Builder’s Risk insurance and Installation Floaters are to provide protection when something goes wrong on a construction project. They often coexist on the same project, protecting property during the construction phase, but they are not interchangeable; placing the wrong one or missing one entirely leaves real exposure on the table.
We discuss how each coverage applies and where they work together.
Builder’s Risk: Protecting the Project as a Whole
Builder’s Risk insurance is designed to protect a structure — and the materials that will become part of it — while it’s under construction, renovation, or rehabilitation. It’s a project-based policy, typically written for a defined term that runs from groundbreaking (or the start of renovation) through substantial completion.
Coverage attaches to the structure itself and generally extends to materials and supplies intended for permanent incorporation into the project, whether they’re already on-site, in temporary storage nearby, or in transit to the location. Common perils include fire, theft, vandalism, wind, and water damage.
Builder’s Risk is the right tool when the primary exposure is the building itself, which includes the shell going up, the floors being poured, and the walls being framed. When purchasing a Builder’s Risk policy, consider the following:
- Ensure the coverage limit reflects the completed project value, not just the contract price. Soft costs — architect fees, loan interest, permits, and re-inspection fees — should be included if delays are a realistic risk.
- Review the definition of “completion” carefully. Policies that terminate at substantial completion may leave a gap if occupancy is delayed.
- Confirm transit and off-site storage sub-limits are adequate, particularly on large projects with phased material delivery.
Installation Floaters: Protecting What’s Going Into the Building
An Installation Floater is an Inland Marine policy that covers specific materials, equipment, or systems while they’re being transported to a job site, stored temporarily, or installed. Unlike Builder’s Risk, an Installation Floater is typically written for a contractor or subcontractor rather than the project owner.
This is where the distinction becomes critical. Builder’s Risk covers the structure and its incorporated materials. An Installation Floater covers the specialty property that a subcontractor is responsible for delivering and installing. These items may be high-value, custom-fabricated, or difficult to replace before they’re physically part of the building.
Think of an HVAC subcontractor delivering rooftop units to a commercial project, holding them in a staging area for two weeks before the crane arrives. Or a glazing contractor storing custom curtain wall panels off-site while the structure catches up. Or an electrical contractor transporting switchgear to a data center build. In each case, the contractor is responsible for property that is not yet incorporated into the structure, and Builder’s Risk may not respond if something goes wrong before installation is complete.
Installation Floaters are particularly important for subcontractors working in:
- Mechanical, electrical, and plumbing (MEP) trades
- Elevator and escalator installation
- HVAC and refrigeration systems
- Fire suppression and security systems
- Specialty glazing and architectural metalwork
Where the Coverages May Overlap — and Where They Don’t
Both policies can respond to losses during transit or temporary storage, which is why the confusion persists. On a well-structured project, there’s coordination between the owner’s Builder’s Risk policy and the subcontractors’ Installation Floaters.
The practical risk is the assumption that one covers for the other. A subcontractor who assumes the owner’s Builder’s Risk policy will protect their materials may find the limits don’t apply to their specific scope, or that the owner’s carrier pursues subrogation after a covered loss. An owner who assumes all subcontractor property is covered under their Builder’s Risk may discover gaps when specialty equipment is damaged before it reaches the site.
The best approach is to treat these as complementary rather than competing coverage. Builder’s Risk covers the building and its incorporated materials. Installation Floaters cover the contractor’s responsibility for specialty property in transit and during installation.
About Seneca Insurance Companies
Seneca Insurance Companies provides Builder’s Risk solutions that address each customer’s needs. Our policies protect property owners, real estate developers, and general contractors with an insurable interest in a construction project. We also offer mid-term Builder’s Risk policies, a unique product in the marketplace that is particularly useful if a construction project is delayed.