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7 Insurance Needs for Small Businesses

Stocks in this article: TRVHIGAZ

NEW YORK ( TheStreet) -- Whatever size company you run, insurance is not something to take lightly.

From customers hurting themselves in your store to employee wrongful termination suits, if you want to protect yourself and your business, take precautions and buy an insurance policy. It can come in various forms, though, from general to specialized, depending on the size of your company, industry, locations and preferences.

Large commercial carriers, including Travelers (TRV), The Hartford (HIG), Nationwide and Allianz's (AZ) Fireman's Fund Insurance, cater to small businesses alongside bigger clients; others are expanding to incorporate the segment into their customer lineup.

"For a few thousand dollars, most small companies should be able to adequately cover themselves," says Steve Kantor, executive vice president of KEH Insurance. "Things start getting more complicated when you add employees, when you add people in the business that drive cars on behalf of the company, when you add data or private information, such as taking credit card transactions and accepting personal information, medical and financial information."

"You now assume liability and, unfortunately, many of these smaller companies are just not properly insured to address this risk," Kantor says.

The options can be overwhelming for a business owner.

Experts say it's important to work with an insurance broker to assess pricing and premiums and ensure there's enough coverage, customer service availability and, most importantly, compliance with all laws and regulations.

Professionals such as lawyers and doctors will need to get professional coverage before they start a firm or practice, but any business owner is expected to be covered even before lighting the "open" sign for the first time under a general liability policy as well as commercial auto insurance, if applicable. Depending on whether the facility that the business is housed in is leased or owned, property insurance is also a necessity.

"Those three things are probably going to need to be in place before you open your doors," says Kevin Lynch, an assistant professor of insurance at The American College and a former owner of a financial planning practice. "All of the other things ... can simply be identified, prioritized and -- as funds are made available -- implemented."

Insurance costs should be roughly 10% of operational costs, lower if you can get it, Lynch says. For start-up firms, insurance can be as much as 12% to 15%.

Policies come in various shapes and sizes. Here are some of the more important -- and possibly overlooked -- coverage areas small-business owners should consider:

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