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There are many reasons to have insurance for small business. Small businesses are liable to a number of accidents including (and depending on the nature of the business itself), property damages, bodily injury, false advertising, discrimination, malpractice, harassment, and many others.

First, it is essential to know just what kind of business insurance you are going to need for your small business. Typically you will need some sort of general insurance, which protects businesses from general liability: bodily injury, false advertising, and property damage. If you are an employed professional, you may also need either malpractice or errors & omissions insurance, which protects professionals and firms from lawsuits resulting from neglect. This is typically purchased by doctors, legal professionals, accountants, architects, engineers, real estate professionals and many other forms of business. If you are a manufacturer, you may need some sort of product liability coverage, to protect you from any lawsuits originating from a malfunction of your product. It may also be necessary to purchase Employment Practices Liability Insurance (EPLI). EPLI is a new form of insurance designed to protect the rights of workers, and provides protection from sexual harassment, discrimination, wrongful termination and a number of other mishaps that may occur in the workplace.

How much you buy depends on how much you are planning on being sued for. If your business poses a high risk for a certain hazard, (like, for example, property damage) it would be wise to calculate the largest catastrophe that will occur within a reasonable level of likelihood. This protects your business from losing a tremendous amount of assets (one of the primary reasons to have insurance for small business), and helps your business maintain a high level of credit for future endeavors.

Another one of the excellent reasons to have insurance for small business: it’s the law. All states have business regulations and, depending on your states requirements, you will have a certain specified minimum amount of coverage that you need to purchase in order to legally operate your enterprise. This varies from state to state, as different geographies and political climates will play a role in these mandatory minimums. However, depending on your real business needs, it will probably be a good idea to purchase more than the mere required minimum.

This Business article was written by Mark Karavan on 12/8/2009