An installation floater insures a subcontractor’s materials, equipment and supplies from the time they leave your premises until the work is installed and accepted by the general contractor or owner. That covers them in storage, on the truck, staged on site and during installation. Most commercial property policies provide little or no coverage once property leaves your premises, so this is how you close the gap between your shop and the finished job.
How an installation floater works
Before your work is accepted, the materials go through a lot of hands and places. They’re bought, stored, transported, staged, processed and installed. At each step they can be stolen, damaged or destroyed.
An installation floater is a type of inland marine insurance, which is the insurance industry’s term for coverage on property that moves. It generally covers your property while it is:
- stored at a temporary location;
- in transit to the job site;
- staged or waiting to be installed;
- being installed; and
- waiting for acceptance by the owner or general contractor.
Once the work becomes a permanent part of the building and is accepted, the floater’s job is done. Put simply, it covers your property until it becomes part of the project.
Policies can be written per project or annually, covering all of your jobs during the policy term. They can apply to new construction and to renovation projects, where a builder’s risk policy may not be in place at all.
What it covers and what it usually excludes
Most installation floaters are written on an “all risks” basis. That means they cover any cause of loss that isn’t specifically excluded. Fire, theft, vandalism, explosion and traffic accidents in transit are typically covered.
Common exclusions, unless added back by endorsement, include earthquake, flood, sewer backup, government action, nuclear hazards, war, employee theft, and faulty workmanship or design. The wording differs between insurers, so check the exclusions on your own policy.
Installation floater vs. builder’s risk
Builder’s risk insurance is usually bought by the owner or general contractor and covers the project as a whole. It’s reasonable to ask why a subcontractor needs anything more. There are a few reasons:
- Your work may be excluded. Some builder’s risk policies exclude certain trades or high-value systems, such as roofing, HVAC or electrical equipment.
- The deductible can come back to you. Even if the builder’s risk responds, the contract may require you to pay a share of the deductible.
- Timing. A builder’s risk policy may not cover your materials while they’re in storage off site or in transit.
- Renovations. On renovation and remodelling jobs, there may be no builder’s risk policy at all.
On every project, read the contract’s insurance clauses and ask to see the builder’s risk wording, so you know whether your interest is insured and how much of the deductible you could be asked to pay.
Other things to check
- Cranes and water. Floaters often exclude property while it’s airborne or waterborne. If you use a crane, barge or helicopter to install materials, review the wording with your broker.
- Landscaping. Trees, shrubs and plants are commonly excluded. Landscape installers should ask about adding them specifically.
- Temporary structures. Scaffolding, forms, cribbing, temporary fencing and temporary lighting may be sub-limited or excluded entirely.
- Testing. Losses during start-up, pressure, stress or performance testing may be excluded. If you test equipment before handover, confirm whether that’s covered, as it can often be added for an extra premium.
If you have a claim
Every policy sets out your duties after a loss. In general, you’ll be expected to:
- report the loss promptly;
- provide proof of loss, including when, where and how it happened, within the time the policy sets;
- supply estimates, specifications, inventories and other information needed to settle the claim;
- disclose any other insurance that may apply;
- take reasonable steps to protect the property from further damage; and
- produce records showing the value of what was lost.
Good records of what you bought, where it’s stored and when it moved make this much easier.
Where your business and family overlap
For many smaller subcontractors, the line between the business and the household is thin. Materials for next week’s job sit in the home garage. Supplies ride around in the pickup that’s also the family vehicle. Tools and stock are kept in a shed behind the house.
That’s where claims can fall between policies:
- Your home policy generally excludes, or tightly limits, business property, so materials stolen from your garage may not be covered there.
- Your personal auto policy covers the vehicle, not the business materials inside it. If the truck is used for business, the auto policy itself needs to reflect that too.
- Your installation floater may or may not extend to a home garage or a personal vehicle as a temporary storage location, and theft from an unattended vehicle often has conditions attached.
Because the home, the vehicle and the business policies all touch the same materials, it helps to look at them together so you know which policy responds before something goes missing.
Next step
If you’re a subcontractor and aren’t sure where your materials are covered between the shop and the finished job, book a review and we’ll go through it together.
Common questions
Isn't my work covered by the general contractor's builder's risk policy?
Sometimes, but not always. A builder's risk policy may exclude your type of work or materials, may not apply to renovation projects, and may make you responsible for part of the deductible. Ask for a copy of the wording, or have your broker review it, before you rely on it.
Can I buy an installation floater for one job?
Yes. Installation floaters can be written per project or on an annual basis that applies to all your jobs during the policy term. Contractors with steady work usually find an annual policy simpler to manage.
Does an installation floater cover my tools?
Not usually. An installation floater covers materials and equipment that will become part of the finished project. Your own tools and equipment are normally insured under a separate contractor's equipment floater.
Are materials stored in my garage or truck covered?
Check the wording. Many installation floaters cover property at temporary storage locations and in transit, but some have limits or conditions, such as for theft from an unattended vehicle. Your home and personal auto policies generally exclude business property.