you from unforeseen losses and help to ensure that your business remains profitable in the long run. If you are an Amazon seller, consider investing in product liability insurance today to keep yourself safe from unexpected liabilities and future risks.
The footnote:
We hope the preceding discussion has helped you understand what product liability insurance is and why your business needs it. With this policy, business owners like you can have absolute peace of mind, knowing that they are covered if something goes wrong with one of their products. For the best recommendation on product liability insurance policies, you may contact BimaKavach. Just answer 6-8 questions and get the best recommendations in 5 minutes.
