Installation Floater Insurance vs. Tools & Equipment Coverage (2026)

Installation floater insurance and a contractors tools and equipment floater are two different inland marine policies, meaning property coverage for goods that move rather than sit at one address. An installation floater covers the materials, fixtures, and equipment you install into someone else's project, through transit, storage, and installation, until the owner accepts the work. A tools and equipment floater covers the tools and machinery you own wherever they travel.

Most contractors hauling real materials and machinery need both, and the pair is a standard part of a broader contractor insurance program. Here's which policy covers what, where each one leaves a hole, and how a stolen-tools claim actually pays out.

What's the difference between an installation floater and a tools & equipment floater?

The dividing line is ownership. An installation floater covers the materials and fixtures you install into someone else's project, from transit through storage until the owner accepts the work. A tools and equipment floater covers the tools and machines you own. So installation floater insurance protects what you leave behind, and an equipment floater protects what you keep.

Both are inland marine insurance, an old category for property that moves around rather than property tied to one building. A floater is simply a policy that follows the covered items.

The concept that trips up contractors is insurable interest, your financial stake in the property. You keep an ongoing stake in tools you own. Your stake in installed materials ends the moment the owner accepts them.

Here's how the two policies split the work.

Does my general liability policy cover stolen tools?

No. General liability pays when your work injures someone or damages their property, because it covers liability, not property you own. Your own stolen or wrecked tools fall outside it.

Protecting your gear takes a separate inland marine policy, usually sold as contractor tools and equipment insurance. That's the same policy family your installation floater belongs to.

Contractors mix these two up constantly (usually at claim time, the worst moment to learn it). General liability answers to other people: a client who trips over your extension cord, or a wall you crack next door. It was never built to pay for your own property.

A stolen generator or a trailer emptied overnight falls to the equipment floater instead. Both sit under inland marine, so one conversation with your broker usually covers the whole set.

What do these policies cover, and what's excluded?

Both floaters cover sudden, accidental loss: fire, theft, vandalism, explosion, water damage, and transit accidents. An installation floater also covers the installation labor cost.

The exclusions catch contractors off guard. Standard ones include wear and tear, mechanical breakdown, employee theft, mysterious disappearance, and faulty workmanship. Flood and earthquake need a separate add-on. Neither floater covers your work trucks, which is what commercial auto handles.

The Insurance Information Institute describes inland marine as coverage for movable property, and these floaters follow that logic on covered perils. The theft fine print causes the most disputes. Many policies refuse a claim from an open, unsecured jobsite when there is no sign of forced entry. An unlocked gate looks a lot like tools that simply walked off (at least to the adjuster reviewing the claim).

Take an electrician whose enclosed trailer of tools vanishes overnight from an active site. The adjuster finds no broken lock and no cut fence, and the theft claim stalls while everyone argues over how the thief got in.

Will a claim actually replace my stolen tools?

That depends on three settings most contractors never check. Older tools usually settle at actual cash value, which is replacement cost minus depreciation, so an eight-year-old kit pays out far below a new one. That gap alone decides whether a claim makes you whole.

How each tool is listed decides the rest. High-value machines should be scheduled by serial number, while small tools sit in a blanket limit. Rented gear needs its own sub-limit, or it's uninsured.

Newer gear tends to settle at replacement cost while older gear is marked down to actual cash value. As a rough rule of thumb, tools around five to seven years old or newer often settle near replacement cost. Picture that same electrician, whose cordless tools sat in a blanket limit at actual cash value. The payout leaves a four-figure gap against buying new.

Rented machines are the common blind spot. A rental contract makes you liable for loss, but the floater ignores them without a sub-limit. Coverwatch sets equipment valuation to replacement cost where it fits and confirms rented-tool sub-limits, so a theft claim pays near new-gear cost. That beats settling for a depreciated fraction.

Construction equipment theft runs between $300 million and $1 billion a year, according to the National Insurance Crime Bureau and NER data. Under 1 in 4 stolen machines are recovered. The coverage averages about $48 a month, and a one-person shop can fold sole proprietor tools coverage in alongside general liability.

Who covers my materials before they're installed, me or the GC's builders risk?

Often neither, unless you carry an installation floater. A general contractor's builders risk policy usually covers materials once they reach the site or go into the structure. But it often excludes your materials while they sit in transit or off-site storage. Your installation floater fills that window, from the supplier through delivery and storage until the materials are installed and accepted.

Insurable interest is the thread that ties this together. You hold the stake in materials you bought and still control, and that stake passes to the owner as the work is accepted. That handoff is where the general contractor's builders risk policy takes over. The gap sits in the window right before it.

Take a flooring sub whose pallets of imported tile are stolen from a rented storage unit a week before install. The GC's builders risk declines because the tile never reached the site, and only an installation floater would have covered it. Line up your subcontract against your certificate before the first delivery. If nothing names your materials in transit or storage, an installation floater is the coverage that closes the gap.