Why You Need Liability Insurance

[00:00:07] Chris: Hi, everybody. Welcome back to Seller Performance Solutions. I'm Chris McCabe of ecommerceChris. I'm here with Leah McHugh. And today's guest is Matt Lovell of WELL insurance. How are you doing?

[00:00:21] Matt: I'm good. How about yourself, Chris and Leah?

[00:00:23] Chris: Pretty good.

[00:00:24] Leah: You are our first guest, actually on the podcast.

[00:00:29] Chris: Welcome as our first guest on the podcast. And we're glad we're talking to you because product compliance and product liability insurance are hot hot topics right now. You're talking to people about it all the time. We are dealing with sellers who lose listings, who get warnings, who are asked for compliance documentation. This is just kind of going round and round at this point showing that Amazon is now enforcing things that were in place years ago but were being ignored by sellers and Amazon would you say both equally?

[00:01:02] Matt: Absolutely

[00:01:05] Chris: Amazon obviously has a responsibility, and they've been trying to share the responsibility with sellers in terms of compliance. But why do you think, do you think it was just Amazon not paying attention to it? And that's why sellers put off investing in it? Or how did we get here?

[00:01:20] Matt: I don't know if it was the couple of the lawsuits that Amazon has recently been involved in if that's kind of set the precedent and made them rethink their stance on it. But as of, you know, a couple of weeks ago, they started sending out the notices that if your account, if you were a professional seller, but reach that threshold, you basically 30 days to get a certificate of insurance on file with them or face suspension.

[00:01:45] Chris: And of course, they may have thought about it before, but they just didn't take action. Or how did they get to the point where they had to be prodded by Amazon? Because obviously liability insurance isn’t Amazon specific. It's something you need at a business. Right?

[00:01:58] Matt: Absolutely. I mean, the policy is not platform specific. It will follow the LLC or the Corporation or the individual. It will cover basically every platform that that ecommerce seller is selling on. But Amazon does want to be specifically included as an additional insured, and they do have some specific requirements to fulfill- million dollar general liability, must include products liability, must list them as additional insured and then provide them with a certificate of insurance.

[00:02:26] Leah: Being listed as an additionally insured, that's fairly standard, right? I've seen other people requesting that for, like, events or warehouses wanting to be specifically named.

[00:02:35] Matt: Yeah. Absolutely. It’s very standard in the insurance business. Not a huge cost to do that. Walmart and Wayfair are two of the other platforms that really, really require the insurance that we see for the most part. But now Amazon has started enforcing it. So we send a lot of certificates to Amazon, on behalf of the sellers.

[00:02:54] Leah: Yeah. I think beyond just Amazon requirements. I think if you're selling a product, it’s probably a good idea to have liability insurance in case, someone gets hurt or gets sick using your product. Do you work with people off of Amazon as well? Or are you guys mostly Amazon specific?

[00:03:11] Matt: We deal with probably 90% Amazon sellers, but we also insure sellers that just have a Shopify store, down to the mom and pop that are doing business on etsy. But majority of our businesses is on the Amazon platform. That's the elephant in the room.

[00:03:27] Leah: Yeah.I mean, I guess everybody is if you're in ecommerce now.

[00:03:29] Chris: When people were contacting you about the account suspension insurance packages, did they bring this up as well? Or did you bring it up or did people get product liability in place earlier than they would have because they had contacted you about the suspension insurance?

[00:03:45] Matt: Well, the suspension insurance actually went away in January of 2020. We've really been focusing on the general product liability for about two or 3 years now. The suspension policy was really good for us to get the foot in the door to show sellers that we were a legit ecommerce insurance agency.

[00:04:02] Chris: Right. I figured back then you’d kind of ask them, survey them, “What do you sell? What insurance do you have for that?” And would they come back with, “Actually, we don't have liability insurance for those products”, and then maybe they would say Amazon hasn't forced us to do that yet, or they viewed it as an extra expense. But I'm sure they understood the concept of insurance and if anything went wrong with their product, it was a good thing to have.

[00:04:29] Matt: Yes, the general liability policy that includes the product liability will help to pay to defend the customer. It will hire an attorney to defend them in court and then it would pay any judgments that are levied against them by the judge and jury, should their products cause bodily injury or property damage. That's what the policy is really designed to do is just protect the assets of the business, but also now to keep them in compliance with Amazon's terms of service.

[00:04:54] Leah: So for those sellers who don't currently have general liability insurance or product liability insurance, what is the process of applying and getting that?

[00:05:0] Matt: We have a form on our website, well-insurance.com. It'll take about two minutes to work with some real basic information, name, address, link to Amazon store or link to your website. It depends on where they're selling. A couple of questions, are you selling private label? Do you rebrand and repackage, relabel? Hit submit, sends it over to us. But we've got a real quick turnaround time and we're always real real good about getting back to sellers to let them know that we've received it and we will be in touch very soon. A pretty quick process.

[00:05:33] Leah: Yeah. Seems pretty simple. And important.

[00:05:35] Matt: Very important.

[00:05:36] Leah: So anybody that's listening that doesn't have it, go get liability insurance.

[00:05:41] Chris: Right, I mean, we can all see which way this is going with Amazon. It's going in the direction of more focus on product safety, product compliance, liability insurance, certificates of analysis, certified labs using certain labs to test your products all the way down the checklist. So this is just another thing that people should be factoring in as their regular process, I would say.

[00:06:04] Matt: That is one of the questions on our form, too. Do you have any safety testing certificates? That part of the entrance vetting process is asking about those certificates and making sure that the products are safe for the consumer to use and to purchase.

[00:06:19] Chris: Yeah. I think it was interesting, you mentioned a few minutes ago you figure out what kind of seller they are, right? Are they reselling it or do they make it themselves? Because we're now starting to see resellers on Amazon who are being asked for compliance

documentation that they don't have- the manufacturer, the creator of the product has it or

should have it. But the resellers, some of them don't, haven't thought about it, don't have any of those things, so they have to either get it done themselves or they have to go to the manufacturer, which is not something we had seen before. It's kind of interesting.

[00:06:52] Leah: I imagine a lot of resellers haven't really thought about the fact that they as a reseller are liable for selling that product. So they probably haven't even really thought about the safety testing side of what it is that they're selling.

[00:07:03] Matt: What a lot of sellers don't realize is that even if they're not rebranding or repackaging a product, if they're importing it from overseas, like China specifically, they become the manufacturer of that product. You can't segregate back against the Chinese manufacturer. So in essence, they are the manufacturer of that product, and they hold the product liability exposure at that point.

[00:07:23] Chris: Hopefully they do understand that. And anyone that wants us to explain it to them, of course, we can give them some degree of explanation, but we're also going to be sending them your way for the complete version because some of them don't understand it entirely. And they are new to this.

[00:07:41] Matt: And we're always happy to jump on a quick call or answer an email. We would rather educate the customer on what they're purchasing, and why they're purchasing it versus just selling the policy to them, not understanding what they're buying.

[00:07:52] Leah: Yeah, definitely. I mean, if you're adding an expense, although I would argue that insurance, maybe it shouldn't be classed as an expense, it's good to know what it is that you're paying for,

[00:08:02] Chris: Any last thoughts or anything we haven't touched on yet? Sometimes we get tunnel vision on the Amazon stuff and we leave out things that businesses face that they have to address outside of the Amazon marketplace. Is there anything that you think people need to

know as they dive into this?

[00:08:19] Matt: Just make sure that you're dotting your i’s and crossing your t's when it comes to doing your due diligence, making sure you're covered. Make sure you're covered properly. Don't just have a policy because it's cheap, and it satisfies Amazon. Make sure your business is actually covered for what you're actually selling. I guess that's my last word of advice.

[00:08:36] Leah: Yeah, that's great. I feel like we're constantly telling people to do due diligence. That’s a great piece of advice.

[00:08:42] Chris: It doesn't hurt to mention it one more time. Thanks again, Matt, for joining us.

And again, WELL insurance. If you want to throw out the link one more time,

[00:08:51] Matt: It’s well-insurance.com

[00:08:55] Chris: Any questions on that, reach out to Matt. Reach out to us. We'll get you there.