As a contractor when you take on a construction project, what you’re really taking on is a lot of responsibilities and risk. As with any business you have General Liability insurance, which will cover you, your employees, and equipment on the job. You might also add a Builders Risk policy, which would cover the existing residence while you’re working on it. Then, there are the materials…
How can you insure the materials you’re buying for a customer?
What happens if the work you did gets damaged or stolen after you leave the job site?
Answer: Installation Floater
What’s an Installation Floater?
Installation Floaters insure the materials, equipment, machinery, and supplies the moment they leave the store to the moment the job is complete.
Here are a few examples of the material coverage:
- Floor Tiles damaged in car accident from the store to the job site
- Water Heaters for an apartment complex stolen from the storage container
- Lumber Pack for a new home gets moldy after delivery and awaiting installation
- Counter Tops cracked during installed
- Building wiring damaged after install before acceptance of the project owner
How is that different from Builders Risk insurance?
Builders Risk is typically purchased by the property owner or the General Contractor that is running the project. Installation Floaters are typically purchased by contractors that have a limited scope of work for the project. Subcontractors use them to cover only the materials they are supplying for that task.
Builders Risk policies are specific to the project and property.
Installation Floaters can either be written on an annual basis to cover all projects, or on a per project basis.
Installation Floaters are “all risks” policies, meaning they cover a wide variety of losses such as: fire, theft, explosions, traffic accidents, vandalism, and several others (as defined by your provider)
Unless specifically endorsed, policies may exclude losses from: earthquakes, volcanic eruptions, floods, sewer backups, nuclear hazards, military actions, employee theft, or errors and omissions (i.e. you cut it wrong)
Living materials (like trees, shrubs, sod, and flowers) are commonly excluded. Landscaping companies should request to have their policy amended to cover their living materials.
What Equipment is covered?
Construction machinery, tools, temporary fencing, concrete forms, scaffolding, cribbing, and temporary lighting, are not part of the “equipment” covered with these floaters. That is under your General Liability or Business policy.
“Equipment” is referring to items that will become permanent to the building such as: HVAC equipment, fans, air handlers, elevators, water heaters, etc.
What to do with this information
I’m not an insurance salesman, so I am not pushing this on anyone. But I am a remodeling contractor and I have paid out of pocket for damaged materials, which is no fun.
If you are a contractor that regularly purchases materials and installs them, you need this! Call your insurance provider and get the conversation started.
If you are looking for help with construction equipment protection, check out this article we did on asset tracking