What is Equipment Floater Insurance for Contractors?

The life of a contractor can be a hectic one. 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 coverage for unexpected damage to some business property, but making assumptions about the extent of coverage could lead to some financial distress. 

Additional coverage for your tools and equipment may be worth considering. This type of protection, known as an equipment floater, can be added on to your contractor’s insurance policy. It can also be secured through a standalone policy. Whichever route you choose, you can get some peace of mind by exploring and purchasing this type of coverage.  

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 portable tools and equipment, in addition to larger items that are transported, stored on the jobsite, or situated somewhere away from the project. Equipment floaters may offer more comprehensive insurance coverage for unique and high-value business property.

As a contractor, there may be a considerable amount of money sunk into tools of the trade. Accordingly, damage to those tools could cause financial setbacks, especially for smaller businesses. 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 a 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 specialty contractors own some specialized business property and spend time moving from job to job. In that case, equipment floater insurance can help protect valuable business property regardless of where it’s located.

The list of contractors requiring this coverage is quite extensive. Below is a list of specialty contractors who may benefit from purchasing an equipment floater:

• 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 (GC)'s policy, that doesn't necessarily mean you also receive business property coverage under the GC's insurance.

A GC’s policy would extend general liability coverage to your 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. Adding equipment floater coverage might be a solid move, depending on your business needs.

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, includes coverage only for hazards distinctly listed in the insurance contract. 

Below are some common tools and equipment routinely covered by an equipment floater: 

• 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 that some may assume that an equipment floater would cover. But any trucks, vans, or cars you might own are not covered by inland marine insurance. These must be insured under a separate commercial auto policy, which has liability and property coverage of its own. Also, you may 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 offer different coverages than an equipment floater.  

Below are some things that aren't 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 requesting contractor’s equipment floater insurance protection through amending either a current policy or purchasing a separate contract, there may be an additional premium charged and collected by your insurance carrier.

It's critical to discuss specific costs of an equipment floater with an insurance representative as there are several variables that may affect what you'd pay out of pocket, including:

• 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. 
• Scope of coverage: The amount of equipment that you seek to have covered is also factored into your costs. The more equipment that is included in your policy, the more you could expect to pay for protection.

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, but an installation floater covers the materials you intend to install on a specific project.

Covering your bases with a floater

Since it more thoroughly covers the tools of your trade, an equipment floater may help fill any additional gaps remaining after purchasing your main policies. Your contractor’s policy may have some coverage for tools, but a floater may address some risks that your foundational policy may not. Be sure to discuss your insurance needs with an insurance rep to ensure your business is protected from top to bottom.

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