Insurance on a Floating Basis

This is an insurance policy which covers property in a number of locations or situations in a collective sum insured without giving a breakdown of the sum insured on different risks. Because of this, the floater is made subject to two conditions of average so that in the event of a claim, the specific insurance contributes first and the floater second. Thus the floater tops ups, subject to average, any shortfall in one of the more specific insurance across which it floats.

This form of insurance is restricted to fire insurance in large commercial and industrial risks where insured may be able to tell the total value at risk at any time but they may be uncertain as to how the goods may be distributed among the warehouses at any one point.

The purpose of the floater is to top up the specific insurances but, as ready noted, the insured will be penalized for under – insurance