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Liability insurance is a necessity for any business to protect itself if it is held legally responsible for any injury or loss resulting from a mistake. Many insurers have liability policies for small businesses called business owners policy, or BOP. There are generally two types of policies. Claims made policies cover the business when a claim is made and are a good choice for construction or design businesses. Occurrence policies insure you at the time of the occurrence and can include continuous or repeated exposure to the same harmful condition. These liability policies generally have low limits, so businesses that may require more coverage because they deal with higher risk elements such as heavy machinery or toxic chemicals may choose to purchase liability insurance as a separate policy. In addition, states not only have different laws regarding coverage, but some states are known to award large damage awards to plaintiffs. These factors as well as analyzing the exclusions of the policy should be considered in choosing a liability policy.