Consider Business Insurance
GUIDE: START A BUSINESS IN IOWA | STEP TEN:
Consider Business Insurance
What is business insurance?
Business insurance is meant to protect businesses from losses due to their normal business practices. This can be for things like but not limited to property damage, employee injuries, employee risks, and product defects.
Do I need business insurance?
While the type of business entity formed may offer some personal property protections when dealing with business debt or certain lawsuits, there are limitations to these protections. On top of this, the lack of business insurance can leave many businesses, especially small businesses, unable to survive when faced with a natural disaster, lawsuit, or fire, just to name a few potential risks.
It is always a good idea to speak with an insurance agent to determine what kind of coverage you need and compare terms and prices to find the best option for your business since each business has unique insurance needs. A great place to start your search is the insurance agent locator tool provided by the Independent Insurance Agents of Iowa. Independent agents typically have more flexibility when it comes to shopping around for different underwriters. As a general rule, you should always get multiple quotes from these agents, just as you would when buying any product.
Six most common types of business insurance
General liability insurance
This type of insurance is useful for any business. It provides protection against financial loss resulting from such things as property damage, bodily injury, medical expenses, slander, libel, lawsuit defenses, and bond or judgment settlements.
Product liability insurance
This type of insurance is useful for a business that manufacture, wholesale, distribute, and retail a product. It provides protection against financial loss resulting from injury of bodily harm caused by a defective product.
Professional liability insurance
This type of insurance is useful for a business that provides a professional service or routinely provides advice to their clients. Often referred to as Errors and Omissions (E&O), this insurance provides protection against financial loss resulting from such things as malpractice, errors, and negligence. Specific names and protections will vary depending on the kind of work the business does.
Commercial property insurance
This type of insurance is useful for a business with a large amount of property and physical assets. It can provide protection against loss and damage to a company’s property resulting from events such as fire, smoke, wind and hail storms, vandalism and civil disobedience.
Home-based business insurance
This type of insurance is useful for businesses that are run out of the owner’s personal home. If you have significant assets, you may wish to inquire about an umbrella liability policy to provide additional protection of your personal property.
Business owner’s policy
This type of insurance is useful for most small business owners, especially home-based business owners. A business owner’s policy is an insurance package that combines the typical coverage options into one bundle. This option can simplify the insurance buying process and save money.
Workers’ compensation offers financial coverage for medical bills, lost income, and rehabilitation expenditures to workers who sustain injuries or fall ill while performing their job duties. Additionally, it provides compensation to the families of employees who tragically lost their lives while working.
What are the steps to buying business insurance?
Assess your risks
Each business has unique insurance needs that must be carefully considered. Think about what kind of accidents, natural disasters, or lawsuits could damage your business and what you could afford to pay for on your own. For example, if your business is located in a commercial area that is at risk from seasonal events such as fire or hail storms, commercial property insurance will help protect against loss.
Find a reputable licensed agent
With the wide variety of insurance options out there, it is important to find a reputable licensed agent. Commercial insurance agents can help you find policies that match your business needs. They receive commissions from insurance companies when they sell policies, so it’s important to find a licensed agent that’s interested in your needs as much as his or her own.
Prices and benefits can vary significantly. You should compare rates, terms, and benefits for insurance offers from several different agents. This will allow you to determine the lowest priced coverage available to fit all your businesses needs. You may also be asked for your anticipated sales volume for the quote to be generated.
Reassess every year
As your business grows, so do your liabilities. If you have purchased or replaced equipment or expanded operations, you should contact your insurance agent to discuss changes in your business and how they affect your coverage. If your coverage needs have changed or the policy terms or rate have changed from the prior year it may be beneficial to shop around to see if other insurance options would better suit your needs.
Frequently Asked Questions
Do you have questions about obtaining business insurance? You should consider checking out our Resource Navigator. It houses the contact information of 400 of our most helpful partners from across the state, like the Small Business Development Centers, who provide no-cost confidential assistance to Iowa entrepreneurs and small business owners.
Quality of business insurance is determined based on a variety of factors such as the amount of coverage, the price for the coverage, general reviews from the insurance company customers, and more personal reviews from your peers or competitors.
It depends on the type of business you operate and the requirements the state sets based on your industry and/or business type.
This is completely related to the type of business you run and the risk you are willing to take on. There may be certain types of insurance you are required to obtain, just like auto insurance for our cars, so make sure you look into your industry requirements. Ask your agent to explain the kinds of available coverage and the importance of each.
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NOTICE: The information included on this website is to be used only as a guide. It is not intended to cover all provisions of the law or every taxpayer's specific circumstances.
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