Small business insurance goes beyond insuring your inventory and office space. All small business owners may, at some point, have a need to protect themselves from lawsuits. These lawsuits don’t just come from employees; they can also come from independent contractors and customers. Discrimination, sexual…

Small business insurance goes beyond insuring your inventory and office space. All small business owners may, at some point, have a need to protect themselves from lawsuits. These lawsuits don’t just come from employees; they can also come from independent contractors and customers. Discrimination, sexual harassment, wrongful termination—these are just a handful of the claims that employees and others can file against a business at any time.

The average amount of damages recovered by plaintiffs in employment practices suits has soared. According to Jury Verdict Research, the median award for all discrimination claims payouts in 2011 was $317,000, up 46 percent from the 2010 median of $216,000. Million dollar payouts are not uncommon.

If you think employment practices liability (EPL) lawsuits are only filed against large corporations, think again. Nearly 50 percent of EPL charges are filed against small businesses, many of which do not have the funds to defend themselves. In fact, many small businesses often do not have human resources professionals to develop the formal personnel policies and procedures that can help prevent employment-related charges in the first place.

In your efforts to prevent employee lawsuits, you may want to consider: