What Is Installation Floater Insurance?

Installation floater insurance is a type of property insurance designed to protect materials, equipment, and machinery during the transit, storage, and installation phases of a project. It provides specialized coverage for contractors and businesses engaged in construction or installation work, safeguarding valuable items before they become a permanent part of a structure. This insurance offers a financial safety net against potential losses during active project phases, which traditional property insurance often does not adequately cover.

Understanding Installation Floater Coverage

Installation floater coverage protects various types of property central to construction and installation projects. It commonly covers materials like lumber, wiring, pipes, and HVAC components intended for integration into a structure. This also includes machinery and equipment being installed, ranging from industrial machinery to large appliances. The policy typically covers tools and equipment owned by the contractor or installer, provided they are temporarily at the job site and directly used in the installation process. Coverage generally begins when these items leave the insured’s premises or are acquired for a specific project.

This insurance is distinct from general property insurance because its focus is on property in transit or at a temporary job site undergoing installation. Unlike standard commercial property insurance, an installation floater offers protection for movable property wherever it goes, within the policy’s terms.

Scope of Protection

An installation floater provides coverage across several phases of a project. Coverage extends to items in transit to the job site, protecting against damage or loss during transport. This protection continues for items stored temporarily, whether off-site or at the construction site, before permanent installation. The policy remains active during the installation process, covering property as it is assembled or integrated into the structure. Some policies extend coverage during the testing phase of installed equipment, prior to project completion and handover.

The insurance protects against common perils that can affect property during these phases, including fire, theft, and vandalism. Coverage also extends to losses from windstorm, hail, and other weather events. Accidental damage during installation and collision during transit are additional covered risks. Common exclusions typically include faulty workmanship, wear and tear, inherent vice, and damage from war or nuclear hazards.

Applicability for Businesses

This insurance is relevant for businesses and contractors that regularly transport and install valuable property for clients. It helps mitigate financial risks associated with potential damage or loss during the project lifecycle. Businesses such as HVAC contractors, plumbers, and electricians often utilize installation floaters to protect their materials and equipment. Companies specializing in the installation of large appliances, specialized machinery, or cabinets also benefit from this protection.

Subcontractors find this insurance valuable as their materials may not be fully covered under a general contractor’s builder’s risk policy, especially when items are in transit or off-site. The financial exposure from damage or theft of materials makes installation floater insurance a practical consideration. Protecting these assets ensures projects can continue without significant financial setbacks or delays.

Important Policy Elements

Several components define an installation floater policy. Policy limits establish the maximum amount an insurer will pay for a covered loss. These limits should align with the maximum value of property at risk for a single project or the aggregate value across multiple projects. Deductibles represent the amount the insured must pay out-of-pocket before coverage begins.

Valuation methods determine how covered property is assessed for a claim. Actual cash value considers depreciation, while replacement cost value covers the expense of new materials without deduction for depreciation, making it a preferred option for new construction materials. Some policies may include reporting requirements, particularly for blanket policies covering multiple projects, obligating the insured to periodically report the values of property at risk to ensure adequate coverage.