Streetsmart insurance Blog
If you are a home improvement contractor or some other type of service contractor, then installation floater coverage needs to be on your radar. An installation floater is a type of insurance policy that protects you (the contractor) if a piece of property you are supposed to install is damaged to destroyed before or during installation. Essentially, an insurance floater saves you from having to absorb the cost of something that the purchaser will no longer buy from you.
A Note on Damage of Materials
Think of an installation floater this way: when you are hired to do a home improvement job, you may also be responsible for obtaining the materials for the project. Perhaps the purchaser hired you to add new hardwood floors in his or her living room or to install new cabinets in the kitchen. While the customer may order those items separately (the wood for the floor and the cabinets for the kitchen) and then have them on hand when you arrive to work on the project, it’s more likely that you will sell the materials and take care of installation.
For this kind of project, you would get the necessary materials from a supplier, deliver them to the buyer’s house, and carry out the installation. Upon completion of the project, the customer would pay you for the materials and the installation labor. You might even charge a “finder’s fee” for obtaining the materials, or a delivery fee, for getting them to the specified location. In any case, the client’s payment would settle all debts.
Such would be the scenario if everything went according to plan for your project. Unfortunately, there are times when things don’t go according to plan. Perhaps, as you are delivering the wood flooring to your client’s home, you are caught in a rainstorm. Unbeknownst to you, there is a leak in your delivery truck, so the wood gets wet and waterlogged. You can no longer use it for the project and will have to go back to your supplier for a new set of wood to do the job. In an alternative scenario, you might accidentally break a cabinet during the installation process—another mistake that would result in a return to your supplier to purchase replacement materials.
How an Installation Floater Works
These two scenarios described above, of course, could prove quite costly. Sure, you bought the materials from the supplier for your client. However, the materials were in your care when they were damaged. As a result, replacing the materials is your responsibility—not the responsibility of the purchaser.
It would be in this dire moment that installation floater coverage would come into play. This type of insurance can substantially cover any materials that a contractor would use for a job or installation. With the right policy, that coverage would begin the moment you purchased the materials from your supplier and took responsibility for them. The coverage would hold until 1) you had installed the materials in the home of the purchaser and 2) the customer had reviewed the work and accepted it as satisfactory.
At that moment, the materials (the cabinets) or whatever they were used to build (a hardwood floor) would become the responsibility of the client. The contractor would have no remaining liability for the materials as they would belong to the customer. As such, the client would be responsible for replacements or repairs in case of further damage, not the contractor. The installation floater would no longer be necessary because you will have fulfilled the installation contract.
Installation floater coverage is essential for contractors because of how often they deal with materials or assets that can suffer damage before they are officially the property of the client. Virtually anything set to be installed or built as part of a home improvement job can be damaged in transit or at some other point in the process. Windows or glass shower doors can break; cans of paint can spill; granite countertops can crack; carpets can be soaked and rendered worthless by heavy rain. All of these possibilities represent possible materials costs that can cut into a contractor’s expenses and hurt their profit margins.
With an installation floater in place, the contractor would not have to pay full replacement costs on any of the items mentioned above. Instead, the insurance policy would cover the costs, and the contractor would only have to pay any deductibles. As a result, having an installation floater could help a contractor salvage an entire job and save their profits.