When you’re in the construction business, your materials are your livelihood, but what happens if something goes wrong before the job is complete? Unfortunately, the answer often spells trouble for contractors who don’t have the proper insurance coverage in place. That’s where an installation floater comes in.
This specialized form of insurance is designed to protect your materials at every stage before a project is completed. Below, we’ll break down what an installation floater is, how it works, and why it might be a smart investment for your business.
What Is an Installation Floater, and What Does It Cover?
An installation floater is a type of insurance that specifically covers materials related to a project while they are at risk in several key stages, including:
- In Transit: Materials being transported to the job site.
- At the Job Site: Materials that are awaiting installation.
- Awaiting Installation: Materials temporarily stored on-site or off.
- During Installation: Materials actively being installed at a project location.
- Testing: Losses incurred during the testing of a project.
Think about it this way: your job isn’t finished until the project is done and you have been paid. Your materials are vulnerable throughout the process. Whether it’s a theft, fire, storm damage, or another unforeseen disaster, an installation floater ensures that your business won’t carry the financial burden of a material loss.
Why Should You Care About an Installation Floater?
If you’re on the fence about whether you need an installation floater, ask yourself the following questions:
- How many of your jobs are fully paid before completion? For most contractors, the answer is “none.”
- What happens if your materials are stolen or destroyed before the project is done? Does that loss fall on you?
- Will your general contractor or client still pay you for work that can’t be completed because the materials were damaged or gone?
The truth is, most general contractors or project owners pay you for a finished job, not just for the materials on-site. Without those materials, they’re not likely to pay you a dime.
Don’t Rely on Assumptions
While some general contractors may provide primary coverage, there are often technicalities in those policies that may leave you exposed. For example:
- Who is carrying coverage for the project, the GC or building owner?
- Are you aware of the details of that coverage?
- What if the GC’s policy doesn’t adequately cover the materials or has a sky-high deductible?
- What if there is no policy in place at all?
You might assume a builder’s risk policy will cover your materials, but this isn’t always the case. An installation floater is designed to fill these gaps, providing coverage that’s specific to your materials, no matter where they are in the process.
Why It’s More Important Than Ever
Material costs have skyrocketed over the past five years, increasing contractors’ financial exposure. The good news is, installation floaters offer a cost-effective way to mitigate this risk.
- Affordable Premiums: Compared to the exposure you face, the premiums for installation floaters are minimal. We’re talking hundreds or thousands of dollars in premiums.
- Comprehensive Coverage: Unlike piecing together coverage from multiple sources, an installation floater picks up all of these risks on a blanket basis. You’ll never have to “hope” it’s covered elsewhere.
- Peace of Mind: Don’t get caught in a financial bind from a theft or storm. With an installation floater, you’re covered.
Common Misconceptions
Some contractors assume that their standard insurance policies already include this type of coverage. Installation floaters have to be specifically scheduled with a limit that is adequate for your largest project. If this is not something you discuss with your broker at renewal, chances are you don’t have one.
What Next?
Reach out to your broker and have an honest conversation. Make sure you understand where your risks lie and how an installation floater could help protect your growing business.
At Kapnick Insurance Group, we specialize in helping contractors like you secure the coverage they need to
