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Businesses protect themselves from bad weather

Whether your company depends on attendance at special events, on shoppers coming into a store, or appropriate weather arriving in time for seasonal activities, weather insurance can ease some headaches and provide a backstop if Mother Nature doesn't agree with your timetable. While it doesn't guarantee good weather, weather insurance does guarantee that weather won't destroy your budget.

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For example, the inclement weather can affect attendance to an event like a boat show or special sale at a store. Decreased attendance equals decreased revenues. Conversely, warm weather can hurt businesses that depend on snow in the winter for skiing or other cold weather events. An unusually warm winter definitely hurts the income of a utility company, which counts on people cranking up the heat as temperatures drop.

At what cost weather insurance

Three variables factor into pricing a weather insurance policy. The first is the location of the insured. Minneapolis, for example, is more likely to have severe winter weather than Orlando, so rates for a policy protecting against severe weather would be higher there.

Second, the duration of the policy figures into the premium. Coverage for a single day event like a concert will cost less than for the entire winter season at a ski lodge.

And third, the degree of severity of the weather from which you desire protection determines how much you will pay. If a light rain won't stop your football game, but a massive downpour will turn the stadium into a water polo match, you can pick the degree of protection you need.

Insurers determine premiums for a certain location by consulting a database that extends as far back as 100 years. This history takes into account climatic events such as El Nio, since over a 100-year period, as many as a dozen El Nios or more may have occurred.

Depending upon the three variables, premiums can range from $50 for small, one day events to more than $100,000 for special events or seasonal policies. Some companies offering this coverage include Harbour Entertainment & Sports Insurance, Willis Group brokerage services, and SportingInsurance.com.

The main buyers

The biggest buyers of weather insurance in the winter are cities and airports because the cost for snow removal can be tremendous, and a bad winter can far exceed a city's planned expenses. Retailers offering a weather-related promotion may also buy weather insurance.

Perhaps the most interesting example of businesses needing weather insurance is ski resorts. Not only will they obtain coverage for a winter so stormy it prevents people from coming, but they will also protect themselves against a winter that is too warm for anything other than water-skiing.

Nervous nellies

Nervous fathers of brides have also been known to purchase weather insurance. When a wedding costs as much as a new BMW, you want to make sure a winter storm doesn't ruin you financially along with ruining the day. In addition to weddings, charity fund-raising events such as a winter carnival or New Year's Eve celebration can also be protected.

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