WEATHER INSURANCE

This type of coverage is encountered in a variety of situations such as special outdoor events, concerts, fairs, festivals, commercials and motion pictures as well as different sales promotions, aggregate coverage on snow removal budgets and income stabilizing programs for manufacturers.  Coverage can also include fluctuations in temperature for events such as outdoor hockey tournaments.

Rain or snow insurance is based on a certain accumulation of precipitation during a pre-determined number of insured hours, referred to as critical hours. The more hours are insured, the higher the rate so it's important to choose the most critical hours that will affect the success of the event. The earlier hours are usually more important than the later hours because that is when people will decide whether or not to attend.

Weather Insurance policies are written as “stated value” policies, which means that the event organizer does not need to prove a financial loss due to the poor weather. The basic premise is as simple as “if the agreed upon weather event happens, you collect the amount stated in the policy.”  There is no proof of loss required to pay a claim. Whatever dollar amount insured, is the amount the client gets if the agreed rainfall threshold is reached within the agreed hours.  The event does NOT have to be cancelled.

Because of this, measurement of the actual weather conditions during the event is critical in determining whether or not the pre-determined claim criteria have been met. The weather insurance buyer has several measurement options from which to choose.

One option is to simply rely on the data recorded at the nearest official weather reporting station (closest airport where Environment Canada can provide hourly readings) but due to cutbacks in that area, lengthy delays are often experienced in seeking confirmations at time of claim.  This method is inexpensive, but the airport may be located miles from the event site.  A local downpour that affects the event may not be recorded at the weather station.

A second option is to hire an on-site independent weather observer.  Observers are accurate and local, but are also paid by the hour and if they are required to observe an all day event, then the total bill may rival the cost of the insurance premium.

A third measurement option is the services of Weather Command.  This is a proprietary satellite and Doppler radar based system which zeroes in on the exact postal code of where the event is being held.

Upon submission of a completed application, we present a detailed quote that automatically includes a variety of threshold options and their corresponding rate for the client to choose from.

Weather Insurance can also be used as the basis of a consumer promotion.  Auto dealers, jewelers, and electronics retailers will sometimes entice consumers to purchase their products during the promotion period based on the promise that some or all of the purchase price will be refunded if a weather event happens on a particular date.  Frequently the promotion offers take the form of “Buy your car from us during January and if it snows on Valentine’s Day, you will receive a $5,000 rebate,” or “Buy your big screen television in December and if it snows on New Year’s Eve, you get it for free.”

Entities such as municipalities and retailers can use weather insurance to help contain the costs created by certain types of weather. Say for example, a large retailer normally budgets $X to cover the costs of snow plowing parking lots during the winter.  This type of weather insurance can protect the retailer from exceeding their budget if the number of storms that require having the parking lot(s) plowed exceeds a predetermined number. 

There might also be some outdoor events for which it will be impossible to quote on the basis of specified perils but that, due to their location and protection from the elements, may be eligible for Event Cancellation due to Adverse Weather. The coverage is triggered if on the Insured Date during the Insured Hours Adverse Weather occurs resulting in thenecessary Cancellation or Abandonment of the Insured Event.    "Adverse Weather" refers to extreme weather conditions which occur during the Insured Hoursresulting in conditions which the Local Authority consider to pose serious threat to the safety of thoseattending or working at the Event.

 "Cancellation" refers to the inability to proceed with the Insured Event prior tocommencement and "Abandonment" refers to the inability to complete fifty (50) percent or moreScheduled Event Hours once the Insured Event has commenced.

 "Local Authority" refers to: A. The governmental official or agency having responsibility for insuring public safety or B. where the Insured and venue/facilities owner are different, the venue / facilities owner may be considered the Local Authority.

Since we require approximately 30 years of hourly precipitation or temperature data for our Underwriters to prepare a quote, other than possibly on an Adverse Weather basis, it often is difficult for our facility to offer specific insurance for wind speed, lightning or hurricanes in certain locations.