Your landscaping business made a significant investment in commercial lawn mowers and all the other necessary equipment to service your clients. An equipment floater insurance policy allows you to manage the risk of theft and other causes of loss to these assets. The equipment floater is a type of inland marine insurance that covers your equipment not only when it is at your office, but, also, as it travels throughout your service territory. Before purchasing this insurance, there are a few things you need to know:
1 Policy Discrepancies - Most insurance policies for your business have standard coverage terms that are consistent for each insurance carrier. Unlike workers' compensation, general liability, commercial auto and other insurance, the equipment floater policy is not written with standard terms. Each insurance carrier has unique definitions of exclusions and other coverage options, making it more difficult to compare "apples to apples" when shopping for the best premium. When receiving quotes, ask questions and understand the difference in how claim situations will be handled, especially theft.
"When shopping for insurance, make sure you ask your agent or insurance provider exactly what's covered. Just like you'd go to a doctor for medical advice, your agent or company should be able to help you find the right policy for your business," says Ryan Furmick, commercial auto product manager, Progressive Insurance. "Consider how much everything is worth, and pick a limit that you're comfortable with. Whether your equipment is owned, leased, rented or borrowed, there can be protection against loss, theft or damage."
2 Definition of Theft - Most policies exclude coverage for disappearing equipment. In theft claims, there must be visible breaking and entering into your trailer. This is a significant difference that you will want to know before purchasing an equipment floater. If you have an open trailer or if your trailer is unlocked when your equipment is stolen, you may not be able to file a claim on your insurance. Ask your insurance agent about these situations and implement procedures for your employees that will reduce the risk of equipment getting stolen without a trace while on a jobsite or at your storage facility.
3 Scheduling Equipment - Insurance carriers typically request a list of the more valuable items of equipment that will be insured on the policy. Provide them with the identification number, year, make, model and value of each piece of equipment. The premium rates are lower for individually scheduled pieces of equipment, and lower deductibles and better coverage terms are commonly applied when you take the time to do this.
4 Limits for Smaller Equipment - Most policies will pay a maximum of $1,000 for every piece of equipment that is not individually scheduled. Each policy will also have a limit on the amount of coverage designated for smaller tools and unscheduled equipment. Check these limits on your quotes to verify that you are purchasing sufficient coverage for your business.
5 Deductibles - There has been a trend towards higher deductibles over the past five years. A $500 deductible was common on these policies a few years ago, and now most insurance carriers only offer $1,000 or $2,500 deductibles. Often a higher deductible is applied to theft than other causes of loss.
6 Valuation of Equipment - During a claim, there can be a substantial difference in the amount paid to your company depending on the valuation method that is used to determine the worth of your equipment. Lawn mowers depreciate faster than automobiles, and purchasing a policy that uses the actual cost value will have a lower claim payment than a policy based on the replacement cost value.
7 New Equipment Purchases - Some insurance carriers provide a 90-day grace period that extends limited coverage to equipment you buy during the policy period. Other insurance carriers will not cover new equipment until it is scheduled on the equipment floater. Either way, it is important to notify your insurance agent when purchasing equipment so that coverage can be added for it through an endorsement to the policy.
The author is an insurance agent, based in Longwood, Fla., who specializes in providing business insurance to Florida landscapers. For more information, visit www.BearWiseLandscapers.com.