There's a builder's risk policy on the job. The owner bought it, or the GC bought it, and you're listed as an insured somewhere in the stack. That means your materials and your work are protected, right?
Not necessarily. Whether the project's builder's risk policy actually protects your materials and work-in-progress depends on the policy's language, how you're listed, and what you're installing. Subs who assume they're covered by the project's builder's risk policy often discover the gap at the worst possible time — after a fire, theft, or storm that destroys $50,000 in materials waiting to be installed.
This guide explains the difference between builder's risk and installation floaters from the sub's perspective, and helps you figure out which one you actually need.
What Builder's Risk Covers (and Who It's For)
Builder's risk insurance is a property policy that covers a building or structure during the course of construction. It protects against direct physical loss — fire, theft, vandalism, wind, hail, lightning — to the structure and the materials that will become part of it.
Builder's risk is typically purchased by either the owner or the GC. The policy covers the project as a whole — the structure and all materials incorporated or to be incorporated into it. When a GC purchases builder's risk, the policy usually names the owner and the GC as insureds, with subcontractors listed as additional insureds.
The key limitation for subs: additional insured status on a builder's risk policy is not the same as having direct coverage for your materials and work. The policy is designed to protect the project. Whether your specific loss is covered depends on:
- Whether your materials are "part of the structure" at the time of loss
- Whether the policy covers materials stored off-site or in transit
- How the policy defines "insured property"
- Whether there are sublimits that cap recovery for specific types of losses
- Whether the carrier pursues subrogation against you after paying a loss you caused
Ask for a copy of the project's builder's risk policy. Don't accept a summary or a certificate. Read the actual policy — or have your broker read it — to understand what's covered, what's excluded, and whether your materials are protected. This is standard practice on large commercial projects. On smaller jobs, subs often don't ask, and that's where the gaps get expensive.
The Subrogation Problem
Even when the project's builder's risk policy covers a loss, it may pursue subrogation against you — the sub whose work or negligence caused the damage. If your crew accidentally starts a fire that damages the structure, the builder's risk carrier pays the claim, then turns around and sues you for the cost under its subrogation rights.
This can happen even though you're listed as an additional insured. Additional insured status on a builder's risk policy doesn't automatically waive the carrier's subrogation rights against you. A waiver of subrogation endorsement must be specifically requested and added to the policy.
Standard GC contracts include waivers of subrogation running to subs. But they're only effective if the policy actually contains the endorsement — and someone needs to verify that. If you're on a job with a project builder's risk policy, confirm:
- Whether you're listed as an additional insured (not just named in a contract)
- Whether a waiver of subrogation endorsement is on the policy in your favor
- What the policy covers for your specific scope of work and materials
What an Installation Floater Covers
An installation floater is an inland marine policy specifically designed for contractors who install materials and equipment. It covers materials and equipment you own — or are responsible for — while they're in transit, in storage, on a job site, or in the process of being installed.
The installation floater follows your materials from the point you take ownership (typically at the supplier or warehouse) through delivery, job site storage, and installation. It covers loss or damage until the project is accepted or title passes to the owner.
Installation floaters are particularly valuable for subs who:
- Store materials off-site before delivery (your warehouse, a rented storage yard)
- Handle high-value specialty materials with long lead times (HVAC equipment, electrical gear, custom millwork, mechanical systems)
- Work on multiple projects simultaneously where a single project's builder's risk doesn't follow their materials across jobs
- Cannot verify that the project's builder's risk provides adequate coverage for their scope
What installation floaters typically cover
| Stage | Builder's Risk Coverage | Installation Floater Coverage |
|---|---|---|
| In transit from supplier to job site | Often excluded or limited | Typically covered |
| Stored at your facility before job | Excluded (off-site) | Typically covered |
| Stored on job site, not yet installed | Usually covered if on-site | Covered |
| During installation | Depends on policy language | Covered through completion |
| After installation, before acceptance | Typically covered as part of structure | Varies by policy; some end at installation |
When You Need Your Own Installation Floater
The situations where a sub needs their own installation floater rather than relying on the project's builder's risk:
High-value, long-lead materials
HVAC equipment, commercial kitchen equipment, electrical switchgear, custom cabinetry, and similar high-value items often arrive at your facility weeks before they go to the job site. The project's builder's risk policy only covers materials "at the project location" — your shop is not covered. An installation floater covers these materials from the moment you own them.
Multiple concurrent projects
If you're running several jobs simultaneously, the installation floater covers all your materials across all jobs under one policy, without having to verify individual project policies. This simplifies your coverage management and ensures there are no gaps between projects.
Projects where you can't verify the builder's risk
Residential remodels, small commercial projects, and tenant improvements often don't have builder's risk policies — or the homeowner/owner hasn't confirmed coverage. An installation floater is the safe default when you can't confirm what the project's coverage is.
Work outside of traditional construction settings
Mechanical and electrical subs installing equipment in operating facilities (hospitals, manufacturing plants, data centers) may find the project-level coverage is complex or absent. Installation floaters follow the work regardless of the facility type.
The most common gap: materials stolen from a job site over a weekend. A builder's risk policy covers the project, but coverage for stored materials — particularly when the job site isn't secured and you can't prove the materials were already incorporated into the structure — is contested at claim time. An installation floater with clear coverage for materials on site provides cleaner claim outcomes.
Installation Floater vs. Builder's Risk: What They Both Don't Cover
Neither builder's risk nor installation floaters cover:
- Faulty workmanship: If your installation fails because the work was defective, neither policy covers the cost of replacing or repairing your own bad work. GL's products-completed operations coverage handles the downstream damage, not the cost of the work itself.
- Mechanical breakdown of equipment after installation: Once installed and in operation, equipment is typically excluded from both policies. Equipment breakdown coverage is a separate line.
- Your tools and equipment: Neither builder's risk nor installation floaters cover your tools. That's inland marine (see our guide on contractor tools, equipment, and trailers).
- Delay and consequential losses: If a loss delays your project and you incur costs for extended rentals, demobilization, or liquidated damages, those aren't covered under either policy without specific endorsements.
What Installation Floaters Cost
Premiums vary by the value of materials typically in your care, the trade, and deductibles. Rough ranges for Texas contractors:
- Small sub (electrical, plumbing, HVAC) — $100,000–$300,000 annual installation value: $800–$3,000/year
- Mid-size mechanical/electrical sub — $500,000–$2,000,000 installation value: $2,500–$8,000/year
- Specialty contractor with high-value equipment (generators, HVAC systems) — $1M+ at risk: $5,000–$15,000/year
Rates typically run 0.15% to 0.40% of the insured installation value annually, depending on the trade's theft/loss profile and deductibles. Some carriers write installation floaters on a "completed value" basis (you declare the total project value); others use "reporting form" (you report monthly values). Ask your broker which structure makes sense for your workflow.
Frequently Asked Questions
If I'm listed as an additional insured on the project's builder's risk policy, do I still need an installation floater?
Possibly. Additional insured status gives you rights under the policy, but the policy may still have gaps for your specific scope — particularly for materials stored off-site, in transit, or in your shop before delivery. Review the policy language or have your broker review it before assuming you're fully covered.
Does the GC's builder's risk policy automatically include subcontractors?
Not always. Some builder's risk policies automatically include subcontractors as additional insureds under a blanket provision. Others require subs to be listed specifically. And even with AI status, coverage scope for sub's materials varies by policy. Don't assume; ask for confirmation in writing.
What happens if there's no builder's risk on the project at all?
It happens — particularly on residential remodels and small commercial jobs. In that case, your materials are unprotected by any project-level property coverage. An installation floater is the only way to protect your materials on those jobs. Without it, a theft or fire that destroys your materials means you eat the cost and still owe the customer the completed work.
Is an installation floater the same as an inland marine policy?
Installation floaters are a type of inland marine coverage — inland marine is the broader category that includes tools, equipment, and property in transit. An installation floater is specifically designed for property that's being installed as part of a construction project, as distinct from a general tools & equipment policy.