Insurance is an area that tends to strike fear or boredom into people’s hearts but Ashlin has a way of making it all very palatable. Which is good because you really need to know this stuff. In the first part of this interview, we talked about Ashlin’s story and the requirements around Amazon liability insurance for Amazon sellers.
Ashlin Hadden Insurance has created the first ever account suspension policy for eCommerce sellers (which includes Amazon, eBay, and other platforms) that will help pay your lost income if you’re suspended. This is a Lloyds of London policy, and it’s fairly reasonably priced. The policy is a 90-day aggregate and you can qualify for 250,000, 500,000 or a million dollars in coverage, depending on how long you’ve been in business.
When you get the email to say your Amazon account is suspended, you call the 1800 number like you do with any type of claim for your auto or home or commercial insurance policy. We will get you in contact with an account reinstatement specialist. For example, CJ Rosenbaum who has been on the show before and then have 120 hours to get you unsuspended. You’ll make the contract with them and pay whatever fees there are. You must keep that receipt that you paid because you will be reimbursed up to $500 for that. If they don’t get your account unsuspended within that first 120 hours then the insurance starts paying your loss of income back to day 1 of suspension. This is coverage for your bills, so your payroll, owner draw, cell phone bills, storage fees, internet bills etc.
Amazon account suspension insurance does help you get reinstated as quickly as possible through experts like CJ Rosenbaum. Assuming you do have to use the actual insurance, the policy will cover the ongoing overheads like payroll and internet bills.
It does not cover direct lost sales. However, if you’re taking those sales out as an owner’s draw then it is covered. However, you have to show that there’s a loss there. As long as you can show that you’re taking that then it is covered.
For example: let’s say there’s $25K revenue, with $10K profit, and $2K for owner’s draw. There’s $8K left that was profit going back into the business. If you’re leaving the $8000 in the business then it isn’t covered that because it’s not a loss. However, if you were to take that out as owner’s draw then the $8000 would be covered plus the expenses. The figures are based on the previous 12 months, so it’s a rolling 12 month period.
By far the biggest exclusions is lying on the application. If you are not completely honest on the application, that will be the thing they look at to deny a claim. For example, if you say you’ve never been suspended on the application, then you get suspended; if they go into your seller central and see that you’ve been suspended before, you will end up with no coverage. Making sure that you’re 100% honest on the application is most important.
Violating a prohibited items list on your terms of service with Amazon will also be not covered. Anything you get suspended for that is on that list isn’t covered.
The other big one is the intentional violation of the Amazon terms of service. Anybody who gets suspended is violating the terms of service. But it’s the intentional violation that specifically is what is being looked for here.
Be honest and making sure you’re following terms of service. Amazon doesn’t always make that very clear so it is worth digging through for anything to do with any borderline activity, any grey areas. If you’re going to try to make money with it, if there’s any question whatsoever, you must double check.
This Amazon Account Suspension Insurance is only open to the U.S. at this stage. For now, you must have a U.S. business registered address and U.S. mailing address. Hopefully, there will be a policy for the U.K. by possibly September 2017.
Remember, it’s not a requirement of Amazon to have this type of insurance. It’s a requirement of Amazon to have the product and general liability insurance (which you can find out more about in Part 1 of this interview).
The minimum premium on an Amazon account suspension insurance policy is $800 but the premium is based on sales. So if you’re a smaller seller, your premium will be $800. It goes all the way up to 1 million in sales per policy year and for that amount you’re looking at close to $3000 policy. It might seem like a lot but remember that would be 0.3% of your turnover. Which is very tiny to be covered against account suspension, which CJ says is the single biggest risk to your business. Maybe you’re not going to need $1M for a product but you need something.
Ashlin tells the story of a claim last year with a retail arbitrage client. This client shipped an item, it was fulfillment by Amazon. It was shipped to their client’s door. UPS put the box in front of the client’s door, The client came out in the morning, tripped over the box, broke his clavicle and hip. They sued UPS, sued Amazon and sued Ashlin’s client. It was not Ashlin’s client’s fault but he still had to get an attorney to defend him and go through the proceedings. Nine months later it was dropped but it still cost the carrier about $76,000 to do all of that. Even though the client wasn’t directly responsible, he still has to prove that he wasn’t responsible.
So remember, even if you’re not the product owner you still can be pulled into a lawsuit. People sue for the stupidest stuff all the time. You still need a policy even if you’re not the direct owner or manufacturer of the product.
We’ve got to take responsibility for ourselves in a world where people don’t take responsibility and try and shove responsibility onto us as business owners. Everybody’s got to have insurance. If you haven’t got it, don’t mess about, get it done. It’s not worth risking not having it.
Don’t forget to contact Ashlin at [email protected] if you want more information about Amazon account suspension insurance or have a question about your policy. She is happy to talk to you and wants to make sure you are protected; whether or not you get protected through her or somebody else.
And remember to sign up if you want to be notified of when this insurance will be available in the U.K.
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.