Product liability insurance is one of those business expenses that feels unnecessary — until something goes wrong. For Amazon sellers, understanding when you need it and what it covers is an important part of running a responsible business.
Amazon's Requirements
Amazon requires sellers with gross proceeds exceeding $10,000 (approximately £8,000) in any month to carry commercial liability insurance of at least $1,000,000 per occurrence. Amazon may request proof of your policy, and failure to provide it can affect your selling privileges.
Even below this threshold, Amazon can request insurance documentation at any time. Being prepared with a policy in place prevents scrambling if Amazon makes the request.
What Product Liability Insurance Covers
Product liability insurance covers claims arising from products you sell causing injury or damage. If a customer is harmed by a product you sold — even if you did not manufacture it — you could be held liable. The insurance covers legal defence costs, settlements, and judgements up to the policy limit.
This applies whether you are selling private label products, wholesale items, or arbitrage finds. As the seller, you are part of the supply chain and have legal exposure.
How Much Does It Cost?
For small to medium Amazon sellers in the UK, product liability insurance typically costs £100–£400 per year. The exact cost depends on your annual turnover, the types of products you sell (higher-risk categories like electronics or supplements cost more), and your claims history.
Several insurers specialise in e-commerce and Amazon seller policies. Companies like Hiscox, Superscript, and specialist brokers offer policies tailored to online sellers. Shopping around is worthwhile — rates vary significantly between providers.
When to Get Insured
The conservative advice is to get insured as soon as you start selling. The cost is modest — even at £200–£300 per year, it is a tiny fraction of your business expenses. The protection it provides if something goes wrong is disproportionately valuable.
At minimum, get insured before you exceed Amazon's threshold or before you start selling any higher-risk products. Do not wait for Amazon to ask — being proactive demonstrates good business practice.
Other Insurance to Consider
Beyond product liability, consider stock insurance (covering your inventory at home, in transit, or at a prep centre), public liability insurance (if customers or delivery drivers visit your premises), and professional indemnity if you provide services alongside product sales.
Insurance is a cost of doing business properly. It protects your personal assets, keeps you compliant with Amazon's requirements, and gives you peace of mind to focus on growing your business.