What Does an Installation Floater Cover?

An installation floater is a specialized insurance designed to protect materials, equipment, and components throughout a project’s installation phase. It covers property in transit, stored at a job site, or actively being installed. This policy safeguards businesses in construction and specialized installations, providing financial protection against unexpected losses and bridging coverage gaps in standard property insurance for movable property.

Defining Installation Floater Coverage

An installation floater is a type of inland marine insurance that covers movable or in-transit property. Its purpose is to protect materials and equipment from the moment they leave a contractor’s premises until they are fully installed and accepted by the project owner. This includes coverage during transport to the job site, temporary storage at the site, and the actual installation process.

This coverage is important for contractors, subcontractors, and service providers who install specialized systems. Businesses involved in HVAC, electrical, plumbing, and machinery installation frequently use these policies. An installation floater fills a gap because standard property insurance covers only fixed property, and general builder’s risk policies may not adequately cover a subcontractor’s specific materials or high-value equipment during installation. It focuses on protecting designated items intended for installation, not the entire construction project.

Covered Property and Perils

An installation floater covers a wide range of property essential for a project, including construction materials, raw materials, and various types of equipment. This encompasses items such as machinery, HVAC units, electrical panels, plumbing fixtures, and specialized tools intended to become a permanent part of the structure. It also protects property owned by the insured or for which the insured is responsible, including property of others in the contractor’s care.

The policy applies to property at the job site, during transit to and from the site, and sometimes while temporarily stored off-site. Installation floaters are “all-risks” policies, covering all exposures unless specifically excluded. Common perils include fire, lightning, explosion, windstorms, hail, theft, and vandalism. During transit, perils like collision, overturning, and derailment are covered. Water damage, such as from burst pipes, is also included, though flood damage requires a specific endorsement. Accidental damage during the installation process is often covered.

Exclusions and Limitations

Installation floaters come with specific exclusions and limitations. Policies exclude the cost to repair faulty workmanship, defective materials, or design flaws, though resulting damage might be covered. Damage caused by wear and tear, rust, corrosion, or inherent vice is not covered. Theft from an unsecured site may be excluded if proper security precautions were not taken.

Damage due to earth movement, such as earthquakes or landslides, or from floods, is excluded unless explicitly added through an endorsement. Acts of war, nuclear hazards, or government actions are also excluded from coverage. Damage to vehicles, tools, or equipment not intended for permanent installation is not covered, and these items may require separate equipment floater policies.

Policies exclude losses due to project delays, loss of use, or other indirect losses. Property is no longer covered by an installation floater once it has been installed and accepted by the owner, as it then falls under the owner’s permanent property insurance or a builder’s risk policy. Financial limitations include deductibles, which are the amounts the insured must pay out-of-pocket before coverage applies, and policy limits, which cap the maximum payout for a claim.

Coverage Duration and Scope

The duration of an installation floater policy is tied to the project timeline and the status of the installed property. Coverage begins when the property leaves the insured’s premises or arrives at the job site. The policy remains active throughout the installation process. Coverage ends when the installation is complete, the property is tested and accepted by the owner, or a specific time limit after completion has passed, whichever comes first. Some policies may cease coverage once materials are installed, regardless of formal acceptance.

The geographical scope includes the designated job site and transit routes. It can also cover property held in temporary storage locations, whether on-site or at an approved off-site facility. This insurance is project-specific, applying only to the designated installation work. Once the installed property becomes a permanent part of the structure and is formally accepted by the owner, it transitions to other forms of insurance, such as the owner’s commercial property policy.