A Floater Policy is a type of insurance designed to cover property that is movable or subject to movement. Unlike standard property insurance, which typically covers stationary items within a fixed location, floater policies provide protection for items that are frequently moved or are inherently mobile. This makes them particularly useful for personal belongings such as jewelry, art, and electronics, or business equipment that may be regularly transported between locations.
Definition
A Floater Policy insures movable property against various risks, including theft, loss, damage, and natural disasters. This policy “floats” or moves with the insured item, providing comprehensive coverage regardless of its location at the time of the incident.
Types of Floater Policies
Personal Articles Floater (PAF)
Designed for individual personal property, the Personal Articles Floater covers high-value items such as:
- Jewelry
- Fine arts
- Cameras
- Musical instruments
- Sports equipment
Commercial Floater Policy
Businesses can also benefit from commercial floaters that protect assets used in various locations, such as:
- Contractor’s equipment
- Medical and scientific instruments
- Mobile tools and machinery
Special Considerations
Coverage Limits and Valuations
- Specific vs. Blanket Coverage: Some policies specify coverage amounts for each item, while others offer blanket protection.
- Valuation Method: Replacement cost or actual cash value are commonly used to determine payout amounts.
Premium Calculation
Premiums are influenced by factors such as:
- The total value of the insured items
- Theft and damage risk levels
- Geographic locations where the items are typically used or stored
Examples
Consider a professional photographer who frequently travels with expensive camera equipment. A Commercial Floater Policy can protect this equipment against loss or damage during transit, at various job sites, and even in storage.
Historical Context
The concept of floater policies originated in the marine insurance industry, where they were used to cover cargo shipments that moved from port to port. Over time, this idea was adapted to provide coverage for various types of movable personal and business property.
Applicability
Floater policies are particularly beneficial for:
- Individuals with high-value personal items
- Businesses with mobile equipment
- Those who frequently travel with valuable belongings
Comparisons
Floater Policy vs. Standard Property Insurance
While standard property insurance covers fixed assets within a set location, floater policies provide dynamic coverage for items that move frequently or have no permanent location.
Related Terms
- Rider: An addition to an insurance policy that modifies coverage.
- Endorsement: Similar to a rider, it alters the terms of the insurance contract.
- Inland Marine Insurance: A broad category that includes floater policies and covers various types of movable property.
FAQs
Is a floater policy only for high-value items?
While commonly used for high-value items, floater policies can cover any movable property, irrespective of its value.
Do I need separate floater policies for different items?
Generally, one floater policy can cover multiple items, although each item may be precisely listed and valued.
How is the value of items determined in a floater policy?
Values can be assessed based on replacement cost or actual cash value, with specifics outlined in the policy details.
References
- Insurance Information Institute. “Personal Property Floater.” Link
- National Association of Insurance Commissioners. “Understanding Commercial Floater Insurance.” Link
Summary
A Floater Policy provides a flexible and comprehensive solution for insuring movable property. Whether for personal high-value items like jewelry or commercial assets such as contractor’s equipment, floater policies ensure that your property is protected regardless of its location. This type of policy is ideal for anyone looking to safeguard movable items against a wide range of risks.
