What it means
The word floater means the cover travels with the property instead of being tied to one address. A standard property policy protects goods at the premises named on it, while a floater protects them at a client's site, on the road or in storage.
This matters for any business whose assets are portable, such as contractors, photographers and sales teams. A scheduled floater lists every item with its own description and agreed value, and the insurer pays that value if the item is lost.
An unscheduled floater does not list the items. It gives one overall limit for the category, and a claim is settled on the basis of the loss actually suffered, usually its replacement cost or actual cash value (replacement cost less an allowance for age and wear).
The attraction of the unscheduled form is simplicity. A growing business does not have to notify the insurer every time it buys a new drill or a new laptop, and the premium is often based on an estimate of the total value covered.
The trade-off is that individual items are usually subject to a cap, so a single expensive piece of equipment can be underinsured. Premiums are calculated from the insured value and a rate that reflects the type of property and the risk of theft or damage.
Insurers may also impose a deductible (the first part of any loss that the policyholder pays), and they often exclude certain risks such as gradual wear, mysterious disappearance or goods left unattended in a vehicle. Reading these exclusions is as important as reading the limit.
Finance teams should review the cover once a year against the fixed asset register, which is the list of equipment the business owns. Items that exceed the per-item cap should be moved to a scheduled floater or insured separately, because an unexpected gap only becomes visible at claim time.
In practice
Real-world examples.
Example
A building contractor insures hand tools, ladders and small machinery under one unscheduled floater with a $60,000 limit. A set of power tools worth $3,200 is stolen from a locked van. The insurer pays the replacement cost less the deductible without needing the tools to have been listed in advance.
Example
A wedding photographer carries cameras and lenses to venues in several cities. Her unscheduled floater covers the equipment wherever she is working, and she renews it each year with an updated estimate of total value. When a lens is dropped and broken, she claims the loss through the same policy.
Example
A software company equips its sales team with laptops and tablets. The finance manager chooses an unscheduled floater so that new hires' devices are covered automatically. After reading the policy, she asks for a higher per-item limit because some laptops cost more than the standard cap.
Formula
Calculation
Claim payment = lower of (loss - deductible) and the per-item limit, and never more than the overall floater limit
Suppose a contractor has an unscheduled floater with an overall limit of $50,000, a deductible of $1,000 and a per-item limit of $5,000. A surveying instrument worth $7,500 is stolen from a site. Loss after the deductible = 7,500 - 1,000 = $6,500. This exceeds the per-item limit, so the insurer pays $5,000, which is within the overall limit. The business bears the remaining 7,500 - 5,000 = $2,500 itself.Case study
Seen in the real world.
Summit Surveys is an illustrative, fictional company with ten field teams using specialist measuring equipment. It bought an unscheduled floater with a $100,000 limit and a per-item limit of $8,000, because the broker's quote was lower than a scheduled alternative.
A year later a drone costing $15,000 was lost during a storm. The insurer applied the per-item limit, so after a $1,000 deductible the payment was capped at $8,000, leaving Summit to absorb $7,000.
The finance manager then compared the fixed asset register with the policy and found four items above the per-item limit. The illustrative lesson is that convenience has a price: the business should either schedule its most valuable assets or accept that a gap exists.
Watch out
Common mistakes.
- Assuming that an unscheduled floater pays the full value of any single item, when most policies cap the amount payable per item.
- Treating it as covering everything the business owns, when it applies only to the category of movable property named in the policy.
- Never updating the insured value as the business buys more equipment, which leaves the overall limit too low when a large loss occurs.
Questions
People also ask.
What is the difference between scheduled and unscheduled?
A scheduled floater lists each item with an agreed value, while an unscheduled floater covers a class of property up to a blanket limit without listing items.
Does the cover apply away from the business premises?
Yes, that is the purpose of a floater, although some policies limit cover for goods left unattended or kept in vehicles overnight.
How is the amount paid worked out?
It is normally the replacement cost or actual cash value of the loss, minus the deductible, capped at the per-item and overall limits.
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