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What are the Most Common Weather Insurance Products?
Rain insurance protects all outdoor events from lost profits due to occurrences of rain. The most common events are fairs, festivals, golf tournaments, air shows, art festivals, concerts, tv & commercial filming, corporate functions, hot air balloon fairs, agriculture, motion pictures, sporting events and many more. This product is a unique tool that can be used to stabilize the financial outcome if adverse weather occurs.
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How Much Insurance Do I Need?
The limit of insurance is critical as the premium paid for this coverage is directly tied to the amount of coverage needed (i.e., the higher the limit of insurance the more expensive the premium - all things being equal). Each client that we deal with has their own monitoring mechanism and employ a slightly different approach identifying how much insurance is needed. Many consider the following: (a) unrecoverable expenses, (b) total revenue or (c) profits.
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How Much Does Weather Insurance Cost?
The costs associated with these types of products are based on several years of historical weather data at your location, date(s) and hour(s) applied. A percentage rate is derived from the historical data to which you then multiply the policy's agreed coverage value.
Premium rates generally vary depending on the above parameters. For example, a special event coverage such as a one-day outdoor concert, fair and/or festival may require a rate of between two (2%) and ten (10%) percent of the total limit of insurance requested. Longer-term coverages for risks such as weather promotions and/or business interruption (income stabilization) can range between one (1%) to five (5%) percent. Furthermore, seasonally snow removal for municipalities, business owners and property management companies can range in the four (4%) to ten (10%) percent - depending on where the Insured is geographically located. Rates may be reduced by either: (a) reducing the number of hours/days of coverage, (b) adding a deductible day (c) adding an alternate "peril date" for the event and/or (d) increasing the "triggering" rainfall/snowfall/temperature/wind amount requested.
To determine premium amount, please take the rate and multiply by the amount of insurance needed per day (i.e., $100,000 insurance coverage x 5.0% rate = $5,000).
The policy pays the agreed value if the specified weather condition occurs (no gross receipts are needed). The coverage and costs of these types of products are tailored to meet specific budgets. However, there is a $750 minimum premium amount applicable to all new business policies. Because the policies are structured on an "agreed" upon basis, all premiums must be paid a minimum of 14 days in advance.
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Should the Coverage Times for my Rain Policy be the Same Hours as my Event?
Rarely, please view below examples:
An outdoor concert that starts at 6pm and ends at 10pm - you would probably want coverage to start earlier than 6pm because if it is raining at the time your attendees are about to come to the concert (say 5pm), they may decide then not to attend. We would recommend starting the coverage at least 1 hour prior to the event and end it 1 hour prior to it ending as there is minimal impact on revenues during the last hour or two of the event.
A film or TV commercial shoot that starts at 6am and ends at 6pm - because film production crews are able to adapt to the weather conditions, it is usually not necessary to insure the full 12 hours of a production against rain or any other peril. In this example, the shoot may only need 6 to 7 hours of "good" weather out of the entire 12 for actual filming. For this instance, a rain-free or dry-hours coverage options would fit well (i.e., 6 out of 12 hours rain-free).
A fair/festival that starts at noon and ends at midnight - because the event hours are long (12 consecutive hours), it becomes difficult/expensive to insure for the entire day. In this scenario, the event has a couple of different options: (a) focus on the hours of the highest foot traffic and ticket sales (i.e., 4pm to 9pm) or (b) focus on the hours of the featured entertainment where there is significant attendance (i.e. 6pm to 10pm) and the most impact on revenues.
Please note that the above are only examples of how this coverage can be utilized. Each of our clients has their own set of individual criteria/circumstances that need to be evaluated when purchasing this coverage.
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How Is Weather Monitored for Claim Verification?
Closest National Weather Station:
In order for us to ensure the accuracy and quality of the monitoring station, the National Weather Station from your city/state can be utilized, as they already record daily local weather data on an hourly basis.
Independent Weather Observer:
However, in many cases where the National Weather Station is not within an agreeable distance from the event site, a qualified and pre-approved on- or off-site Independent Weather Observer can be utilized at the cost of the Insured. Most TV stations, radio stations, water treatment facilities and universities have fixed and/or remote equipment that can be utilized to monitor the specific location(s). Additionally, any of the following would be eligible: (a) any member of the American Meteorological Society (AMS) or any member of a Professional Meteorological Society (PMS) with observational experience/equipment, (b) an academic in Atmospheric Sciences program with observational experience and/or (c) any observer pre-qualified by the insurance carrier.
Capitol Weather Company, located in Baltimore, MD, has the means of contracting with a qualified local person who can perform the necessary recordings for an hourly fee ($30+) of which is the responsibility of the Insured - Tel: 410-486-5258.
WeatherWatch Service:
WeatherWatch is a third party service that uses the latest in weather technology along with many weather products from the National Weather Service. If your event site is far away from the nearest active weather monitoring station, WeatherWatch Service www.weatherwatchservice.com analyzes data from the nearest National Weather Service sites along with Doppler radar showing the storm track and intensity for precipitation that fell at your event site during the Insured Hours of your event. This way an actual meteorologist is watching what is going on at the event using satellite pictures, live weather radar, as well as information from the National Weather Service Office nearest to your event. The information is also related to snowfall, temperatures, and other measurable weather occurrences. Please call All-Weather Insurance Agency to secure WeatherWatch for your event for less than $50 per day.
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How is Rain Insurance Purchased?
Rain insurance can be purchased by identifying a selected increment of rainfall over a specified time, date, location and dollar amount of coverage. This is all that is needed to receive a no-obligation quote for a scheduled event. Please click on the apply for weather insurance tab to fill out an on-line application for weather insurance.
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What Other Creative Weather Insurance Products Are Available?
You can basically protect yourself from any measurable weather peril in existence. Some of the more popular alternative insurance products created are severe adverse weather, temperature, wind, hurricane and snow removal insurance products. Other unique products that are offered and created on an individual basis are weather related sales promotions, event cancellation and prize indemnity. Please contact us for further information on these types of products.
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How to obtain a no-obligation quote?
Simply fill out the on-line application or call us with the date, location, hours of your event and total limit of insurance needed along with the weather peril(s) associated with your risk. We will provide you with a customized product tailored to meet the needs of any given event.
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Weather Terminology
Selected Rainfall Threshold:
The amount of liquid precipitation chosen by the client, which, if met or exceeded results in a valid claim. Following are some more common threshold choices:
1/100 (.01) Inch of Rain
The least amount of measurable rainfall recorded by the national weather service. This amount would not leave puddles on the ground and would slightly wet the surface. Considered to be non-intrusive to outdoor events. Example: A light shower for 2-5 minutes or drizzle for two hours.
1/10 (.10) Inch of Rain
A light rain for 30-40 minutes, moderate rain for 10 minutes or heavy rain for 5 minutes. Small puddles would form but usually disappear after a short while.
1/4 (.25) Inch of Rain
A light rain for 2-3 hours, moderate rain for 30-60 minutes or heavy rain for 15 minutes. Many puddles on ground that do not disappear easily.
1/2 (.50) Inch of Rain
Moderate rain for 1-2 hours or heavy rain for 30-45 minutes. Deep standing water for long periods of time (a light rain never reaches this amount).
3/4 (.75) Inch of Rain
Heavy rain for 2-4 hours. Deep standing water for long periods of time (a light or moderate rain never reaches this amount).
1.0 Inch of Rain
Heavy rain for several hours (2-5 hours). Deep standing water for long periods of time (a light or moderate rain never reaches this amount).
The descriptions above are offered as a guide since many variables such as terrain, drainage and intensity can alter the descriptions. Please note that All-Weather Insurance Agency does NOT endorse the above rain increment definitions.
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Weather Monitoring
Closest National Weather Station:
City/state run facility that records daily local climatological data on an hourly basis. The historical data from such a facility is used for the purpose of rating/pricing the weather insurance product. In many cases the closest national weather station is within an agreeable distance from the event site and is chosen as the official monitoring site under the contract. There is no cost to the client for the use of a national weather station.
Independent Weather Observer:
A qualified individual, with proper instrumentation, who is retained by the client for the sole purpose of recording the selected weather peril during the insured hours of the event. An observer can either be on or off site within an agreeable distance from the event. If a weather observer is used, it must be known prior to the start time of the event. If the observer fails to comply with the qualifying requirements, the weather recording automatically defaults back to the closest national weather station. For further information regarding Independent weather observer requirements please contact us at toll free 800-686-3226.
How does one find a weather observer?
We suggest that the insured call a local water treatment facility, fire department, TV, radio station, college or university, most of which have remote equipment for this purpose. Capitol Weather Company, located in Baltimore, MD, has the means of contracting with a qualified local person who can perform the necessary recordings for an hourly fee ($30+) of which is the responsibility of the Insured - they require a minimum of 2 weeks (preferably more) advance notice for placement. CAPITOL WEATHER CONSULTANTS, INC. President - Sol Hirsch PO Box 15011 Baltimore, MD 21282-5011 Tel: 410-486-5258: Fax: 410-486-9446 POC: Sol Hirsch e-mail: 71232.2755@compuserve.com
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