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Buying business liability insurance in Michigan is an extremely important part of business proprietorship; if you don’t have any and should anything go wrong, your company could be sued for an overwhelming amount that might force your business to go under. It is important to first understand the various kinds of insurance products that are classified as “business liability insurance.”

In Michigan, there are primarily four kinds of liability insurance: general, professional, product, and employment practices liability insurance. General is purchased by nearly all businesses in the state of Michigan, from professional to construction to retail to manufacturing, and covers property damage, bodily injury and false advertisement claims. Professional liability insurance is purchased by doctors, lawyers, engineers and architects to protect them from either malpractice (in the case of medical professionals) or errors and ommissions (or E&O, which applies to the other categories). Product liability insurance is purchased by manufacturers to protect themselves from liability resulting from product malfunctions, and the last form is a recent type of insurance product known as employment practices liability insurance, which covers sexual harassment, discrimination, and wrongful termination.

The amount of insurance needed to be purchased varies widely and is entirely dependent on the risk inherently assumed by the business and the needs and risk tolerance of the proprietors. The appropriate (though comical) response to the common entrepreneurial question of “how much insurance should I buy?” is “how much do you plan on being sued for?” When assessing this, it is wise to seek the aid of a consultant and/or an attorney and find out what the most reasonable worst-case scenario to be prepared for is, and plan your insurance purchases accordingly.

Another useful strategy to buying low-cost business insurance in Michigan is to bundle your insurances with a product known as umbrella insurance. Umbrella insurance encompasses multiple insured items under one policy, thus reducing costs. If you have multiple business liability insurance products, or are a sole proprietor of your business and wish to bundle your liability products with either your health, homeowner’s or auto insurance, you should check with one of your insurers to find out if they have an umbrella insurance product that will better fit your needs.

This Business article was written by Mark Karavan on 11/27/2009