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If you are in the middle of a project and have materials in transit, not yet installed, or in mid-installation, you may be facing a significant gap in insurance coverage. That’s because most commercial property policies don’t address items that are moved off of your business’s property or on their way from your site to their ultimate destination. An Installation Floater covers materials and products from the moment they are loaded on a truck up until they are installed for use.
What is an Installation Floater?
An Installation Floater is a type of inland marine insurance that covers your materials, supplies, equipment, fixtures, machinery, and other business property while it is in the process of being installed.
Whether your property is being stored, is in transit to a client’s site, or is in the middle of being installed, an Installation Floater will protect it—and you—from loss. Essentially, your property will be covered from the moment it leaves your business premises until the project is complete and the installation has been accepted by your client.
- Your flooring company has been hired to install new hardwood flooring at a customer’s home. On the way to the job site, your truck is involved in an accident, causing your truck to overturn and damaging the hardwood flooring you were transporting. The Installation Floater you purchased for this project would provide funds to replace the damaged flooring.
Installation Floaters serve to fill a gap in property coverage left by standard commercial property policies, which typically only provide coverage for your property when it is on your business premises. For contractors, this gap in coverage can prove to be costly, as much of their work is done on various job sites, meaning any property they are transporting or installing could be damaged before the project is done.
What does an Installation Floater cover?
An Installation Floater covers your business property while it is in the process of being installed. Situations in which your property would be covered include:
- While it is being transported to a job site
- While it is being stored at a temporary location
- While it is on the job site
- While it is being installed
- While the installation is complete but has yet to be accepted by the client
Installation Floaters are typically written as all-risk or open perils policies, meaning unless specifically excluded in the policy, all hazards are covered.
What are the key exclusions of an Installation Floater?
It’s important to keep in mind that exclusions will vary by insurer and by policy, so make sure to check your insuring agreement carefully. Additionally, some exclusions can be addressed by additional endorsements if your business needs specific coverage.
Commonly excluded property include:
- Machinery, tools, equipment, or other similar property that does not become a permanent part of your installation or construction
- Buildings, structures, or land that are not part of your installation or construction
- Property that is airborne, except while in transit on a regularly scheduled flight
- Property that is waterborne, except while in transit in the custody of a carrier for hire
- Money and securities
- Trees, shrubs, and plants
- Temporary structures or framework, including fencing, scaffolding, cribbing, lighting, or retaining walls
Commonly excluded perils include:
- Earth movement or volcanic eruption
- Sewer backup
- Criminal, fraudulent, or dishonest acts
- Loss of use, business interruption, delay, or loss of market
- Missing property with no evidence as to cause
- Voluntary parting of property
- Defects, errors, or omissions
- Mechanical breakdown
- Changes in humidity or temperature
- Contamination or deterioration, including corrosion, decay, fungus, mildew, mold, rot, or rust
- Wear and tear
- Nuclear hazards
- Civil authority, including seizure, confiscation, destruction, or quarantine of property
- Ordinance or law, including enforcement of any code, ordinance, or law regulating the use, construction, or repair of any building or structure or requiring the demolition of any building or structure
- War or military activity
- Your landscaping business is hired to renovate the green space of a local office complex. Along with installing a brand new irrigation system, you are planting a number of mature palm trees to line the perimeter of the complex. While your work is still in progress, a windstorm passes through the area and damages the irrigation equipment and palm trees. While your Installation Floater policy will cover the cost of replacing the irrigation equipment, trees are excluded from your policy. The palm trees cost upwards of $20,000 each, meaning you are on the hook for a significant amount.
The cost of an Installation Floater, a type of inland marine insurance, is highly dependent upon the value of the property being covered and the specific project. Broadly speaking, the average cost of inland marine insurance is $736 per year to cover $100,000 worth of property, with a $1,000 deductible. This is a cost of $0.736 per $100 of property covered. Many inland marine policies also have minimum premiums of $100 or $250.
Note that the cost of coverage varies widely depending upon the business and use of the property. For example, a builder’s risk policy may have premiums as low as $0.22 per $100, while a contractor’s small tools policy may charge premiums as high as $3.00 per $100.
Pricing is heavily dependent upon a number of factors, including:
- Value of property. The higher the value of the property that you need coverage for, the higher your premium will be.
- Coverage limits. Depending on the type of property you have, you may need higher limits of coverage. The more coverage you purchase, the higher your premium will be.
- Type of coverage. There are a number of types of inland marine coverage, and the total cost to your business will depend on which types and how many types of coverage you purchase.
- Business type. The type of business you run will dictate what types of coverage and how much coverage you’ll need.
In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer inland marine insurance:
|Inland Marine Insurance
|Business Owner's Policy
What is the difference between an Installation Floater and builder’s risk?
- Scope of coverage. While builder’s risk policies are typically meant to cover entire projects, Installation Floaters address specific items that are slated to be installed. Coverage is not always overlapping, however, as a builder’s risk policy may exclude certain types of property or equipment.
- Price. Because it covers a broader range of property, builder’s risk insurance will typically be more expensive than an Installation Floater, where your coverage is limited to a specific set of materials and equipment.
- Most appropriate insured party. While a general contractor can benefit from builder’s risk insurance, an Installation Floater is better for a task-specific contractor or subcontractor with limited risk within a larger project.
When evaluating the differences between a builder’s risk policy and an Installation Floater, remember that your work as a contractor may not be covered under the former. Commonly, builder’s risk policies exclude high-value equipment and materials.
Even in the case that a contractor’s work is covered by an owner’s builder’s risk policy, the contractor would not be provided first-party coverage, and it is likely that the contractor would be held responsible to pay part of the deductible in the event of a claim. Installation Floater policies offer first-party coverage so that in the case of a loss, a contractor can receive payment from his or her own insurance agency directly, rather than going through the owner’s insurance company. This could prove a true time-saver since there is no reimbursement lag—and thus no problems with cash flow.
- Your company is in the process of installing a new HVAC system for a commercial property. Much of the equipment to be installed is stored at the property, including an expensive air conditioning unit. The project is halfway complete when a fire breaks out on-site and destroys your AC unit. The general contractor’s builder’s risk policy specifically excludes high-value equipment. An Installation Floater can protect against specific circumstances such as this.
Is an Installation Floater the same as an equipment floater?
An equipment floater does not provide the same coverage as an Installation Floater. While an Installation Floater is meant to cover property that is in the process of being installed, an equipment floater provides coverage for tools, machinery, and other equipment that moves from place to place.
For contractors, this commonly means the equipment that is being used for construction that moves from job site to job site, including backhoes, trenchers, mixers, and other mobile equipment.
- You are hired to install a new solar power system at a commercial office building. Mid-project, a sever storm hits the area, damaging the photovoltaic panels you are in the process of installing, as well as your installation equipment, including a cherry picker. Your Installation Floater would cover the losses to the panels being installed, while your equipment floater would cover the losses to your cherry picker.
How do I file a claim under an Installation Floater?
If you are an insured contractor who needs to file under an installation policy, be prepared to do the following:
- Quickly notify your insurer of the damage or loss—the sooner the better so they can start working on getting you paid out
- Gather and provide proof of the incident, making sure to note place, time, and circumstances under which it occurred
- Offer documentation of how the property’s value was affected
- Collect information needed to settle the claim, including inventories and estimates
- Identify any other insurance coverage that may pertain to the loss
- Shore up the property to prevent a similar loss in the future
It’s essential that you contact your insurer immediately after the loss as there is often a deadline. Dragging your feet may mean you will have trouble getting reimbursed—or run the risk of not getting reimbursed at all.
If you are a licensed contractor or subcontractor with materials, supplies, or equipment in transit or waiting to be installed, you should consider putting an Installation Floater in place to make sure that your property is protected. Builder’s risk policies won’t necessarily cover the specific materials or equipment you’ll need for your job, so it’s crucial to ensure that you have coverage in force in the event of a loss.