Anyone selling through a website, a marketplace, or a platform like Amazon eventually runs into the same question: do online businesses and Amazon sellers need insurance in Canada? No single law forces every online seller to carry a policy, but Amazon itself sets a specific insurance requirement once sales cross a threshold, and the risks an online business faces, from a defective product to a data breach, do not disappear just because there is no physical storefront.
This article looks at what counts as online seller or e-commerce business insurance, what Amazon specifically expects of its sellers, and the coverage online businesses in Canada typically carry beyond that requirement. None of this is a recommendation for a specific business; it is background information for a conversation with a licensed broker.
What Is Online Seller Insurance?
Online seller insurance, sometimes called e-commerce business insurance, is not one named policy but a general term for the group of commercial coverages online retailers, dropshippers, and marketplace sellers typically combine to manage the risks specific to selling online. It commonly draws on commercial general liability (CGL), product liability, cyber liability, and commercial property or inventory coverage, layered to fit how a specific business actually operates.
Unlike a storefront retailer, an online seller's main touchpoints with customers are a website, a marketplace listing, and a shipped package rather than a physical location, which shifts which risks matter most. A slip-and-fall claim is less likely; a product liability claim, a shipping or return dispute, or an attack on stored payment data is more likely, and coverage built for a traditional shop does not automatically follow a seller online.
Does Amazon Require Sellers to Carry Insurance?
Amazon Canada's own seller policies set out a specific requirement rather than leaving the question open. Once a seller's gross sales reach roughly $10,000 CAD in a month, or across three consecutive months depending on how Amazon calculates it, the marketplace generally requires that seller to carry commercial general liability insurance with at least $1 million in coverage per occurrence and in aggregate, and to add Amazon as an additional insured endorsement on the policy.
Amazon typically expects the policy to be occurrence-based and to include products and completed operations coverage, the part of a CGL policy generally designed to respond to a claim tied to a product after it has already shipped, such as an alleged defect discovered after delivery. Sellers who cross the threshold are usually given a window, commonly around 30 days, to put a qualifying policy in place, and this requirement applies to both Fulfillment by Amazon and Fulfillment by Merchant listings, so switching fulfillment models does not remove it. Because marketplace policies change, a seller approaching the threshold should confirm the current wording directly through Amazon's seller account rather than relying on a general summary.
What Coverage Do Online Businesses Typically Carry?
Amazon's requirement is a floor, not a full risk assessment, and most established online sellers carry a broader mix of coverage once the business grows past its early stage. Coverage varies by insurer and by the specific policy wording a business holds, so the summaries below are a starting point for a conversation with a licensed broker, not a description of what any particular policy includes.
Product and General Liability
Product liability insurance is generally designed to respond to claims that a product sold by the business caused injury or property damage, and it matters for sellers who source, private-label, or manufacture goods, not only for those who make them from scratch. Dropshippers, who often never physically handle the products they sell, can still be named in a claim, since a seller of record is frequently treated as part of the supply chain regardless of who manufactured or shipped the item. Commercial general liability insurance sits alongside product liability to address broader third-party bodily injury and property damage claims tied to the business's operations.
Cyber Liability Insurance
According to IBM's 2026 Cost of a Data Breach Report, the average cost of a data breach for a Canadian organization reached $7.11 million in 2026, up from $6.98 million the year before, driven in part by rising supply-chain attack costs. An online business storing customer names, addresses, and payment details carries some version of that exposure regardless of its size, which is one reason cyber liability insurance, generally designed to help with costs such as breach notification, forensic investigation, and related business interruption, is a common addition to an online seller's coverage.
Commercial Property and Inventory Coverage
A home office or a rented warehouse holding inventory typically needs its own property coverage, since a standard homeowner's or tenant's policy is generally not designed to extend to business inventory or equipment. As inventory value grows, particularly for sellers who prepay for large shipments ahead of a peak season, this coverage becomes a bigger part of an online business's overall program.
Benefits of Online Seller Insurance
The practical value of this coverage is straightforward: it is generally designed to stand between a claim, a data incident, or a damaged shipment and the business's own finances, rather than leaving an owner to cover legal defence costs and any settlement out of pocket. Even a claim that is ultimately unsuccessful can generate real legal costs, and most liability policies are structured to help with those costs as part of the policy, not only a payout if a claim succeeds.
Meeting Amazon's requirement, or a similar requirement from another marketplace, also keeps a seller's account in good standing, which matters for a business whose revenue depends on staying listed and active on that platform. Beyond marketplace compliance, holding an active policy can also support a seller's move into other channels, such as wholesale accounts or its own storefront, where a supplier or landlord may ask for proof of coverage before signing an agreement.
Where You'll Come Across This Question
The question of whether an online business needs insurance tends to surface at a few predictable points rather than as an abstract concern. Onboarding as a new Amazon seller, or watching monthly sales approach the marketplace's insurance threshold, is often the first concrete trigger, since Amazon's own dashboard will typically flag the requirement directly. Statistics Canada reported that e-commerce made up roughly 5.7 percent of total retail trade in 2026, and as that channel keeps growing, more sellers are crossing the revenue levels where a marketplace or a supplier starts asking for proof of coverage.
Launching a standalone website store alongside a marketplace listing is another common trigger, since a seller's own storefront does not carry any of Amazon's built-in requirements or protections. Applying to sell on a second marketplace, signing a wholesale or distribution agreement, or simply reviewing business insurance in Canada options as order volume grows are other points where an online seller typically revisits whether existing coverage, if any, still fits the size of the business.
Talk to a Licensed Broker About Online Seller Insurance
Whether an online business needs product liability, cyber coverage, e-commerce insurance, or some combination depends on what the business sells, how it fulfills orders, and which marketplaces it operates on, all of which a general article cannot weigh for an individual seller. A MyBrokers broker can review a seller's current operations, including how they compare with the underlying risks reflected in product liability insurance, to help work out which coverage fits.
Start a commercial insurance quote to connect with a licensed broker about coverage for an online business or Amazon seller account.