Lost or Damaged FBA Inventory: When Amazon Reimburses and When Insurance Pays
Amazon now pays for most lost FBA units at what they cost you to make or buy. Here is what that reimbursement covers, what it misses, and where property and cargo insurance fit.
Two safety nets with different jobs
When units go missing or arrive crushed, a seller has two possible sources of money. Amazon’s FBA inventory reimbursement policy handles loss and damage while stock sits in Amazon’s facilities or travels with an Amazon-operated carrier. Your own insurance handles stock everywhere else and, when the policy is written for it, part of the value that Amazon’s payment leaves behind.
Sellers usually discover the second net after a large loss, when the reimbursement lands and it is smaller than they expected. This guide covers both, starting with Amazon’s rules as they stand in 2026.
How Amazon reimburses lost and damaged units
In the US, Amazon changed its reimbursement basis on March 31, 2025, after moving the start from March 10 to give sellers more time to enter their costs. Units lost or damaged before a customer orders them are now reimbursed at manufacturing cost: what you paid to source the product from a manufacturer, wholesaler or reseller, or your cost to produce it if you make it yourself. Shipping, handling, customs duties and similar costs are left out.
Amazon estimates the figure from comparable products sold in its store and through other channels. You can replace that estimate with your own numbers on the Manage Your Sourcing Cost page inside the Inventory Defect and Reimbursement portal, and supplier invoices are the evidence behind them. Units lost or damaged after a customer order are still reimbursed at the sale price on that order, less applicable fees.
A few conditions travel with every payment. The unit has to be registered in FBA and meet FBA’s requirements when it is lost or damaged. Amazon can replace a unit instead of paying for it, reverse a reimbursement it made in error, and keep and dispose of or sell units it has paid you for.
Claim windows and automatic reimbursement
Amazon now reimburses most units lost inside its warehouses on its own, typically up to five business days after marking them lost, and the payments show on your Inventory Ledger report. Manual claims still matter for the rest, and their windows are short. For claims created from October 23, 2024, Amazon set 60 days for warehouse loss and damage, 60 to 120 days after the refund for customer returns that never came back, and 15 to 75 days from shipment creation for removal orders lost in transit.
Inbound shipments follow their own process. Once a shipment closes, the reconciliation tool lets you ask Amazon to research missing units, and seller tool vendors put that claim period at roughly day 15 to day 60 after delivery. Check the current windows in Seller Central before you rely on any of these figures, and reconcile your inventory reports every month so nothing ages out.
What the reimbursement leaves behind
Manufacturing cost is not what a loss costs you. The difference shows up in five places:
- Landed cost. Freight, duties, prep fees and inbound placement fees spent getting a unit to Amazon are excluded from the payment.
- Margin. A unit that would have sold for three times its cost returns only the cost.
- Stock outside Amazon. Goods at the factory, on the water, at a prep center or 3PL, or in your garage sit outside the policy entirely.
- Sales and rank. When a fast-selling product is lost in volume, the weeks spent restocking cost revenue that no reimbursement touches.
- Late or disputed claims. A missed window or a cost Amazon will not accept leaves the gap with you.
For an occasional damaged box, these gaps are a cost of doing business. For a seller holding six figures of stock in Amazon’s network, a fire, flood or roof collapse at one fulfillment center makes them large enough to plan for.
When your own insurance pays
Commercial property insurance can follow your inventory to addresses you do not control, but only when the policy is written that way. A standard Business Owner’s Policy includes an extension for business personal property in transit or at premises you do not own, lease or operate, with its own separate limit. Compare that limit with the peak value you hold at Amazon before you count on it.
Sellers with meaningful inventory often move to an inland marine or stock throughput policy, which follows goods from the supplier through transit and into third-party warehouses under one limit. Ask two questions of any policy you consider. How does it treat Amazon’s reimbursement: does the insurer subtract what Amazon pays and respond to the remainder? And how does it value stock: at cost, or at selling price? Some property forms offer a selling price option for finished stock, which narrows the margin gap.
A large loss also raises a business income question. Business income cover is usually tied to damage at your own premises, so ask whether a policy extends it to stock held at Amazon or a 3PL, and how it measures the sales you lose while you restock.
For goods still on the way, cargo insurance answers the ocean, air and trucking legs. Stock waiting at a prep center brings in the warehouse’s own liability, covered in our guide to 3PL and prep center insurance.
Records that support both claims
- Supplier invoices for every purchase order, matched to SKUs, to back the manufacturing cost you enter.
- A landed-cost sheet for each shipment showing freight, duties and prep, which a property or cargo insurer will ask for.
- Shipment IDs, bills of lading, packing lists and pallet photos for every inbound shipment.
- Monthly exports of the Inventory Ledger and reimbursement reports.
- A current schedule of where stock sits and its value at each address: Amazon, prep centers, any 3PL and your own space.
The same file serves two readers. Amazon’s reimbursement team needs it to accept your cost, and an insurer needs it to measure the loss.
Where liability fits in
Inventory and liability are separate questions. Lost stock is your property; a customer hurt by a product is a liability claim, and liability is the policy Amazon requires once your sales pass its threshold or your products fall in an enhanced safety category. Our Amazon seller insurance requirements page covers those rules, and the Amazon seller insurance hub links the rest of the series.
We work with hundreds of Amazon sellers, and we read inventory and liability as one picture. When you ask for a quote, send your inventory values by address alongside your product list.
A few useful answers
Common questions
Does Amazon reimburse lost FBA inventory at my selling price?
Only for units lost or damaged after a customer ordered them, which are paid at the sale price less fees. In the US, units lost before an order are paid at manufacturing cost from March 31, 2025 onward.
What counts as manufacturing cost?
Your cost to buy the product from a manufacturer, wholesaler or reseller, or to produce it yourself. Shipping, handling and customs duties are excluded, so keep those on a separate landed-cost record.
Do I need insurance if Amazon reimburses lost stock?
Amazon’s policy pays for units in its care at cost. Insurance is for everything around that: stock elsewhere, goods in transit, value above cost, and losses large enough to strain cash flow.
What happens if Amazon finds a unit it already paid me for?
Amazon can reverse a reimbursement, and reversals appear on your reimbursement reports. Check them monthly so your books and your insurance values stay accurate.
Is my stock protected by Amazon while it sits at a prep center?
No. Stock at a prep center is outside the FBA reimbursement policy, so it needs your own property or inventory cover, along with the prep center’s warehouse legal liability for losses it causes.