Homeowners Insurance and Your Amazon Business
Plenty of Amazon businesses start in a spare room or a garage. The homeowners policy on that house was written for family life, and it treats your inventory and your products very differently from your furniture.
The short answer for Amazon sellers
We work with hundreds of Amazon sellers, and a good number of them launched from a garage with nothing but a homeowners policy behind them. That policy does very little for the business. It holds business property to a small special limit, it shuts out liability that arises from business activity, and it cannot give Amazon what Amazon asks for.
Amazon’s rule calls for commercial liability with $1,000,000 per occurrence and in the aggregate, with Amazon named as additional insured by endorsement, as set out on our Amazon seller insurance requirements page. A homeowners policy is personal insurance, and its liability section excludes the products you sell. So the home policy is never the answer to Amazon’s insurance notice. The useful questions are what it still does for the house and what has to sit beside it.
Renters are in the same position. A renters policy is built around personal belongings and household liability, so business stock and product claims sit outside its purpose in much the same way. Your lease adds another layer, since some landlords limit commercial deliveries or stored inventory in a unit, so read it before the first pallet of stock arrives at the door.
How a standard homeowners form treats business property
Most US homeowners policies follow the ISO HO 3 form or something close to it. The edition the Insurance Information Institute publishes as a sample limits property used mainly for business to $2,500 on the residence premises and $500 away from it. Inventory counts as business property, so a garage holding $40,000 of stock waiting for the next FBA shipment would bring back a few thousand dollars after a fire. Your insurer’s own edition sets the exact figures; find the special limits section of your policy and read it before peak season.
The same form restricts other structures on the lot. It leaves out a detached garage or shed from which a business is conducted, and it protects one used to store business property only when that property belongs solely to you or a tenant and is not stored fuel. A seller who packs orders in a backyard workshop can find the building itself outside the policy, not just the boxes inside. Business records and data are excluded as well, apart from the cost of blank media.
The form defines business broadly: a trade, profession or occupation pursued full time, part time or occasionally, or any other activity done for money. The exception that matters to sellers is a side activity that paid no one in the household more than $2,000 in the 12 months before the policy began. A seller with steady Amazon sales is well past that line.
The liability gap: your products and your visitors
Section II of the homeowners form excludes bodily injury and property damage arising out of a business run from the home or carried on by anyone the policy protects. For an Amazon seller, that exclusion reaches the biggest exposure of all: a customer hurt by a product you sold. That claim does not start on your front steps. It starts with a product that left your house in a box, and the homeowners policy is written to stay out of it.
Visitors add a second layer. A freight driver collecting pallets, a photographer shooting listing images in your living room or a neighbor paid to pack orders all come to the house because of the business. Their injuries fall under the same exclusion, and once someone works for you, an injury on the job becomes a workers’ compensation question rather than a homeowners one.
Home business endorsements and what they leave out
Many insurers offer a way to stretch the home policy. The simplest is an endorsement that lifts the business property limit, which the Insurance Information Institute notes is one of the usual first steps for a home-based business. It helps with a modest amount of stock and does little for liability.
ISO’s Home Business Insurance Coverage endorsement, HO 07 01, goes further, adding business property, business income and extra expense, and liability that can include products-completed operations. IRMI’s summary of the form sets out who qualifies: a business owned by the named insured or resident family, run from the residence, with no more than three employees and gross receipts of no more than $250,000 a year. It cannot make, sell or distribute food or make personal care products, which rules out many supplement, snack and skincare brands from the start.
Even a seller who qualifies faces Amazon’s specific wording: Amazon.com Services LLC and its affiliates and assignees added as additional insured, $1 million limits, and an insurer rated A- or better. Ask your home carrier directly whether it can issue that endorsement and a certificate Amazon will accept. If the answer is no, the commercial route is next.
When a Business Owner’s Policy fits
A Business Owner’s Policy packages general liability, including claims from your products, with business property and business income. The Insurance Information Institute describes typical BOP candidates as companies with up to about 100 employees and revenue up to about $5 million, and a home-based Amazon seller often sits comfortably inside that. The property part can be written for stock at your home address, and the liability part can carry the additional insured endorsement Amazon asks for.
A BOP is not open to every catalog. Underwriters look hard at what you sell, so supplements, cosmetics, children’s products and battery-powered goods often move to a standalone product liability policy, with property written separately. That is also where sellers land once their sales or product mix outgrow small-business packages. The Amazon seller insurance hub walks through those category questions one by one.
Keeping the home policy and the business policy in step
Tell your home insurer that a business runs from the house, and describe it plainly: how much stock you hold, which rooms and buildings you use, who visits and whether anyone helps. An undisclosed business is the kind of fact that turns a house fire claim into an argument. Keep the home policy for the house and the family’s belongings, and let the business policy carry the business.
Stock rarely stays at home for long. Most growing sellers move overflow to a prep center or third-party warehouse, and the property cover needs to follow it to every address. When you rent a storage unit or a small warehouse, the home policy drops out of the business picture entirely, and the new address belongs on the commercial policy before the first pallet arrives.
A few useful answers
Common questions
Is inventory in my garage protected by my homeowners policy?
Only up to the business property special limit, which is $2,500 on the residence premises in the ISO HO 3 sample the Insurance Information Institute publishes. Check the special limits section of your own policy and place the rest of your stock on a business policy.
Can a home business endorsement satisfy Amazon's insurance requirement?
Ask your carrier, but plan for a commercial policy. Amazon wants $1 million commercial liability limits with Amazon named as additional insured by endorsement, and a home endorsement is seldom written that way. Commercial general liability or product liability is the usual route.
What happens if a customer is hurt by a product I sold from home?
The homeowners policy’s business exclusion keeps it out of that claim. Product liability, usually part of commercial general liability, is the coverage that responds, and it is the same policy Amazon asks sellers to carry.
Should my homeowners insurer know about my Amazon store?
Yes. Describe the stock, the space you use and any visitors or helpers. The insurer can then tell you what the home policy still does for the house, and you can place business cover for everything else.
When does a BOP make more sense than a home business endorsement?
When you hold meaningful stock, need Amazon’s additional insured endorsement, or have outgrown the endorsement’s eligibility, such as more than three employees or receipts above $250,000 under the ISO home business form.