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Two forms of coverage many start-ups may need

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Starting an independent business can be a thrilling experience, but it is important for new business owners to protect themselves against legal claims that may put their company at risk. The most effective way to do so is to invest in business insurance coverage, but certain types may be more useful for those who have just started their enterprises.

One form of insurance that may be useful to start-ups is errors and omissions insurance, according to Entrepreneur magazine. This basic form of insurance can help protect the companies financially against mistakes they make in the process of performing work-related tasks.

Workloads can get overwhelming quickly, and some entrepreneurs may find themselves in need of assistance. Before hiring their first employee, small business owners should ensure they have employment practices liability insurance.

"For the past 10 years, the Equal Employment Opportunity Commission (EEOC) has received more than 75,000 complaints each year of various forms of employment discrimination. In fiscal year 2005, damages paid amounted to more than $104 million," the source says.

This type of coverage will assist them in covering related expenses should something go wrong with an employee during the hiring, termination or employment process.

Insurance coverage is important for keeping a start-up going strong. Being prepared for anything that can go wrong may help a new company enjoy a long, successful future.  

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