Insurance Complications for Supplement Sellers on Amazon

It is increasingly common that technology moves too fast for legislators and judges to address. For instance, there is a certain amount of ambiguity when it comes to Amazon’s status as a marketplace. As in the case of State Farm Fire and Casualty Co, et al. v. Inc., some consumers are finding success in holding Amazon responsible for harm resulting from products sold by third-party merchants via the Amazon platform. It is perhaps this decision, handed down in December 2020, along with the FDA’s recent findings that some supplements sold through Amazon contain potentially hazardous drugs, that has spurred the megacorp’s latest decision concerning vendors’ insurance requirements.

These new requirements apply to businesses making $10,000 or more per month on the platform, and with the exception of one clause, they are fairly routine. The complication arises in this section:

AMAZON: “…The insurance policy type can be either commercial general, umbrella, or excess liability and be occurrence based;…”

What is the issue with this, exactly? For most businesses, there is none. Your typical start-up business selling office supplies or workout apparel can go online and get a product liability insurance policy with just a couple of clicks and $500-1000. However, a business selling supplements under its own brand or label does not have this luxury. It seems likely this clause was crafted by Amazon’s legal team without a comprehensive understanding of the types of liability insurance available to those in the supplement industry. This is strange considering that this understanding is Liability Insurance 101.

Types of Liability Insurance: Claims Made vs Occurrence Based Liability

Any business that sells supplements is going to have a ‘claims made’ product liability policy. For 20 years, this type of insurance has been the only form of product liability available to the supplement industry. How exactly does this differ from the occurrence based liability policies upon which Amazon now insists?

With an occurrence based policy, the policy in place on the date of the event the plaintiff claims a loss occurred will be the policy that responds to the costs and settlement. Regardless of how much time has elapsed between the event, the expiration of the policy, and the present day, that claim would still be tendered back to the insurance company that handled the policy at the time of loss.


  • Clarence Beest gets sick from consuming your product in January 2021.
  • Your liability policy renews in March 2021.
  • You receive notice of Clarence’s injury/claim in July 2021.
  • The policy that was active back in January 2021 is the policy that is relevant.

However, with a claims made policy, the only policy available to businesses selling supplements, coverage is triggered on the date you first became aware of a possible claim (or when an actual claim is made against you). The policy in place on that date is the policy that will defend and ultimately settle the claim.


  • Clay Smead gets sick from consuming your product in January 2021.
  • Your liability policy renews in March 2021. 
  • You receive notice of Clay’s injury/claim in July 2021. 
  • The policy that is active in July 2021 is the policy that is relevant, assuming the claim occurred after the ‘retroactive date’ on the policy (more on that later).

Some insurance brokers and attorneys that are unfamiliar with claims-made coverage will tell you it is bad coverage because it ties you to one insurance company and prevents you from getting competitive quotes. This could not be farther from the truth. Unfortunately however, the above lack of understanding influences insurance language in contracts with landlords, vendors, and distributors of your products. Thankfully a claims made policy does not impose higher costs or provide any inferior coverage language. Most importantly, it does not restrict a broker’s ability to shop your renewals with various insurance companies.

Retroactive Date on Your Policy

Claims made policies will have a date shown as the ‘retroactive date’. This is usually tied to the day on which you purchased your first claims made policy. It’s imperative that you never change the retroactive date. Some brokers that do not understand claims made insurance will produce a renewal quote for your business that nudges the retroactive date closer to the current date. A business owner unfamiliar with the finer points of claims made policies may overlook this detail, ignorant of the potential consequences.


  • The retroactive date on your 2021 policy is March 1, 2019.
  • Rhett Rogan gets sick from consuming your product in January 2021.
  • Your liability policy renews in March 2021 with the 2019 retroactive date.
  • You receive notice of Rhett’s injury and claim in July 2021.
  • The policy active in July 2021 is the relevant policy since the claim occurred after the policy’s retroactive date.

If your broker tries to save you a few bucks adjusting the retroactive date to be closer to the current policy’s date, they leave you without coverage for the negated period.


  • The retroactive date on your 2021 policy is March 1, 2019.
  • Penny Pinscher gets sick from consuming your product in January 2021.
  • Your liability policy renews in March 2021 but you saved $5,000 by moving the retroactive date from 2019 to March 1, 2021.
  • You receive notice of Penny’s injury and claim in July 2021.
  • Since the claim occurred before the new retroactive date on your policy, the insurance company will decline to cover the claim.

While a common lack of understanding surrounding claims made insurance policies may persist, a competent insurance broker will offer great value by negotiating around a ‘generalized’ insurance requirement in a contract such as Amazon’s new requirement. Over the years, I have spent hours providing consultation to businesses on both sides of these agreements, to help all those involved understand that the insurance for a supplement business is far from routine. 

If you are attending the SupplySide West Conference in Mandalay Bay, Las Vegas, you can visit the Bolton booth (#6601) in the Expo Hall on Oct 27 & 28, to learn more about the services I and the rest of my team provide.

Please contact me if you have any questions:

Chris Morey

Associate Vice President, Bolton

(626) 535-1459

About Chris Morey

Chris Morey specializes in protecting and supporting the growth of Dietary Supplement and CBD businesses, including raw material importers, manufacturers, distributors and retailers. A Certified Sports Nutritionist, he has been active in the health and fitness industry both professionally and personally for over a decade, and he understands the challenges that businesses in this space face. Chris firmly believes that dedication and consistency lead to results, and every day he works to translate that philosophy into partnering with his clients to reach their goals.

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