Picking the right insurance

Business insurance protects your business, both financially and legally, but navigating insurance policies can be tricky.

Some kinds of insurance are required by law, others by clients or customers and other types are optional.

While not a replacement for legal, insurance agent or regulatory advice, consider the following information.

Check your requirement — Before contemplating plans, determine legal requisites. For example, if you have employees, unemployment and workers’ compensation insurance is necessary.

Check with governmental entities to evaluate and ensure that you meet requirements.

Assess your business risks — Think about your business and risk management.

Do you work where natural disasters or accidents could affect business? Are you at risk of lawsuits?

Could your physical location be damaged? Do you sell products that could be lost, broken or stolen?

These factors will help you in understanding and determining coverage to explore.

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Know types of insurance and what they cover — There are common types of business insurance. However, depending on your business, you may need specialized policies.

For example, if you are involved with manufacturing, product liability insurance will help provide protection in a defective product claim.

Here are some types of business-specific insurance:

General liability insurance — This policy protects against financial loss in many situations, such as a customer injury at your business, property damage to your business or defending your business against a lawsuit.
Errors and omissions insurance — Also called professional liability insurance, it protects you in case of a business error.

This type of insurance is common in service-based businesses, such as consulting, attorneys and accountants.

Business interruption insurance — This insurance covers expenses and lost income that may occur during a covered incident. For example, this would cover a shop that had to close due to flooding.
Workers’ compensation insurance — Required by U.S. law for businesses with employees, this covers medical costs and lost wages if an employee is injured at work.

If you need assistance, contact a licensed insurance agent. Ask for recommendations, check reviews and bbb.org/iowa to help find a reputable agent who will do what’s best for your business.

The Iowa Insurance Division, at (515) 654-6600, is the licensing agency to check credentials.

Also, consider bundling insurance into one policy. A business owner policy, or BOP, combines several types of business insurance into one bundle. This could simplify your purchase and possibly reduce cost.

Benefits, costs and customer service inevitably will vary. Be certain that you are comparing apples to apples and that cost is not the only consideration.

As your business grows and changes, so might your insurance needs. Reassess your options every year to ensure your insurance still is providing the most appropriate coverage.

Bobby Hansen is regional director for the Better Business Bureau Cedar Rapids office; (319) 365-1190.