The guest on the show today is Ashlin Hadden of Ashlin Hadden Insurance. She is here to talk about an area that nobody wants to think about but that is really important: insurance. Even more specifically, Ashlin specialises in Amazon liability insurance and has some great tips for Amazon sellers to help them in this area.
One day a customer needed insurance for an Amazon business because at that time Amazon had just introduced new rules regarding sellers needing General Liability Insurance. Ashlin’s initial response was no because people don’t really know what Amazon sellers do. Carriers didn’t want to work with them because they don’t really understand the industry.
However, this customer was persistent and Ashlin did agree to help. Educating the carriers about eCommerce was part of the process. She has done a lot over the last 15 months. Now Ashlin focuses on helping eCommerce sellers get their Amazon liability insurance and proving to insurance carriers that you are good risks for them to have.
Amazon used to require a general liability insurance policy if you had 3 months of $10,000 of sales or more. Recently this has changed, so now any seller must have a $1,000,000 general liability insurance policy with products completed. What that means for you as a seller is that you need a policy that has general liability and product liability no matter if you are private label, wholesale or retail arbitrage.
A lot of people think they can’t afford it, but it really is inexpensive. If you’re a fairly new seller doing retail arbitrage you’re looking at about $500 a year policy. That might seem like a lot but it’s part of your terms of service to have Amazon liability insurance. If you don’t have it, Amazon could suspend you and take you off the platform, so it’s a very cheap policy to make sure you’re protected.
General liability is anything you do or say as a business that could harm somebody. Product liability is anything your product could do to harm somebody. It doesn’t matter what your product does if it hurts somebody or their property, it’s covered under the policy.
General liability is anything else that’s not really included in your product liability. For example, if somebody says you slandered them, you stole their intellectual property.
If you do get yourself into a situation like that, you would also need to call a lawyer. Of course, the person to call is CJ Rosenbaum because he knows about the nitty gritty of all of this.
Ashlin isn’t the only broker providing Amazon liability insurance, however, there’s not a lot that know where to get it. There just aren’t a lot that know what Amazon sellers do, how to class you, and really what coverage you need. From the 30 different companies, Ashlin works with there are only about 2 or 3 that understand and are comfortable insuring an eCommerce seller.
Not only does Amazon require the liability insurance, they also require the Certificate of Insurance to be sent to them along with some verbiage on it. Ashlin takes care of all of that for you. She will organise a policy that meets the Amazon requirements. General and Product Liability, a $1M aggregate policy. She sends Amazon the required information for you so it’s uploaded onto your Seller Central. Plus she will do it every year moving forward so Amazon always has an updated copy on file for you! You get to sit back and relax and know that you’re protected and don’t have to do anything else with the insurance. Ashlin will take care of it.
The insurers will take into account your sales numbers, where you’re from, what you’re selling and how you’re selling. e.g. retail arbitrage, wholesale or private label. Retail arbitrage is the cheaper one, then wholesale.
Private label is more expensive because you’re really the one that’s solely responsible if it gets harmed. They’ll also look at how long you’ve been in business and if you’ve had any past claims.
Prices can really range because it depends on what you’re selling and how much you’re selling. For example, someone manufacturing pocket knives is going to be paying something like $6000 per year. But if you’re a small seller selling very low-risk items, it will likely be $500 per year and a bit more if it’s private label or more expensive items.
More product lines don’t necessarily increase the premium. The biggest rate factor is your gross sales. Then they will add on more if the risk of the next item is higher. They work it out by looking at the whole store and base the sales on the highest risk. If you add one more risky item in then it suddenly puts the premium up across the board.
Ashlin strongly recommends contacting her to get a heads up before adding products that might be risky. This can be a great reality check for us as sellers. Insurers generally try to be as precise as possible as pricing risk. Therefore if an insurance company with a lot of statistics behind them, and very sharp people doing the underwriting, think that it’s going to increase your risk of liability to have certain products in place that might be a bit of a hint to us as sellers. We might just want to weigh up the risk vs reward for ourselves if that is the case.
These carriers are so new to assessing your risk as an eCommerce seller. They don’t have a whole lot of data now. As the years go on, Ashlin believes the carriers will realise how many people are moving to eCommerce, and it will get more tight. She says $500 is a pretty cheap policy to get covered for a million bucks. She thinks they’ll adjust the premiums as the years go on to make it worth it for them.
In part 2 we talk to Ashlin about the infamous ‘your account’s been suspended’ email.
Don’t forget to contact Ashlin at [email protected] if you want more information.
And if you are dealing with a product liability issue, contact CJ Rosenbaum, a lawyer who specialises in Amazon sellers and only Amazon sellers and their issues.