Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.

Over the last 15 months, COVID-19 has brought numerous challenges to the construction industry. Second to only the labor shortage, the most pressing challenge faced by contractors is the spike in material costs which can leave them underinsured if a proper installation floater is not updated.

Lumber, steel, copper, and other building material costs rose anywhere from 100% to 500% between April 2020 and May 2021, depending on the material. Since most projects are bid 6 to 18 months prior to the start of construction, many suppliers and subcontractors were caught off guard and did not reflect these increases in their initial bids.  

Most contractors will purchase an inland marine policy that provides coverage for their miscellaneous tools, scheduled equipment, rented or leased equipment as well as an installation floater. It is important for contractors to understand the installation floater and how the increase in material costs could leave a contractor underinsured in the event of a loss.

An installation floater policy provides protection for direct physical loss or damage to materials, as well as supplies and labor costs for property being installed at jobsites. Materials are also covered while in transit and stored at temporary locations. The floater also extends coverage to the property until the installation work is accepted by the purchaser or when the insured's interest in the installed property ceases.

So, in the event of a covered loss, which includes fire, theft, explosions, transit-related damage and vandalism, a contractor’s installation floater will respond with coverage.

Proactive contractors should rely on their insurance advisor to discuss and design a program that addresses these unforeseen material and labor increases. In advance, consider the amount of product stored at any jobsite at one time, the amount of product that can be at risk in transit, the value of product stored offsite (i.e., storage units) and the protections in place that secure your product.

To discuss how an installation floater can protect your company, contact me at (619) 937-0167 or sclayton@ranchomesa.com.