It’s common for general contractors, renovation experts, and builders to overlook adding installation floater insurance to their policies for a project. But it’s an oversight that can cost you dearly.

Installation floater insurance is an optional coverage that pays for damage or loss of the materials or property a contractor purchases for a renovation or new build project while those materials are in transit or before being installed.

The coverage applies when building materials are picked up from a home improvement store or manufacturer until installed and are designed to repair or replace damaged, lost, or stolen materials before they’re installed.

What is installation floater insurance for contractors?

Installation Floater Insurance Coverage Basics

Installation floater insurance protects a contractor’s property or materials at a temporary site, while in transit, or during the installation process until it is installed at the job site

You likely already have a contractor insurance policy, but not all policies automatically include installation floater coverage. You can add it to your policy if it isn’t included.

For example, let’s say you’re installing new bathroom vanities, sinks, and faucets for a customer. The client has found what they want at various stores, meaning you must travel and pick up every item at different locations across the city.

Your first stop is the sink manufacturer’s warehouse. You inspect it, and everything looks fine. Along the way from the sink manufacturer to a home improvement retailer, a driver cuts you off, and you slam on the brakes to avoid getting into an accident. But when you arrive at the customer’s home, you notice one of the $2,000 marble sinks has cracked in half.

The customer won’t cover the cost because the damage occurred while it was in transit. And the manufacturer won’t pay for it because there were no signs of any defects before you left the warehouse.

The $2,500 profit you expected to make on this job is gone, and you’ll lose money before installing everything. You may also need to delay the start of the project and not meet your deadline, which can delay future scheduled projects with other clients.

That’s why having installation floater insurance is wise. With it, the damaged materials are covered, and the loss will turn back into a profit because the insurer will pay for the damaged, lost, or stolen items.

What Is Not Covered by Installation Floater Insurance?

Installation floater insurance coverage can vary from one insurance provider to another, so it’s crucial to know exclusions apply to your policy. Some items aren’t typically covered by this type of insurance, such as:

  • Tools, equipment, and machinery that won’t become part of the installation
  • Plants, trees, or shrubs
  • Temporary structures, including scaffolding, fencing, or cribbing
  • Cash
  • Property sent via an airplane unless it’s a regularly scheduled flight
  • Property sent via a ship unless it’s being transported by a carrier for hire

Who Needs Installation Floater Insurance?

Installation floater insurance is needed if you transport materials to a client’s home or business. You should also get it because accidents can happen on the job. For example, if you drop a vanity sink at the job site and it’s no longer usable, or the tiles and flooring are stolen when the property is unoccupied, installation floater insurance will cover the cost of replacement materials. 

Anyone in a profession that’s in the business of building or installing expensive items (decks, kitchen cabinets, flooring, HVAC systems, etc.) needs this type of coverage.

Builders’ Risk vs Installation Floater Insurance: What’s the Difference?

Builders’ risk insurance, also known as course of construction (COC) insurance, protects the building and the liability during the project’s life. It is typically needed for major renovations, new construction, or adding an addition or second story to a home.

This type of insurance covers the building, materials at the job site, and liability for physical loss or damage because of an insured event, such as vandalism, theft, or fire.

Be advised that materials located at the job site are covered with builders’ risk insurance, not those you still need to transport or items that are damaged or stolen before installation.

Installation Insurance vs Tools and Equipment Insurance

While installation floater insurance covers materials for a build that has yet to be installed, tools and equipment insurance covers replacing a contractor’s tools and equipment if they’re stolen, lost, or damaged. 

Also called contractor equipment insurance, this type of coverage protects a broad range of expensive tools and equipment, from hand tools to heavy construction equipment and vehicles.

Get the Low-Cost Installation Floater Insurance You Need Now

Protecting the materials you use before installation can save a project and give contractors peace of mind if construction materials are lost, stolen, or damaged.

Zensurance can help you get low-cost installation floater coverage quickly. 

Fill out our online application for a free quote. Our brokers will take the hassle off your hands by shopping our partner network of over 50 insurers to get the protection you need and customize it to suit your budget.

– Updated March 6, 2024.

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About the Author: Aharshan Thangarasa

Aharshan Thangarasa is a licensed commercial insurance broker and Team Lead, Contractors, at Zensurance.