Dodge a bullet with this new Amazon insurance policy, covering financial loss, reinstatement expert expenses and even tax audits.
UPDATE 27 OCT 2018: Momentum is no longer open for business, but existing policies will be honored.
Amazon seller account suspensions are a common occurrence and can be devastating for the businesses affected.
You’ve probably heard the horror stories about honest, hard-working sellers losing access to their accounts and having their payouts frozen. Their loans have to be paid and day-to-day expenses mount up, while costly reinstatement experts help them battle Amazon to get their accounts back as quickly as possible. But it can be a slow process, and success is not guaranteed.
Now a new Amazon suspension insurance option has launched for U.S. sellers, from leading underwriter NAS Insurance Services. The new cover, called Momentum, covers financial loss up to $1,000,000, suspension appeal expenses up to $25,000, and tax audit expenses up to $2,500.
With rates starting as low as $250 annually, it makes sense for all Amazon sellers to seriously consider protecting their accounts before they have their own horror stories to tell.
Who is eligible for Amazon suspension insurance?
To be eligible for coverage, sellers must be based in the U.S. and sell on Amazon.com.
If a seller has been suspended in the last year, been contacted by Amazon about a potential issue in the last 180 days, or had their account terminated on another marketplace, NAS will ask for further information and make a decision on a case-by-case basis. Those circumstances don’t necessarily prevent sellers from being covered.
How much cover does it provide?
There are three parts to the cover:
Sellers are covered for the financial loss sustained during a suspension, with coverage options between $25,000 and $1,000,000. The coverage amount that sellers can apply for is determined by factors such as a seller’s gross sales, business operations, and selling history.
Suspension appeal expenses
Sellers have a limit between $2,500 and $25,000 to cover the cost of hiring a reinstatement consultant, with a deductible of $250. Sellers are free to choose a reinstatement specialist of their choice. The policy even covers expedited services to get sellers back up and running as quickly as possible. If necessary and reasonable, sellers can hire more than one expert to help reinstate their account, as long as they are within their coverage limit.
Tax audit expenses
The tax audit cover adds a level of protection for sellers against the cost of professional support to deal with a federal tax audit. Sellers have a $2,500 limit for hiring a tax expert, with a $250 deductible.
What types of suspension are covered?
There are several different reasons that Amazon accounts can be suspended. Suspensions caused by performance issues, poor metrics or policy violations are typically covered, as long as they weren’t the result of dishonest or criminal activity (such as counterfeiting) or the result of other intentional wrongful acts.
The same goes for inauthentic complaints or product quality issues. As long as the seller acts in good faith and does not intentionally violate Amazon’s selling policies, they should be covered.
To learn more about the policy and coverages, feel free to contact an NAS representative.
How is the amount of financial loss calculated?
When sellers are suspended, their financial loss may be covered for up to 30 days, subject to a five-day waiting period. The financial loss is calculated based on net business income, which is defined as: gross sales less Amazon fees less the cost of goods sold.
NAS will look at the seller’s average net business income over the previous 12 months to calculate the sales that would have been made while suspended. The daily average is then multiplied by the number of days that the seller was suspended, minus the first five days.
Seasonality is also taken into account, so if a seller is suspended on December 1st, NAS will look at their sales from December of the previous year. The financial loss will then be calculated using the greater of:
- Average net business income over the previous 12 months, or
- Average net business income from the same period in the previous year.
Can I choose my own reinstatement consultant?
Yes, sellers are free to choose their own reinstatement consultant. NAS does not have an in-house reinstatement specialist, and does not force sellers to use a particular service. They believe that sellers know more about their business than anyone else, and are best equipped to select their own reinstatement specialist or manage the appeal themselves.
What if I’m suspended more than once?
Sellers may be covered for multiple suspensions during the policy period. The policy, however, will not cover suspensions resulting from a seller’s failure to respond to, or appeal, a notice of suspension. In the event of a related suspension, a seller is only covered for the loss incurred in the initial suspension.
For example, a seller’s account is suspended due to an issue with the packaging of a particular product, leading to an inauthentic claim. The seller submits a plan of action promising to improve the packaging and is then reinstated. But the seller fails to follow through on their plan of action, and is suspended again because the problem was not cleared up properly. In this scenario, the second suspension would not be covered.
If a suspension is unrelated to a previous claim, the seller could be eligible for another 30-day period of cover.
How much does it cost?
Momentum starts as low as $250 annually, which is very affordable for part-time sellers and businesses who only make a small proportion of their sales on Amazon.
An online rate calculator provides an instant on-screen indication of the premium, and also shows the effect of changing the cover limit.
The final quote depends on the seller’s specific characteristics, but the online calculator should provide a good indication of the cost.
Who is NAS Insurance?
NAS Insurance Services is a large specialty insurance underwriter, headquartered in Los Angeles, California. They have over 40 years experience developing and marketing specialty insurance products with financial support from Lloyd’s of London.
NAS’ in-house claims team is experienced and accessible, working with policyholders to resolve claims quickly and provide support throughout the reinstatement process.
How do sellers apply?
Sellers can apply online via the Momentum website or can call to speak to an agent over the phone. Only a name, email address, phone number, state and company name are required at first, then there is an application form to complete with more detailed business information.
This post does not constitute financial or legal advice and should not be taken as such. Always discuss your specific requirements and questions with your own insurance provider.
This post was sponsored by NAS Insurance Services, LLC.