What Is a Commercial Property Floater?

A commercial property floater is a rider that is attached to a commercial insurance policy to protect property that a company doesn't store at a fixed location. For example, a construction company may want to guard equipment it owns that it uses at various sites. Companies may pay an additional premium to add such a rider to a commercial property insurance policy.

Key Takeaways

  • A commercial property floater is a rider added to a business insurance policy to protect a company's property that may be used in many different locations.
  • An example of a company that would need a commercial property floater would be a construction company that has bulldozers, cranes, and other equipment that it moves from one construction site to another.
  • Another example would be a company that has a sales team that uses company cars and laptops when they visit clients.
  • The commercial property floater is added to the standard insurance policy and covers claims for the damage or loss of these special property assets.
  • While business owners will pay an additional premium for commercial property floaters, they may be able to deduct the cost of the insurance on their taxes as a business expense.

How a Commercial Property Floater Works

Commercial property floaters protect business assets even though the insurance company underwriting the policy understands that these assets—such as movable equipment—may not be at a specific location. The floater assures that the insurance provider would cover any claims resulting from the damage or loss of these assets.

A floater is a type of rider that a company can add to its commercial property insurance coverage. Riders are insurance policy provisions that amend the terms of a standard insurance policy. The term floater refers to an addition to a current policy to make sure the insurance covers certain valuables. People buy these add-on policies to provide coverage for property that insurance may not adequately cover otherwise.

Commercial property insurance essentially provides the same kind of protection as property insurance for consumers. However, businesses can usually deduct the cost of commercial property insurance premiums as expenses. 

Benefits of a Commercial Property Floater

Companies that regularly move equipment from site to site, such as construction contractors, need to make sure wherever they have the equipment, it has adequate insurance. Weather, vandalism, and other hazards create risk for expensive equipment such as cranes and bulldozers.

Some organizations frequently move for their work and do not have a consistent physical address. Carnivals and fairs are examples of such businesses. They regularly travel from one area to another throughout the country. While tornados may not be a risk in Oregon, they may be in Kansas. Flooding may be a danger in low-lying areas, while mudslides more of an issue in mountainous regions. It's important for businesses of all sizes to identify these potential business risks. Assuring protection against such risks may require a commercial property floater.

Business owners should also be aware of related tax deductions that can help offset the cost of purchasing a commercial property floater. According to the Internal Revenue Service (IRS), business owners can generally deduct the cost of insurance as a business expense if the insurance is directly related to their trade, business, or profession. To be deductible, the expense must be ordinary (one that is common or accepted in your trade or business) and necessary (one that is helpful and appropriate for your trade or business).

Employee Equipment Use

Many businesses that operate from a central headquarters require commercial property floaters to protect equipment routinely taken offsite. Sales executives and other employees may use company cars, phones, laptop computers, and other devices as they visit prospects and clients.

In these situations, insurance companies can’t know in advance where such devices may be at any given time. For example, an employee may carry a laptop into a higher-than-usual crime area. Thieves may steal company equipment from an employee’s car or home during a burglary. Although a commercial property floater may increase premiums paid, companies can protect their assets in multiple locations.

Special Considerations

In some cases, insurance providers issue commercial property floaters for a scheduled property. They underwrite these floaters for assets defined explicitly in the insurance contract. In other cases, commercial property floaters are for unspecified or unscheduled property, which means the insurance provider issues coverage for property not itemized in the policy.