Before tackling your next renovation or new build project, take the time to ensure the materials you buy on behalf of a client for that project are covered if something happens to them before you install them.
It’s not uncommon for general contractors and builders to overlook adding installation floater insurance to their policies for a project they’re working on when they may already have commercial property and tools and equipment insurance. 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.
For example, you buy a kitchen sink to install in a client’s home, but while en route to the jobsite, you get into a collision and the sink is damaged beyond use. Unfortunately, without an installation floater, the contractor must absorb the cost of that damaged sink since it was ruined before it was accepted by the client and installed in their home. Commercial property or tools and equipment insurance won’t cover the cost of the damage.
Installation floater insurance covers your materials if they’re damaged by fire, or water, are stolen or vandalized. Having it means if one of those insurable losses happens to you, your insurance provider will reimburse you for the loss after you pay the deductible.
Builder’s risk vs. installation floater insurance
You may wonder if having an installation floater is necessary if you already have builder’s risk insurance. The answer is, yes, it is. Also known as course of construction insurance, builder’s risk insurance protects the building and the liability during the project’s life. It’s typically needed for major renovations, new construction or adding an addition to a home or existing structure.
This type of insurance covers the building, materials at the jobsite and liability if there’s physical loss or damage because of an insured event, such as vandalism, theft, accidental damage or fire.
But keep in mind builder’s risk coverage only covers materials located at the site, not those you still need to transport or items that break or go missing before they’ve been installed. So, certain items or materials may be excluded from a builder’s risk policy.
Installation floater vs. tools and equipment insurance
On the one hand, installation floater insurance protects the cost of replacing materials following an insurable loss. On the other hand, tools and equipment insurance covers the cost of replacing the tools and equipment used during the installation process if they’re stolen, vandalized, lost or suffer water or fire damage.
Moreover, tools and equipment insurance covers heavy equipment, such as bulldozers, backhoes and cement mixers. Having both optimizes your protection from potential losses.
Beyond your tools and equipment, there are some things an installation floater may not cover, such as temporary structures like fencing or the scaffolding you use.
Speak with a licensed business insurance broker to clarify the policies you should have and the exclusions and coverage limits for each type of insurance before you purchase them.
Jon Hogg is a licensed broker and team lead, digital solutions, contractors at Zensurance, Canada’s leading source for small business insurance. Get a free quote for your insurance needs by visiting Zensurance.com/DCN.
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