Builder’s Risk vs. Installation Floater: What Contractors Should Know
Contractors are often asked to carry coverage for materials, equipment, and work in progress—but the terms used in contracts aren’t always clear. Two of the most common (and commonly confused) coverages are Builder’s Risk and Installation Floater insurance.
Understanding the difference can help you avoid coverage gaps, delays, and out-of-pocket losses.
What Is Builder’s Risk Insurance?
Builder’s Risk insurance is designed to cover buildings and structures while they’re under construction or renovation. It typically applies to larger projects where a structure is being built from the ground up or significantly remodeled.
Builder’s risk may cover:
Structures under construction
Materials stored on-site (and sometimes off-site)
Damage from fire, theft, vandalism, or certain weather events
Work in progress before the project is completed
This coverage usually ends when the project is finished or occupied.
Who typically needs it?
General contractors
Owners of new construction projects
Developers
Contractors working on major renovations
What Is Installation Floater Coverage?
An installation floater is designed to cover materials and equipment being installed, rather than the entire structure. It’s commonly used by specialty or trade contractors who are responsible for specific components of a project.
Installation floater coverage may apply to:
Materials while in transit
Materials stored off-site or on-site
Materials during installation
Loss or damage before the job is complete
This coverage is often more flexible and project-specific than builder’s risk.
Who typically needs it?
Electrical contractors
HVAC contractors
Plumbers
Flooring and finish contractors
Specialty trades installing high-value materials
Key Differences at a Glance
Builder’s Risk
Covers the structure and work in progress
Often tied to a specific project
Common on large construction jobs
May be required by lenders or owners
Installation Floater
Covers materials and equipment being installed
Focused on the contractor’s scope of work
Often ongoing rather than project-specific
Useful for trade and specialty contractors
Which One Do You Need?
The answer depends on your role and your contracts.
If you’re responsible for the entire structure, builder’s risk may be required.
If you’re responsible for specific materials or systems, an installation floater may be the better fit.
In some cases, both are needed—especially when contracts shift responsibility to the contractor.
This is where many coverage gaps occur. Contractors assume coverage exists when it doesn’t, or they rely on another party’s policy that doesn’t actually extend to their materials.
What to Watch for in Contracts
Contract language often drives insurance requirements. Pay close attention to:
Who is responsible for insuring materials
When coverage must begin and end
Whether coverage must apply off-site or in transit
Required limits and named insureds
If you’re not sure what a contract is asking for, it’s better to review it before work starts.
Final Thoughts
Builder’s risk and installation floater insurance are designed to solve different problems. Choosing the right one—or the right combination—can help protect your work, keep projects moving, and prevent costly surprises.
If you’re a contractor with an upcoming job or questions about coverage requirements, a quick review can help clarify what’s needed before work begins.
Contact us to review your contracts or make sure the right coverage is in place.
