Freight Insurance for Amazon FBA Shipments: Who Pays When Goods Are Damaged?

Shipping inventory into Amazon FBA is supposed to simplify logistics.
In reality, it shifts risk—not eliminates it.

When goods arrive damaged, missing, or rejected, the first question most sellers ask is simple:

“Who is actually responsible for this loss?”

The uncomfortable answer: it depends on when and where the damage happened.
And in many cases, neither Amazon nor your freight forwarder is legally obligated to reimburse you.

This article explains how freight insurance works for Amazon FBA shipments, what Amazon does and does not cover, and when sellers should protect themselves with cargo insurance.

Why Amazon FBA Shipments Are High-Risk

Amazon FBA shipments move through multiple parties and handoff points:

• Factory or supplier

• Domestic trucking in China

• Export port handling

• Ocean or air freight

• US customs clearance

• Inland delivery

• Amazon receiving and storage

Each handoff introduces risk.
Most damage does not happen inside Amazon warehouses—it happens before Amazon officially checks inventory in.

Amazon FBA shipments involve more handoffs than most sellers realize. Inventory often changes custody multiple times—from factory to freight forwarder, from carrier to port operators, and finally to Amazon’s fulfillment network. Each transfer introduces a gray zone where damage can occur without a clear admission of fault. In practice, these gray zones are exactly where sellers lose reimbursement disputes.

Key risk factors for FBA shipments include:

• Long transit times (especially ocean freight)

• Pallet breakdown and re-stacking

• Container condensation and moisture damage

• Overweight cartons or non-compliant packaging

• Mislabeling leading to rejection or disposal

Once inventory is rejected or destroyed, recovery options narrow quickly.

👉 Even when sellers believe their cartons are “good enough,” Amazon evaluates inbound shipments using a very different standard. What passes factory inspection or freight transit does not always pass Amazon’s inbound checks. Small details—such as how cartons are split across shipments or how pallets are built for FBA intake—can quietly shift liability back to the seller. Reviewing the Amazon FBA shipping and packaging requirements before goods leave the factory helps sellers understand where Amazon’s expectations differ from typical international shipping norms.

What Amazon Does (and Does NOT) Reimburse

Amazon does offer reimbursement programs—but they are far more limited than most sellers assume.

What Amazon may reimburse

• Inventory damaged inside Amazon fulfillment centers

• Inventory lost after check-in

• Certain inbound handling errors confirmed by Amazon

What Amazon does not reimburse

• Damage during international transit

• Damage before inventory is checked in

• Condensation, mold, crushed cartons from shipping

• Customs inspections or port handling damage

• Rejected inventory due to non-compliance

• Missing units caused by supplier or forwarder errors

Amazon reimbursement is conditional, slow, and documentation-heavy.
It is not insurance—and it is not designed to protect sellers from shipping risks.

This is where many sellers realize, too late, that they were uninsured.

Freight Insurance vs Amazon Reimbursement Programs

These two protections are often confused, but they serve entirely different purposes.

Key distinction:
Amazon protects its fulfillment process.
Freight insurance protects your inventory value during transit.

👉 This gap between carrier liability and Amazon reimbursement is where most sellers become exposed. Freight insurance is designed to cover loss and damage that occurs outside Amazon’s responsibility window, including international transit, port handling, and inland delivery before check-in. A clear understanding of how freight insurance for international shipments works helps sellers decide when insurance is necessary and what risks it realistically covers.

Common Damage Scenarios in FBA Shipments

Most FBA damage disputes do not involve dramatic losses. More often, cartons arrive partially crushed, moisture-damaged, or internally compromised in ways that are difficult to document after delivery. By the time Amazon flags the issue, sellers no longer control the evidence, making insurance documentation far more valuable than post-arrival explanations.

In real-world FBA shipments, these are the most common claim situations:

1. Moisture and condensation damage

Goods arrive with warped boxes, mold, or corrosion—especially in sea freight.

Amazon typically rejects or destroys the inventory.
Without insurance, the loss is yours.

2. Carton crushing or pallet collapse

Often caused by overweight cartons or poor stacking during transit.

Amazon may classify the issue as inbound non-compliance.

3. Missing cartons or units

Loss may occur before US arrival or during drayage.

If it happens before Amazon check-in, reimbursement is unlikely.

4. Labeling-related rejection

Incorrect FNSKU placement or carton labels can result in refusal or disposal.

Insurance may cover the cargo value—but not Amazon penalties.

Who Is Responsible at Each Shipping Stage?

Responsibility shifts as your shipment moves.

Important:
Carriers and forwarders operate under limited liability rules, often covering only a fraction of cargo value.

This gap is exactly what freight insurance is designed to cover.

When Amazon Sellers Should Buy Freight Insurance

Freight insurance is not mandatory—but in practice, it becomes essential when:

• Shipment value exceeds what you are willing to lose

• Goods are fragile, electronic, or moisture-sensitive

• You are shipping via ocean freight

• Inventory is seasonal or launch-critical

• You rely on DDP or third-party forwarders

Many sellers skip insurance to save 0.3–0.6% of cargo value—
then lose 100% of the shipment when something goes wrong.

👉 Sellers using DDP shipping often assume that “everything is covered,” including cargo insurance. In reality, DDP defines who pays duties and taxes, not whether the shipment is insured. Many disputes arise after damage occurs and buyers discover insurance was never included in the quote. Understanding the answer to Does DDP shipping include insurance? is critical before relying on DDP as a risk-management strategy.

Checklist: Protecting FBA Shipments Before They Ship

Before goods leave the factory, confirm the following:

• Carton weight and dimensions meet Amazon limits

• Packaging tested for stacking and moisture resistance

• Clear Incoterms defined in contract

• Freight insurance coverage confirmed in writing

• Claim process and documentation clarified

• Pre-shipment inspection completed

Insurance does not replace good preparation—it complements it.

Final Thoughts

Amazon FBA simplifies fulfillment—but it does not eliminate shipping risk.

If your shipment is damaged before Amazon takes ownership,
Amazon will not automatically make you whole.

Freight insurance exists to protect sellers during the most vulnerable part of the supply chain:
the part Amazon does not control.

Understanding where responsibility ends—and where insurance begins—is what separates protected sellers from exposed ones.