Amazon Product Liability Claims: What Happens When a Customer Sues
A burn, a cut or a broken tooth can turn into a claim on your seller account, a letter from a lawyer or a lawsuit. Here is how each path works and where your insurance fits.
How a product claim reaches a seller
A product claim rarely starts with a court filing. Usually a customer contacts Amazon’s customer service to say a charger overheated, a toy part came loose or a serum caused a rash, and Amazon opens a property damage or personal injury claim under its A-to-z program. Other claims arrive as a letter from the customer’s lawyer, sent to the business address on your seller profile, or as a lawsuit that names you, your brand and sometimes Amazon itself.
Sellers often tell us the first sign of trouble was an email they almost ignored. Treat every message that mentions an injury, a fire, an illness or damaged property as a possible claim, even when the customer sounds calm and the amount looks small. How you handle the first week shapes the defense, the cost and the way the next underwriter reads your file.
Small claims Amazon settles on its own
Amazon changed how it handles these claims in September 2021. For valid property damage and personal injury claims under $1,000, which Amazon said make up more than 80 percent of cases, it pays the customer directly at no cost to the seller. Amazon said it would not ask that money back from sellers who follow its policies and hold valid insurance. It also uses independent claims adjusters and insurance fraud specialists, and it turns down claims it finds unsubstantiated, frivolous or abusive.
Above $1,000, the claim is yours to resolve together with your insurer. Amazon notifies you, and you keep the chance to defend the product. If a seller ignores the notice, or rejects a claim Amazon considers valid, Amazon can settle with the customer itself and then pursue the seller separately for repayment. That is the costly path: the seller loses any say in the settlement and still receives the bill.
The practical lesson is simple. Keep a current certificate uploaded in Seller Central, update the insurance details on your account at every renewal, and answer each claim notice before its deadline. Our Amazon seller insurance requirements guide lists the terms your policy has to meet.
When the claim becomes a lawsuit
A serious injury usually ends up with a lawyer. US product liability suits tend to name everyone in the chain that brought the product to the buyer: the brand owner, the importer, the seller of record and, more and more often, the marketplace. Courts disagree about Amazon’s own exposure. A California appeals court held in Bolger v. Amazon.com (2020) that Amazon could be strictly liable for a defective laptop battery sold by a third party through FBA, while the Texas Supreme Court ruled in Amazon.com v. McMillan (2021) that Amazon was not the seller of a fulfilled third-party product under Texas law.
For the seller, the contract matters more than the split. Section 6.1 of Amazon’s Business Solutions Agreement asks you to defend, indemnify and hold harmless Amazon against third-party claims about your products, including personal injury, death and property damage, with an exception for anything attributable to the FBA service itself. When Amazon is named in a suit over your product, expect it to hand the defense to you. The CPSC also decided in July 2024 that Amazon is a distributor of FBA products under the Consumer Product Safety Act, which pulls Amazon into recalls of those goods and keeps it close to these disputes.
Where your insurance comes in
The policy Amazon asks for is commercial general liability with products-completed operations coverage. When a claim alleges bodily injury or property damage caused by your product, the insurer investigates, appoints defense counsel and negotiates within your limit. The duty to defend is often worth as much as the limit, because legal fees in a product suit build up long before anyone talks about settlement.
The additional insured endorsement is what connects your policy to Amazon’s side of the case. With Amazon.com Services LLC and its affiliates and assignees named on your policy by endorsement, Amazon can ask your insurer directly for a defense in a suit about your product. Without the endorsement, Amazon’s claim reaches you only through the contract, and how far your policy follows that promise becomes a separate argument. It is one reason Amazon rejects certificates that show it only as the certificate holder.
Know the parts of your policy that matter at claim time: the per occurrence limit, your deductible, the products listed on the application, and whether the form is occurrence or claims-made. An occurrence policy responds to injuries that happen while it is in force, so keep every old policy on file. If your factory carries US product liability and added you through a vendors endorsement, report the claim to that insurer as well.
Steps to take when a claim arrives
Work through these in order, and keep a dated log of each step.
- Stay calm with the customer. Express concern, and leave questions of fault and payment to your insurer. A promise to pay made on your own can complicate the defense.
- Answer Amazon on time. Respond to the claim notice in Seller Central before its deadline, with your insurance details when Amazon asks for them.
- Report to your agent the same day. Send the order ID, ASIN, lot or batch code, date of sale, the customer’s own words and any photos.
- Preserve the evidence. Ask for the unit back where you can, set aside stock from the same lot, and save screenshots of the listing as it read on the date of sale.
- Pull your product file. Test reports, the factory contract, warnings and instructions belong with the claim from the start.
- Forward legal papers at once. A summons starts a short response clock, so the insurer needs it the day it arrives.
One more question deserves an early answer: does this incident point to a wider defect? Under Section 15(b) of the Consumer Product Safety Act, manufacturers, importers, distributors and retailers must tell the CPSC no later than 24 hours after they obtain information that reasonably supports the conclusion that a product could create a substantial product hazard, and the law does not wait for an injury. Talk to counsel about reporting, and to us about product recall insurance for the costs that follow.
Claims a product policy leaves out
Not every complaint against a seller is a product liability claim. An ordinary A-to-z claim about a late, missing or not-as-described order is a customer service matter settled with refunds. A patent, trademark or copyright complaint sits under a different part of the policy, if any part reaches it at all; our guide to Amazon IP infringement claims walks through it. The cost of pulling a product back from customers is a recall question, and stock lost in a warehouse is a property question.
Product policies also carry exclusions worth reading before a claim: products left off the application, harm caused on purpose, and in some forms specific hazards such as lithium batteries or ingestible goods that need their own endorsement. Telling your agent about every product line is the simplest way to keep those gaps closed.
After the claim closes
A paid or reserved claim stays on your loss runs, and the next underwriter will ask what changed. Write a short note while the facts are fresh: the root cause, the fix at the factory, the new warning, the retest. That note, with the updated lab report, turns a claim on the record into evidence that the brand learns from its problems.
We work with hundreds of Amazon sellers, and the ones who come through a claim well reported it early and kept their paperwork in order. The Amazon seller insurance hub links every guide in this series, from certificates to product categories.
A few useful answers
Common questions
Does Amazon charge the seller for a product claim under $1,000?
Not when you follow Amazon’s policies and hold valid insurance. Amazon said in 2021 that it pays valid property damage and personal injury claims under $1,000 directly and does not seek repayment from those sellers. Keep your certificate current in Seller Central so that protection stays in place.
Should I settle directly with the customer to keep things simple?
No. Report the claim to your insurer first. A payment or promise made on your own can conflict with the policy’s conditions and weaken the defense, and the insurer’s adjusters handle these negotiations as a matter of routine.
Can my insurer defend Amazon if it is sued over my product?
That is the job of the additional insured endorsement. With Amazon named on the policy by endorsement, Amazon can tender its defense to your insurer under the policy’s terms instead of relying only on your contract promise to indemnify it.
What if the injury happens after my policy has ended?
An occurrence policy responds to injury or damage that takes place during its policy period, so an injury after a lapse falls to whatever policy is in force at that time. Keep coverage continuous while your products are in customers’ homes, even after you stop selling a product.
Can a US customer sue me if my company is based outside the United States?
Yes. US courts hear product claims against foreign sellers, and Amazon’s agreement still asks you to indemnify Amazon. A US product liability policy is written for that exposure, which a home-country policy often excludes.