An Installation Floater covers your property during that in-between time after it leaves your worksite to the point when the job is done.
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How do you mitigate risk in this circumstance? An Installation Floater policy can help. Installation Floaters cover your property during that in-between time after it leaves your worksite to the point when the job is done.
What are the basics of Installation Floaters?
Whether your property is being stored, shipped to your client’s site, or is pending installation or acceptance by the owner or general contractor, an Installation Floater will protect it—and you—from loss. Like a builder’s risk policy, an Installation Floater is a type of inland marine insurance; however, there are several differences between the two. These include:
- Scope of coverage. While builder’s risk policies offer a wider slate of coverage including physical damage as well as time and money lost, Installation Floaters address specific items that are slated to be installed.
- Price. Because it is far more comprehensive, builder’s risk insurance is also more expensive than Installation Floaters.
- 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.
- Your landscaping company is in the process of installing new irrigation for a commercial property. Much of your equipment is stored at the property, including expensive machinery like your trencher. The project is halfway complete, when a fire breaks out on site and destroys your equipment. The general contractor’s builder’s risk policy specifically excludes high-value equipment. An Installation Floater can protect against specific circumstances such as this.
What does an Installation Floater cover?
An Installation Floater is an all-risk or open perils policy, meaning unless specifically excluded in the policy, all risks or perils are covered. Standard coverage typically includes:
- Fire or lightning
- Damage from vehicles or aircraft (excluding those owned by the business)
- Windstorm or hail
- Water damage, sprinkler leakage, or burst pipes (excluding damage from flood)
What are the key exclusions of an Installation Floater?
Unless a specific endorsement exists for coverage, certain losses may be excluded, including those caused by:
- Sewer backups
- Volcanic explosion
- Nuclear hazards
- Changes in humidity or temperature
- Governmental action
- Employee theft
- War or military activity
- Various errors or omissions
- Stress- or performance-testing
You should also talk to your broker if you’re working with items that may include a sublimit or are outright excluded. These include:
- Shrubbery, trees, and plants
- Property that is air- or waterborne, including barges, helicopters, cranes, or watercraft
- Temporary structures or framework, including fencing, scaffolding, cribbing, lighting, or retaining walls
- 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.
Do I need an Installation Floater or will my work be covered by a builder’s risk policy?
Remember, a builder’s risk policy and Installation Floater are not necessarily redundant. While a builder’s risk policy is generally more comprehensive than an Installation Floater, it may leave out key coverage for specific types of work or materials and equipment. For contractors or subcontractors who are performing a specific task or project, even if part of a larger project that is covered by builder’s risk insurance, it is prudent to consider an Installation Floater policy and, at the very least, examine the builder’s risk policy to see if the required work would be covered.
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.
How do I file a claim under an Installation Floater?
Of course, the purpose of insurance is that it is there to be used when needed. While you don’t necessarily want that to occur, it’s important to know the ins and outs of filing a claim under your specific type of policy.
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.
What else should I know about purchasing an Installation Floater?
If your work does not involve either new construction or renovations, an Installation Floater may not be necessary for your project. Remember that these policies are typically purchased for minor or typical work on existing buildings or structures. However, you should know that these policies are also appropriate for more complex jobs as well. These include installation of:
- Above-ground and underground tanks
- High-tension poles
- Communication towers
In addition, while Installation Floaters are typically bought by contractors and subcontractors, they may also apply to distributors and manufacturers of equipment, supplies, or materials.
As a contractor, you may not be aware whether a builder’s risk policy has been issued to cover your work. Moreover, you may also not know whether that coverage is sufficient given a project’s risks. This is a particularly appropriate moment to consider an Installation Floater given the strong incentive to cover your property.
- A pool contractor has materials in transit to a client site and is concerned as to whether that property is protected. He takes out an Installation Floater, only to learn later that he was also covered by a builder’s risk policy. While this is duplication in coverage, more coverage is better than none at all.
It’s also crucial to remember that not all Installation Floaters are created equal. It’s important that you familiarize yourself with the type of coverage required for your individual project and property that needs coverage before purchasing any given policy. Some policies are more potentially problematic than others, so you need to talk to your insurance broker to avoid an adverse situation.
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.