The AAIS underwriting guide says that the purpose of an installation floater is “to provide special perils (all-risk) coverage for personal property that the insured installs, fabricates or erects.” It covers property belonging to the insured and that of others. The property must be at the jobsite and intended to become a “permanent part” of the insured's “installation, fabrication, or erection project.”

The policy provides a sublimit for property in transit. Additional coverage may be purchased.

The AAIS installation floater provides coverage for the described property while at the jobsite. The definition of covered property is the insured's “materials, supplies, machinery, fixtures, and equipment,” or similar property belonging to someone else.

The property described as “not covered” more clearly defines the purpose of this form, i.e., to cover only certain types of property while being installed. One group of the items not covered is “buildings, structures, or land.” While most property policies do not cover land, this form clearly excludes buildings or structures—again covering property being installed.

The installation floater also does not cover the insured's machinery, tools, or equipment. Another type of policy is available for that purpose. Finally, the AAIS policy does not cover property while “airborne” or “waterborne.” For airborne property, it does make an exception for property in transit on a “regularly scheduled airline flight.” It also makes an exception for waterborne property “in transit in the custody of a carrier for hire.”

The AAIS installation floater also provides four additional coverages. Three are fairly typical: emergency removal; debris removal; and pollutant cleanup and removal.

The fourth additional coverage is unique to the installation floater. It provides $2,500 coverage for property while in transit or at an “unscheduled storage location.” In order for coverage to apply in storage the property must be at an unscheduled location and be “awaiting installation, fabrication, or erection.” Again, the emphasis is on specified property for a specific purpose or project. Materials that the insured just has stored, with no particular project or installation date in mind, are not covered by this form.

The AAIS installation floater covers on an open perils basis, subject to the usual exclusions. These include: civil authority; earth movement or volcanic eruption; flood; ground water; nuclear; ordinance or law; and war. Note that the “water damage” exclusion found in other policies appears as two separate exclusions in this one. Note that coverage may be “bought back” for “flood and ground water” and “earth movement.” If such coverage is indicated on the declarations page, the exclusions do not apply.

The installation floater does contain one exclusion not common to property policies, “penalties.” Here the insurer declines to pay any penalties the insured may incur as a result of his or her “non-completion” of the project or any “non-compliance with any contract terms or conditions.”

Other exclusions that apply are: contamination or deterioration; criminal, fraudulent, or dishonest acts; explosion, rupture, or bursting; faults, inadequacy, and defects; loss of use; missing property; pollutants; rain, snow, ice, or sleet (damage to property in the open); temperature/humidity; and wear and tear.

Two additional exclusions in this form are: “testing” and “voluntary parting.” Again, because a contractor is likely to test his or her work or installation upon completion, the insurer has added this exclusion to eliminate any coverage for damage to the insured's own work.

The final set of exclusions eliminates coverage only if the loss is limited to the excluded peril. A subsequent loss, not excluded, is covered. These include: defects, errors, and omissions (in design, workmanship, etc.); electrical currents; mechanical breakdown; settling, cracking, shrinking, bulging, or expanding.

The remainder of the policy consists of the conditions. The insured's responsibilities in case of a loss are fairly standard: notice of loss; protect property; proof of loss; examination; records; damaged property; volunteer payments; abandonment; and cooperation.

The valuation provision contains three subparts. The first specifies that the insurer's payment for a covered loss is the lesser of: the actual cost to repair, replace, or rebuild the property; or the amount that the insured actually spends. The valuation provision also contains a “pair or set” clause and a “parts” provision.

The “pair and set” clause says that just because the lost or damaged property is part of a set, the loss is not a total. The lost item's value is to be based on a “reasonable proportion of the value of the entire pair or set.” The same principle applies in the “parts” provision. When the lost or damaged property is one part of many, the loss payable is the ” value of only the lost or damaged part or the cost to repair or replace it.”

The first provision under “How Much We Pay” is “insurable interest.” Here AAIS specifies that the insurer will not pay more than the insured's interest in the property. Although insurable interest has always been enforced in other property contracts, it is interesting that it is specified here. Other provisions in this section are: deductible; loss settlement terms; coinsurance; insurance under more than one coverage; and insurance under more than one policy. That final provision explains that the AAIS policy will contribute pro-rata with other like policies, but is excess over other policies.

The remaining provisions of the AAIS installation floater are similar in wording and intent to those of other property and marine policies: our options (loss settlement options); your losses (losses to be adjusted with the named insured); property of others; appraisal; [no] benefit to others; conformity with statute; estates (death of the named insured); misrepresentation, concealment or fraud; policy period; recoveries; restoration of limits (paid losses do not reduce the available amount of insurance); subrogation; suit against us; and territorial limits.

The final two provisions are unique.

Under “carriers for hire” the insurer gives permission to the insured to accept a bill of lading or shipping receipt from the carrier that may be for an amount less than the property is worth. To the extent that the insurer might have to pay for a loss to property being transported, they are abrogating the earlier condition of “[no] benefit to others.”

The typical insurance policy has definite beginning and ending dates. The installation floater has a definite beginning, but the ending is less certain. The policy specifies that coverage ceases at the earliest of the following six times:

1.     the policy expires or is cancelled;

2.     the purchaser accepts the covered property;

3.     the insured no longer has an insurable interest in the covered property;

4.     the insured “abandons” the installation, fabrication, or erection  project “with no intent to complete it;”

5.     the project has been completed for more than 30 days;

6.     the covered property is put to its intended use.

However, recognizing that roofs and walls may be “used” long before any other use of the project, provision six does not apply to those items.

The AAIS installation floater may be modified via the addition of certain endorsements. The first, “Personal Property Endorsement” (IM-7111) extends the policy to cover items that will not become a permanent part of the installation. Such items might include the insured's furniture or equipment.

The insured may choose to have his or her premium determined on a reporting basis, by adding form IM-7112, “Reporting Conditions Endorsement.” It requires the reporting of earned installation receipts. This may be done on a monthly, quarterly, or annual basis.

Contractors who are involved in the testing of their installations need “testing coverage.” If so, the policy must be endorsed with form IM-7114, “Testing Coverage Endorsement,” to cover their property while it is being tested.

Such testing may be of two types: “cold” or “hot.” Cold testing involves checking the installation under “dry run” conditions.  Hot testing checks the components under actual operational conditions.

A third type of testing is “commissioning.” This involves operating the installed processing machinery in order to obtain “specification requirements” or to train “operational personnel.”

The endorsement covers damage to the covered property caused by the type of testing specified. The endorsement specifies the length of the testing period. The testing coverage does not pay if the insured does not utilize any necessary safety equipment or if such equipment is not in working order, and the insured knew about it.