Floater policy

From CEOpedia | Management online

Floater policy is a type of insurance policy, connected to two different fields: property and health insurance. In the first one it's usually called floaters, because it covers valuables and tools of everyday use, be it personal or connected with work. Very often used by general contractors and other companies that operate through a lot of equipment, from small, through construction machines, up to mobile offices.

Floaters

"Floater policies provide all-risk protection for accident ant theft losses to movable property regardless of where the loss occurrs."[1]. As mentioned before, Floaters are what usually applies to pieces of insurance that, by their design, cover valuables, tools and other items. Those policies limits are much lower than usual homeowner's insurance policy, which can be very strict in terms of theft or damage. Accidental damage or theft loss protection may apply to movable property, regardless where did the accident or loss occur. Few examples of movable property, that may be covered by floaters are[2]:

  • Laptops
  • Cameras
  • Sport equipment
  • DVD players
  • Wearable accessories

Very often car dealers include partial floater policy, but it mostly applies to devices installed or mounted into the vehicle, that doesn't come out without using force and special equipment[3].

There are cases where insurances can't cover movable property, like in the case of business usage. For example, photographer's cameras and tools, DJ's mixer and equipment and similar items wouldn't be covered by normal insurance. In that situation floaters come to help, allowing a person to insure specific items.

Floater policy in medical field

This type of policy functions in a form of a sum of money, that is insured for the whole family. The covered amount or the whole insured sum, might be used for the insured person or for the members of his family. This points to the fact, that every family individual can request the policy sum during its period. From technical point of view, family is viewed as a whole, single unit, so it doesn't matter who claims the insurance[4].

One of the most visible differences between floater policy and usual health insurance policy, is the premium being charged. It's much lower in floater policy. Due to this aspect, many families tend to prefer this kind of policy over traditional health insurances.

Floater policy in general contracting

Floater policy is one of the most important things a contractor have to always remember about. From and into the construction site, there is always some ongoing transport, be it materials, required machines or tools and many other things. Floater policy allows a contractor to insure all the items for damage and more importantly, theft. Many machines and equipment tools are left in the open in the general area of construction site, often being potentially an easy target for thieves.

There is no set premium rate for floater policy focused on equipment. Insurance companies calculate those for each of the construction companies individually, using many variables like their reputation or past loss experience.

Insurance for equipment can be obtained in two ways:[5]

  • On a named-peril - the policy covers for equipment losses, which have to be listed by name in the document. All unlisted equipment is ignored.
  • On all-risk basis - the policy covers all equipment losses, besides those specifically listed in the document. Usually those are cases of equipment being lost by loaning to others, overload or because of wrong maintenance.

There are two forms of floater policy for contractors:[6]

  • On a schedule - every single covered item have to be listed in the policy with its specified value, which have to be kept up to date at all times. This becomes troublesome for companies with large amounts of equipment.
  • On blanket coverage basis - contractor usually lists every item and its value at the start and end of the policy period.

Examples of Floater policy

  • In Property Insurance: Floater policies are used to cover valuable items such as jewelry, art, antiques, and other items of special value. These items are usually not included in a basic home insurance policy, so a floater policy allows you to insure them separately, often with higher limits.
  • In Health Insurance: Floater policies are used to cover the cost of health care services that are not typically covered by a basic health insurance plan. Examples include acupuncture, chiropractic care, vision care, and fertility treatments. Floater policies can also provide coverage for long-term care, such as nursing home care.

Advantages of Floater policy

Floater policy is a type of insurance that can provide a lot of advantages for its users. Here are the most important of them:

  • It covers multiple items with a single policy. It is particularly useful for businesses that need to cover a wide range of items, from personal belongings to construction equipment, as it can be tailored to cover them all.
  • It provides coverage for items when they are not in the same location as the policyholder. This is useful for businesses that need to move their items frequently.
  • It covers items against a variety of risks, such as theft, damage, or loss. This can provide additional financial protection against unexpected events.
  • It can be tailored to meet the specific needs of the policyholder. This makes it highly flexible, allowing the policyholder to adjust the coverage to match their own requirements.
  • It often provides coverage at a lower cost than separate policies for each item. This is useful for businesses that need to insure a large number of items, as it can save money in the long run.

Limitations of Floater policy

Floater policy is a type of insurance policy, which provides coverage for certain valuables and tools of everyday use. This type of policy has several limitations, including:

  • Floater policy only covers items that are specified in the policy, and there may be an additional fee for items not listed, or for an increase in the coverage amount.
  • Floater policy only covers items that are used in the course of your work, not items that are used in your private life.
  • Floater policy coverage is limited to the value of the item at the time of the loss, meaning that any appreciation in the value of the item is not covered.
  • Floater policies are not transferable and cannot be used to cover any subsequent owners of the item.
  • Floater policies also have a deductible, which is the amount of money you are required to pay out of pocket before the insurance company will cover any of the costs.
  • Floater policies may not cover certain types of losses, such as those caused by war, terrorism, or natural disasters.

Other approaches related to Floater policy

A Floater policy is a type of insurance that can be applied to two fields: property and health insurance. Floater policies are most commonly used by general contractors and other companies that rely on tools and equipment to do business. The following are some of the other approaches associated with Floater policies:

  • Personal property floater: This type of policy covers personal possessions such as jewelry, artwork, and other irreplaceable items. It is designed to protect against loss or damage from theft, fire, and other causes.
  • Business property floater: This policy covers business equipment such as computers, machinery, and tools. It provides coverage for loss or damage from theft, fire, and other causes.
  • Liability floater: This type of policy provides coverage for businesses and individuals in the event of a lawsuit or other legal action. It covers costs associated with defending claims and paying judgments.
  • Health floater: This policy is designed to provide coverage for medical expenses and other health-related costs. It is often used to supplement existing health insurance plans.

In summary, Floater policies provide coverage for a wide range of items, from personal possessions to business equipment, and from legal liability to medical costs. They are an important resource for companies and individuals who need to protect their assets and health.

Footnotes

  1. ↑ Garman E.T., Forgue R., 2017, ch. 10, p. 323
  2. ↑ Garman E.T., Forgue R., 2017, ch. 10, p. 323
  3. ↑ Garman E.T., Forgue R., 2017, ch. 10, p. 323
  4. ↑ Subhash C., 2015, p. 828
  5. ↑ Clough R.H., Sears G.A., Sears S.K., Segner R.O., Rounds J.L., 2014, p. 226
  6. ↑ Clough R.H., Sears G.A., Sears S.K., Segner R.O., Rounds J.L., 2014, p. 226


Floater policy — recommended articles
Period of indemnity — Contract hire — Aggregate deductible — Full service leasing — First party insurance — Waiver of premium rider — Indemnity bond — Guaranteed renewable — Dual insurance

References

Author: Jakub Urban

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