Insurance and Company Structure for Sellers

Two questions arrive together, usually a few months in, and both get answered badly on forums by people describing a different country's rules.

This is the general shape of both. It is not legal or financial advice, and the specifics depend on where you are and what you sell, so the last step is always somebody qualified in your own jurisdiction.

Amazon requires commercial liability insurance once a seller's gross proceeds from Amazon.com pass USD 10,000 in any month: cover of at least USD 1 million per occurrence and in the aggregate, in place within 30 days, with Amazon named as an additional insured and the policy verifiable by Amazon. From 2 November 2026, sellers in safety enhanced categories, such as children's products, cosmetics and ingestibles, and lithium batteries, need that cover whatever their sales. Below the threshold Amazon does not ask, but a private label seller putting its own brand on anything that goes in, on or near a person is the responsible party when something goes wrong, so the cover is worth having anyway. A limited company is a separate question, about what the owner risks personally, and the sections below take both.

Practically, keep the certificate where it can be uploaded the day Amazon asks, and check that it names Amazon as additional insured before the 30 days start.

Amazon's business solutions agreement requires commercial liability cover once an account passes a monthly gross proceeds threshold. The figures have been stable for years, and they are in the agreement rather than in a blog, so check the current version before buying anything.

Two things are worth knowing beyond the number. The policy has to name Amazon as an additional insured, and Amazon has to be able to verify it, so a policy that satisfies your own risk assessment may still be refused for a paperwork reason.

And it is triggered by the account's sales, not by the category. A seller who crosses the threshold in a month is expected to have cover whether or not the products are risky.

Amazon has announced two changes to its insurance requirement, effective 2 November 2026, and restated the rule underneath them. That rule is unchanged: sellers must "obtain and maintain commercial liability insurance within 30 days if gross proceeds from Amazon.com sales exceed USD 10,000 in any month, with minimum coverage of USD 1 million per occurrence and in the aggregate."

The first change removes the threshold for riskier products. Sellers listing in what Amazon calls safety-enhanced categories must carry cover "with a minimum coverage of USD 1 million per occurrence and in aggregate, regardless of whether they meet the USD 10,000 gross proceeds in a month threshold." Amazon names children's products, cosmetic and ingestible products, and lithium battery products, and its list is not exhaustive, so a seller near any of those should check the category page for their own products rather than assume they are outside it.

The second applies to sellers based in mainland China: "Starting November 2, 2026, we will reject newly submitted insurance policies that are not obtained through AIA," the Amazon Insurance Accelerator. A valid policy submitted before that date can run to its expiry, and its renewal then has to come through the Accelerator.

For a small seller in one of those categories, this is the change that matters: the cover used to become compulsory only once sales passed the threshold, and from 2 November it is required from the first listing. Price the policy into the product before launch, not after the first good month.

Most insurance problems on Amazon are not about the cover. They are about a policy that protects the seller perfectly well and still fails Amazon's check on a detail. Asking for the right things at the start avoids the 30 day scramble.

Tell the broker it is for Amazon. A broker who knows the policy has to satisfy a marketplace's requirement will ask the right questions. Give them the requirement as Amazon states it: the cover type, the limits per occurrence and in the aggregate, and Amazon named as an additional insured.

Check the wording before paying. The additional insured clause has to name Amazon as the requirement asks. Read the draft certificate before the policy is bound, because a correction after the fact takes time the 30 days may not leave.

Match the business. The insured name on the policy should match the legal name on the seller account. A policy in the founder's name for an account held by a company is a mismatch Amazon may refuse.

Cover where the products sell. A policy limited to one country does not cover sales into another. A seller shipping to several marketplaces needs the territory to match.

Consider Amazon's own route. The Amazon Insurance Accelerator connects sellers with insurers whose policies are built to Amazon's requirement, and for sellers in mainland China it is now the only route for new policies. For others it is one option to compare with an independent broker.

Diary the renewal. Upload the renewed certificate before the old one expires. A lapsed policy is treated as no policy.

Product liability: somebody is harmed by something you sold. That is the risk Amazon is insisting on, and it is a real one for anybody putting their own brand on a manufactured product, because a private label seller is the responsible party in a way a reseller is not.

It is worth having before the threshold makes it compulsory if you sell anything that goes in, on or near a person: food, supplements, cosmetics, children's products, anything electrical.

You can sell as an individual or a sole trader on Amazon, and plenty do. The question is not whether Amazon requires a company, because it does not, but whether you want the liability separated from your personal finances.

The general argument for incorporating is that it puts a boundary between the business's obligations and your own. The arguments against are administration and cost, and in some jurisdictions tax treatment that is worse at low profits.

That trade-off changes by country and by how much you are making, which is exactly why the honest answer here is a shape rather than a recommendation.

Amazon's requirement covers one risk: harm caused by a product. A seller's business carries others that the requirement says nothing about, and a conversation with a broker is the time to decide which of them are worth covering.

Stock in transit. A container lost or damaged at sea, or a pallet damaged in a truck, is the seller's loss until the stock reaches the warehouse unless cargo cover says otherwise. Freight terms decide who carries the risk at each stage, and they are worth reading before the goods leave the factory.

Stock in a warehouse. Marketplaces have their own policies for stock lost or damaged in their warehouses, with their own rules on what is paid and how to claim. They are not insurance, and a seller with stock in several places should know where each policy stops.

Product recalls. Liability cover pays for harm done. It usually does not pay for the cost of recalling and replacing a faulty batch, which can be far larger. Sellers in categories where recalls happen ask about recall cover separately.

Data and systems. A business that holds customer details, or depends on its systems to fulfil orders, has a cyber risk. Whether that is worth insuring depends on how much of the business runs through its own systems rather than the marketplaces'.

The owner's own exposure. Directors of a company can carry personal liabilities in some circumstances, and cover for directors exists for that reason.

Nobody needs all of these. Ask the broker which risks the business actually carries, decide which to cover, and write down which were declined and why, so the decision is reviewed as the business grows.

That the details match. The name on the account, the name on the bank account, the name on the tax registration and the name on the utility bill you upload all being the same thing is the difference between a smooth verification and weeks of it.

Changing structure later means updating the account, which is a verification event. Doing it while trading is possible and it is not the week to also be launching something.

Tax registration where you are selling, which for cross-border sellers is its own subject and one where getting advice early is much cheaper than getting it late.

Product compliance for the category: safety marking, testing documents, ingredient declarations. Amazon asks for these on inspection, and an account with the documents ready answers in a day, which is the whole of the difference between a request and a suspension.

Invoices are the other half of that. Amazon asks for supply invoices to prove authenticity, and it asks for them from the supplier rather than from a retailer, dated within a set period and matching the business name on the account. Sellers who buy from wholesalers on informal terms discover this at the worst possible moment, which is why the paperwork is worth insisting on at the point of purchase rather than at the point of inspection.

None of this is difficult. All of it is slow if it starts on the day it is requested, and the request usually comes with a deadline measured in days.

The structure chosen in the first year has to survive events nobody plans for in the first year: a partner joining, the founder moving country, the business being sold. Each touches the seller account, the insurance and the paperwork at once.

A partner or investor joins. A new owner of a company may need to be verified on the seller account, and the account's beneficial owners kept up to date. A share sale that leaves the company and the account unchanged is usually simpler than moving the account to a new company.

The business is sold. A seller account is held under Amazon's agreement, which does not let it be handed to someone else without Amazon's consent. Buyers of marketplace businesses check how the account, the brand registrations and the trademarks will move before they agree a price. What an FBA business is worth covers what buyers look for.

The founder moves. A change of country can change tax registration, bank details and the documents used to verify the account. Plan the order of the changes with an adviser, since each one can trigger a verification.

The insurance follows. Any change to the legal name, the owner or the territory goes to the broker before it happens, so the policy and the account still match afterwards.

In every case, the order matters more than the speed. A change made in the right sequence is a few weeks of paperwork; the same change made out of order can leave an account under review while it sells nothing.

We do not give legal or tax advice, and the reason this sits alongside Amazon account management is that the paperwork is an account health matter: the accounts that survive an inspection are the ones that had the documents before they were asked for.

The same is true wherever else you sell. Walmart and eBay each have their own verification and their own compliance requests, and they ask for the same underlying documents.

If you are approaching the threshold or thinking about restructuring, it is worth sequencing it with whatever else is happening on the account.

When a marketplace asks for those documents as part of a policy warning, a suspension or a category approval, the case is the work of marketplace compliance.