What Is Equipment Floater Insurance & What Does It Cover?

Equipment floater insurance is a specific type of property insurance designed to cover mobile equipment, tools, and machinery, whether on the insured’s premises, at a job site, or in transit. Its primary purpose is to protect against financial loss from damage or theft.

This policy addresses a gap left by standard property insurance, which typically only covers equipment at a fixed location. Equipment floater insurance, sometimes referred to as inland marine coverage, provides protection for property that is frequently moved. The “floating” nature means the coverage follows the equipment wherever it is located, including during transportation, at various job sites, or in temporary storage.

Types of Equipment Covered

Equipment floater policies cover a wide array of mobile assets across many industries. This includes heavy machinery used in construction, such as excavators, bulldozers, and forklifts, and smaller, portable tools like drills, saws, generators, and hand tools.

Beyond construction, this insurance extends to specialized equipment like photography and film gear, medical and diagnostic instruments, and landscaping machinery. Musical instruments and theatrical props can also be included. Policies can cover both owned equipment and equipment that is rented or leased from others.

Perils and Exclusions

Equipment floater insurance generally covers common perils that can lead to loss or damage, including theft, fire, vandalism, and accidental damage. Coverage also extends to damage during transit, loading, or unloading, and losses due to natural disasters like wind, flood, or earthquake. An “all-risk” policy typically covers any cause of loss unless specifically excluded.

Despite comprehensive coverage, certain exclusions are common. Policies generally do not cover wear and tear, rust, or mechanical breakdown. Losses resulting from inherent vice, intentional damage, or improper use are also typically excluded. Additionally, specific items such as vehicles, watercraft, and aircraft are usually not covered under an equipment floater.

Who Benefits from This Coverage

Businesses and individuals who frequently transport or use valuable equipment away from a fixed location often benefit from equipment floater insurance. Construction companies and contractors, including excavators, masons, plumbers, and landscapers, often benefit due to their frequent movement of tools and machinery.

Photographers, videographers, and event rental companies also utilize this coverage for their sensitive and portable equipment. Medical professionals with mobile diagnostic tools or any business transporting specialized instruments for off-site operations also benefit. These entities face elevated risks of theft, damage, or loss because their assets are mobile.

Key Considerations for a Policy

When obtaining an equipment floater policy, several factors influence the coverage and cost. The valuation method for your equipment typically involves either actual cash value (ACV) or replacement cost (RC). ACV accounts for depreciation, reflecting its current market value. In contrast, replacement cost covers the expense to repair or replace damaged property with new items of similar kind and quality, without deduction for depreciation.

Choosing an appropriate deductible also impacts premiums and out-of-pocket costs at the time of a claim. Policy limits should be set adequately to cover the full value of all insured equipment, considering both individual items and total aggregate values. Regularly updating the policy is advisable, especially as new equipment is acquired or older items are retired. Premiums are influenced by the type and value of the equipment, its usage, and the business’s claims history.