Rain insurance is an insurance product that provides protection to the organizers of an event in circumstances where rain or snow interrupts the event. The insurance policy will cover for any losses incurred, as well as expenses related to the event. Rain insurance policies are purchased for specific windows of time and are available from a variety of insurance companies. Usually, the policy must be purchased at least two weeks in advance and the policy must include a policy amount to be paid out in the event that it rains. Cost for such policies varies depending on the location and timing of the event.
Rain, snow, and sleet can be big problems for events held outdoors. For indoor events, severe weather can also be a deterrence because people may not want to venture out in order to get to the event. When weather interrupts an event, people suffer a loss in walk-up revenue, as fewer people attend. In addition, they will lose out on the expenses for promoting, renting equipment, hiring personnel, and so forth. Rain insurance compensates for both of these forms of losses.
A rain insurance policy can insure against total accumulation of rain within a set period. It can also be structured in the form of a rain-free or dry policy that measures rainfall per hour to determine whether or not the stated threshold in the policy is reached. With a dry policy, if it rains on the morning of the event but not again, the policy would not kick in, as there would be several dry hours. People can choose between a number of different rain thresholds when buying the policy.
The event does not need to be canceled for a rain insurance policy to take effect. This allows organizers to recoup some of their losses and also avoids liabilities associated with cancellations, such as the need to repay ticket holders. Separate cancellation insurance policies are available to cover events that need to be canceled for rain and other reasons.
For some rain insurance policies, a rain gauge will be placed at the event and monitored by a neutral third party. Others rely on reports from a government agency that keeps track of weather conditions, such as the National Weather Service in the United States. People may also use news reports on unusual weather to bolster a claim made against a rain insurance policy if the insurer attempts to deny the claim on the grounds that the conditions in the policy were not met.