The business of entertaining children is a fun and rewarding business, and it seems as if everyone starting out as a magician gets involved at some point in entertaining kids at birthday parties. Although it's a fun business, it's still a business, and every entertainer should have liability insurance. Liability insurance covers any spectator or member of the public that may suffer a loss or injury as a result of the magic performance. Always ask if your magician carries liability insurance. If he or she doesn't, I'd steer clear.
Although it's highly unlikely that anything would happen, wouldn't you want to know that your magician carries insurance in the unlikely event of an accident? I carry a $3,000,000 insurance policy that covers me and any member of my audience, so you can rest assured you're in good hands. Liability insurance is good business.