Introduction: why installation floaters matter during plant expansions (Updated: 2025)

When Canadian manufacturers expand or modernize a facility, the risk profile shifts from operating risk to project risk. Materials and equipment move in transit, await installation onsite, undergo testing and commissioning, and only then become part of the insured plant. An installation floater fills the coverage gap for those stages and, when paired with Delay in Start-Up (DSU) and related extensions, protects the project’s critical path and revenue projections. See foundational context in Summit’s pages on Contractors Insurance, Builder’s Risk, Business Interruption, and Manufacturing Insurance.

Quick comparison: Installation Floater vs. Builder’s Risk vs. DSU

Wordings to review: Chubb’s Canadian DSU/ALOP overview (linked below) and HSB Canada hot/cold testing and commissioning endorsements.

Commissioning timeline (at-a-glance)

Transit → Offload/Storage → Pre‑install checks → Installation → Cold test → Hot test → Performance tests → Acceptance/Handover
 (Installation Floater) (endorse T&C) (endorse T&C) (DSU applies if delay from insured damage)

What an installation floater covers (and how it differs)

• Scope: Physical loss or damage to scheduled materials/equipment used for a specific project while in transit, awaiting installation, and during installation until the property becomes a permanent part of the structure.

• Typical causes of loss: Fire, theft, vandalism, specified weather perils, accidental damage during handling/installation (subject to policy terms and exclusions).

• Who uses it: OEMs, mechanical/electrical contractors, millwrights, EPCs, and owners during equipment upgrades, line additions, and capacity debottlenecking.

• How it differs from Builder’s Risk: Builder’s Risk (Course of Construction) insures the works (the project/structure). An installation floater insures the contractor’s/owner’s materials and equipment for installation, including while in transit and awaiting installation. See clear comparisons from industry sources like Canada ConstructConnect’s explainer on installation floater vs. builders’ risk and Insurance Business Canada’s Q&A on installation floaters.

Testing and commissioning: coverage nuances manufacturers should know

Testing and commissioning (T&C) bridges construction and operations. Most installation floaters can be endorsed to cover T&C, but terms matter:

• Cold testing vs. hot testing: Policies often differentiate between non-energized functional checks (cold) and energized/loaded trials (hot). Hot testing may require explicit endorsement or sublimits.

• Commissioning duration: Coverage typically extends for a defined T&C window; ensure it aligns with the critical path and OEM performance tests.

• Defects and resultant damage: Many policies exclude the cost to correct a defect but cover resulting damage to other insured property; wording varies by insurer.

• Integration risk: When new assets interface with legacy systems, confirm whether pre-existing property is covered for resultant damage and whether a Builder’s Risk wrap is preferable for broader project integration. See Summit’s Builder’s Risk for wrap options.

Industry references: Chubb’s Canadian overview of construction and DSU/ALOP programs notes coverage extensions across physical damage and delay in opening when structured correctly (Chubb DSU/ALOP).

Delay in Start-Up (DSU): protecting projected revenues during delays

DSU (also called Advanced Loss of Profits/ALOP) indemnifies the owner/sponsors/lenders for financial loss caused by delayed project completion due to insured physical damage under the contract works/installation policy. Key mechanics:

• Trigger: Physical damage indemnifiable under the material damage policy that causes delay beyond the DSU time excess (waiting period).

• Indemnity: Loss of gross profit, revenue, rent, or fixed costs; may include “increased cost of working” to mitigate delay, if economically justified.

• Soft costs: Financing interest, professional fees, extended overhead—often insurable by endorsement.

• Who is insured: Typically owners/sponsors and lenders; contractors are rarely insureds unless contractually required.

• How DSU differs from Business Interruption: BI addresses post-operations loss from an event after the business is trading; DSU addresses pre-opening loss of anticipated income tied to project schedule. See overviews by Marsh, MNP, and Mondaq summary.

Coverage map for manufacturing facility expansions

Program design considerations Summit will evaluate

• Project profile: brownfield addition vs. greenfield, tie-ins, shutdown windows, and seasonal constraints.

• Values and limits: Replacement cost of equipment and freight; soft costs; DSU gross profit calculations and indemnity period.

• Logistics and transit: Incoterms, conveyance, routing, offloading plans, laydown security, and marine cargo interplay.

• T&C plan: OEM procedures, hot works, energization steps, performance tests, and warranty terms; align T&C coverage duration to test sequence.

• Schedule fidelity: Critical path, float, and key milestones; document schedule risk and contingency to support DSU quantification.

• Interfaces and legacy assets: Backfeed risks to existing lines and utilities; consider Builder’s Risk wrap for integrated works.

• Risk controls: Fire watch, impairment permits, lockout/tagout, calibration and alignment QA/QC, vibration/shock monitoring during rigging.

• Contracting: Who bears risk at each stage (owner vs. contractor vs. OEM) and how waivers of subrogation/additional insured requirements are allocated.

Underwriting data checklist for manufacturers

Prepare these items to accelerate quotes and improve terms:

• Statement of values by equipment/line, including spares and tooling

• Detailed transit/rigging plan, lift studies, and storage conditions (humidity, temp, shock)

• Project schedule with critical path and T&C windows; identify zero-float activities

• OEM commissioning protocol and acceptance criteria; punchlist closeout process

• Site security, fire protection impairment procedures, and hot work controls

• Single points of failure and tie-in risks to live operations

• Financial model for DSU: revenue ramp, margins, fixed costs, financing; desired time excess and indemnity period

Claims coordination and service

If a loss occurs, Summit’s claims team coordinates notice, adjuster engagement, restoration vendors, and documentation to support both material damage and DSU quantification. For process steps, see Claim Services.

Frequently asked questions

• Who should buy the installation floater? Any party responsible for the value of equipment/materials prior to acceptance—often the installing contractor or the owner under contract terms. For broader project works, consider a Builder’s Risk wrap.

• Does the floater automatically include testing/commissioning? Not always. Cold/hot testing may require specific endorsements or sublimits—confirm with your broker and carrier.

• How is DSU structured for manufacturing? DSU sits alongside the material damage policy covering the project. It responds when an indemnifiable loss delays completion. Owners/sponsors/lenders are typical insureds; waiting periods and indemnity periods are negotiated to fit the ramp-up plan. For conceptual differences vs. BI, see Marsh’s DSU guidance.

• What are common exclusions? Wear and tear, inherent vice/latent defect correction (but often not resultant damage), faulty design/workmanship (with resultant damage carve-outs), contractual penalties/fines under DSU, and delays not caused by insured damage (e.g., late deliveries). See additional context from Chubb and Insurance Business Canada.

• Annual vs. project-specific? Contractors with continuous installation work may place annual installation floaters; large expansions often warrant project-specific placement with tailored T&C and DSU.

Why Summit for manufacturing expansions

• Independent, multi-carrier brokerage with dedicated account management and transparent compensation practices (see How We Get Paid).

• Deep experience across construction and manufacturing lines, enabling integrated placement of installation, Builder’s Risk, cyber, BI, and D&O where needed.

• Technology-enabled responsiveness—quotes, documentation, and endorsements turned around quickly to match construction schedules.

Next step

Share your equipment list, schedule, and commissioning plan. Summit will structure the installation floater, add the right T&C endorsements, and model DSU terms to align with your financials. Start with Manufacturing Insurance or contact our team via Contact Us.