Amazon FBA Insurance
Sending stock to Amazon’s fulfillment centers changes who handles your boxes, not who answers for your products. Here is how FBA sellers cover liability, inventory and shipments.
What FBA insurance really means
We work with hundreds of Amazon sellers, and many of them start from the same assumption: if Amazon stores, packs and ships the order, Amazon must carry the risk too. Fulfillment by Amazon is a logistics service. When a customer is hurt by a product, the claim points at the seller of record and the brand on the box, and Amazon’s Business Solutions Agreement puts the duty to carry liability insurance on the seller.
So FBA insurance is really a bundle of three questions. Who pays when one of your products injures someone or damages their property? Who pays when your units are lost or damaged before they sell? And who pays when a shipment is ruined somewhere between the factory and the fulfillment center? Product liability answers the first. Amazon’s reimbursement policy, your own property coverage and cargo coverage share the other two. Our Amazon seller insurance hub lists every guide in this series.
Product liability: the policy Amazon asks for
The rule reads the same for FBA and merchant-fulfilled sellers. Once your gross proceeds on Amazon.com pass $10,000 in a month, you have 30 days to put commercial liability insurance in place, and Amazon can ask for it sooner. The policy needs $1,000,000 per occurrence and in the aggregate, Amazon.com Services LLC and its affiliates and assignees added as additional insured by endorsement, and an insurer rated A- or better. The full checklist, with the deductible rule and the upload steps, is on our Amazon seller insurance requirements page.
From November 2, 2026, sales stop being the only trigger. Amazon’s September notice, as reported by PPC Land and MyAmazonGuy, asks sellers with products in enhanced safety categories for the same $1 million policy whatever their sales. The list runs from children’s products, ingestibles and cosmetics to lithium battery goods, small kitchen appliances and home medical devices, and it reaches listings that have been live for years. An FBA seller with a few supplement or power bank ASINs now needs a policy even in a quiet month.
On most FBA policies, product liability sits inside commercial general liability as the products-completed operations part of the form. The detail that matters most is classification. Insurers price your catalog by what the products are, so a policy written when you sold kitchen towels is the wrong fit once the catalog grows into heated massagers or rechargeable lights. Tell your agent before a new product line goes live, not at renewal.
Inventory inside Amazon’s fulfillment centers
Once units check in, Amazon’s FBA inventory reimbursement policy is the first line for loss or damage in its custody. From March 2025, units lost or damaged before a customer orders are reimbursed at sourcing cost, meaning what you paid the manufacturer or supplier, rather than your selling price. You can enter your own sourcing cost in the Inventory Defect and Reimbursement portal; without it, Amazon uses its own estimate. Units lost after an order are still reimbursed at the sale price, less fees.
That leaves gaps worth knowing. Reimbursement at cost means the margin on a lost unit is gone. Claims have to be filed within Amazon’s claim window, so check the current deadline in Seller Central and reconcile your inventory reports every month. The policy speaks only to units in Amazon’s hands. Stock waiting at a prep center, sitting in a storage unit or coming back to you as removals falls outside it, and so does the income you lose while a bestseller is out of stock.
For stock inside Amazon’s buildings, most sellers lean on the reimbursement policy. The insurance conversation centers on everything around it: inventory before it reaches Amazon, overflow stock, returns you have pulled back and the cash-flow hit of a large loss.
Goods in transit from the factory to Amazon
For many private label sellers, the riskiest stretch is the ocean leg. Under the US Carriage of Goods by Sea Act, an ocean carrier’s liability is generally capped at $500 per package or customary freight unit, and courts have argued over whether a container or a pallet counts as one package. A container of goods that cost $60,000 can come back as a very small check.
Marine cargo insurance closes that gap. It is written on the value of the goods, usually invoice cost plus freight, instead of the carrier’s per-package limit, and you can buy it per shipment or as an annual open cargo policy. Check your Incoterms first: on FOB terms the risk moves to you once the goods are loaded at the origin port, while on DDP terms your supplier carries it to the destination. Freight forwarders often offer cargo cover at booking, so read how it values a loss and what it excludes before you tick the box.
The domestic legs carry their own limits. Trucks from the port to a prep center, and from the prep center into Amazon, each move under a carrier’s terms with its own claim rules. Keep the bill of lading, the packing list and photos of every pallet, because a cargo or carrier claim is only as strong as the paperwork behind it.
Prep centers and third-party warehouses
Prep centers label, bundle, bag and inspect inventory before it ships into Amazon, and many hold overflow stock between shipments. Your goods can spend weeks there, and the prep center’s insurance protects the prep center. Ask for its certificate of insurance and look for warehouse legal liability, which responds when the warehouse is at fault, along with the limit it carries per loss.
Warehouse legal liability rarely responds to a fire, flood or theft the warehouse did not cause. For that, your own commercial property policy, written to include your stock at someone else’s address, is the piece that protects your inventory. Give the insurer every address where your goods sit, including the prep center and any 3PL, along with the peak value at each one.
The prep center also touches your liability. If a worker swaps labels or packs the wrong warning insert, the customer’s claim still comes to you first. Your service agreement should say who answers for the prep center’s mistakes, and the prep center should carry general liability that names you as an additional insured where its insurer allows it.
Private label sellers carry the manufacturer’s risk
Selling your own brand changes the conversation. When a product is made overseas and sold under your label, an injured US customer often cannot reach the factory, so the brand owner and importer becomes the practical defendant. Underwriters know this, which is why private label catalogs are rated higher than resold name-brand goods.
Three things help an underwriter see a private label catalog clearly: lab test reports for the safety standards your products fall under, your supplier contracts, and the manufacturer’s own product liability policy if it lists you as a vendor additional insured. The guide to private label and importer liability walks through each one.
What to send for an FBA quote
A useful quote request starts with your product list grouped by category, with anything eaten, applied to skin, used by children or powered by a battery flagged clearly. Add your last 12 months of Amazon sales and a forecast for the next 12, the countries your products are made in, who acts as importer of record, every address where stock is held and any claims or recalls so far.
Include your current policy and certificate if you have one, and the insurance notice from Seller Central if Amazon has sent one. Mithril1 places US product liability for sellers based in the US and for sellers based outside it, and we read the whole FBA picture together: liability for Amazon, property for stock outside Amazon and cargo for what is still on the water.
A few useful answers
Common questions
Does Amazon’s FBA reimbursement replace inventory insurance?
Only for units in Amazon’s custody, and before a sale only at sourcing cost. Stock at a prep center, in transit or in your own storage needs its own property or cargo coverage.
Is FBA insurance different from insurance for merchant-fulfilled sellers?
The liability requirement is the same for both. FBA sellers usually have more inventory away from their own premises, so property and cargo questions come up more often.
Do I need a policy if I sell supplements through FBA but my sales are low?
From November 2, 2026, Amazon asks sellers in enhanced safety categories, which include ingestibles, for the $1 million policy regardless of sales. Check your category against the list in Seller Central.
Does my prep center’s insurance protect my inventory?
Its policy is written for the prep center. Ask for its certificate, then list the prep center’s address on your own property policy with the value of the stock you keep there.
Can sellers outside the US get FBA insurance through Mithril1?
Yes. We place US product liability for sellers based outside the US in every market we cover, and our international sellers guide explains the extra documents. From November 2, 2026, Mainland China sellers without a US company buy new policies through Amazon’s Insurance Accelerator.