The life of a contractor is a hectic one with most of the time spent on a jobsite — and a lot of places in between. With the amount of money you invest in tools and equipment, it’s crucial to protect those assets no matter where you go. Your base insurance policy may offer some coverage for unexpected damage to some business property, but making assumptions about the extent of coverage could lead to some financial distress. 

Additional coverage on your mobile business property can be obtained by amending your contractor’s insurance, or that protection could be secured through a standalone policy. Whichever route you choose, you can get some peace of mind by exploring and purchasing coverage through an equipment floater. 

What is an equipment floater? 

An equipment floater offers insurance protection for your business property as it moves from location to location. That property includes tools and equipment that are in transit, stored on the jobsite, or situated somewhere away from the project. Equipment floaters give you more comprehensive insurance coverage for unique and high-value business property.

As a contractor, you likely have a considerable amount of money sunk into tools of the trade. Accordingly, damage to that business property can cause a financial setback. An equipment floater helps protect your business from loss if tools and/or equipment are lost or destroyed by perils such as theft, fire, or storms, among others. 

This type of coverage is part of the broader category known as inland marine insurance. As a rule, inland marine policies are designed to protect your business property regardless of where it travels on land. This specific coverage can be tailored to meet the needs of your contracting business. 

Who needs equipment floater insurance?

Most construction subcontractors own some specialized business property and spend time moving from job to job. In that case, equipment floater insurance will help protect valuable business property regardless of where it’s located.

So, the list of contractors requiring this coverage is quite extensive. Here’s a list of businesses that should explore equipment floaters:

  • Excavators 
  • Masons 
  • Carpenters 
  • Plumbers 
  • Electricians 
  • Painters 
  • Landscapers
  • Roofers 
  • Concrete contractors 
  • Flooring installers 

If you’ve been named as an additional insured on a general contractor’s policy, you might wonder if you receive business property coverage from the GC’s insurance. The answer would almost definitely be “no.”

A GC’s policy would extend general liability coverage to your subcontractor business. This protection kicks in if someone gets hurt or someone else’s property is damaged on a job, and you’re found to have some responsibility for that injury or accident. 

The best way to determine your strategy for protecting tools and equipment is to assess your current insurance program and address any exposures. You can perform an analysis with an insurance representative who can help identify gaps in coverage. As a result, adding equipment floater coverage might be a solid move. 

What does an equipment floater cover?

Think about all the essential items you own and transport from one project location to another. This includes items that range from small hand tools like trowels to larger, higher-value equipment pieces such as a backhoe. 

You can secure a wide spectrum of coverage or limit risk to named perils with an equipment floater. An all-risk policy would give you the broadest protection, covering every risk except those specifically excluded in the policy’s insuring agreement. A named peril policy, by contrast, included coverage only for hazards distinctly listed in the insurance contract. 

Here are some common tools and equipment routinely covered: 

  • Hammers 
  • Drills 
  • Saws 
  • Ladders 
  • Scaffolding 
  • Generators 
  • Compressors 
  • Excavators 
  • Skid steers 
  • Forklifts 

Equipment not covered by a floater

When you consider the basic description of an equipment floater, you might be inclined to think some other mobile assets will be protected through a policy. However, some business properties will not qualify for coverage. 

Vehicles are the obvious business property assets to which you might assume that coverage extends. Any trucks, vans, or cars you might own must be insured under a commercial auto policy, which has liability and property coverage of its own. Also, you might purchase and have temporary care, custody, and control over materials that include lumber, shingles, and tile for installation on a project. But these items must be added to an installation floater or endorsement that works much like an equipment floater.  

Here are some things that won’t be covered by equipment floater insurance: 

  • Heating units 
  • Cooling units 
  • Windows 
  • Flooring 
  • Siding 
  • Cultured or natural stone 
  • Plumbing fixtures 
  • Plywood 
  • Decking
  • Cabinetry 

How much does an equipment floater cost?

When you request contractor’s equipment floater insurance protection through amending either a current policy or purchasing a separate contract, you’re expanding the breadth of coverage you currently have. So as a result, there will be an additional premium charged and collected by your insurance carrier.

You could expect to pay an approximate cost of 75 cents per $100 of coverage per policy year. This coverage can be purchased as a blanket amount or you can schedule high-end, unique items to be individually insured. Using that average rate, $100,000 of protection would cost around $750 annually. 

Along with the dollar amount you select, other variables influence the cost of an equipment floater:

  • Location: An equipment floater may cost more when the majority of your projects are situated in high-risk areas. A residential home framer may pay more for coverage in a coastal area than it would in a region not prone to hurricanes or flooding. 
  • Business type: You may own a custom woodworking and installation business that uses highly specialized tools and machinery. These items may be unique and difficult to replace. As such, this type of business property might cost more to insure than the brushes, rollers, and sprayers used by a residential interior painter.  
  • Security measures: The degree to which you safeguard and secure business property could have an impact on cost. For instance, rates may be lowered when your tool and equipment storage facility has smoke and security alarms that are wired to fire and/or police departments. 

Equipment floater vs. installation floater 

Both equipment floaters and installation floaters make up an important part of the contractor’s insurance landscape. However, while they both cover construction-related items on the job, off the job, and in transit, there are some distinct differences between the two policies. 

An equipment floater protects the tools and equipment you permanently own and use on each construction project. An installation floater covers the materials you intend to install on a specific project. So, the major difference comes down to ownership. 

Learn more: What Is an Installation Floater?

Covering your bases with a floater

Since it more thoroughly covers the tools of your trade, you might want to consider including an equipment floater in your insurance plan.

Your contractor’s policy may have some coverage for tools, but a floater will address some risks that you possibly weren’t aware of. Levelset can also help manage risk on the payment side. Learn more about Risk Intelligence that helps determine the payment reliability of other contractors with whom you may work. 

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