Most sellers are unaware that Amazon requires third party sellers to carry and/or provide proof of liability insurance. While Amazon has not generally enforced this requirement, a recent string of intellectual property lawsuits may cause Amazon to start enforcing this requirement.
As a seller, you can be liable if somebody gets hurt using your product, or if somebody gets hurt using a product that can be attributed or traced back to you. Liability insurance can provide sellers with coverage and peace of mind.
Liability insurance also provides sellers with indemnity. A seller who gets sued or has a complaint filed against them can tender the claim to its insurance company. The insurance company will then assign lawyers to defend the seller. This protects the seller from aggravation and the costs of defending the claim or lawsuit.
Its better to have insurance and not need, than to need insurance and not have it.