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Spotlight on Associates


Spectrum Weather and Specialty Insurance We’ve all seen it, and perhaps you’ve experienced it. The careful planning and


preparation has been completed and the show is poised for a great success. And then Mother Nature decides to make an appearance. The result becomes an event that quickly turns into a financial disaster. However, thanks to a variety of weather-related insurance products, that scenario may be avoided. Rain Insurance Rain insurance has been around for decades and is widely used for events


around the globe, both large and small. It is designed to help mitigate a financial loss should rainfall occur that will impact the revenue generated by walk-ups tickets sales, concessions, parking, merchandise sales, and any other revenue- generating activities.


It is an agreed-value policy, meaning if the rainfall occurs


as designated in the policy, a claim is paid. There is no proof of loss provision and the event does not need to be cancelled nor abandoned. Traditional Rain Insurance A standard policy consists of the specified coverage hours, the amount of


rainfall that fall during those hours to receive a claim payment, and the amount to the claim should rain exceed the insured threshold. While it is certainly the most popular coverage choice, it does suffer from some inadequacies; only the rainfall that falls during the coverage hours “counts” toward a claim, and a specif- ic rainfall threshold must be exceeded in order to have a claim paid, thus creat- ing an all-or-nothing solution. Stepped Coverage Recently-developed stepped rain insurance coverage eliminates the require- ment that an event must procure an all-or-nothing rain insurance solution. Ra- ther than have a single threshold define the acceptance of a claim, with this coverage there are actually three thresholds defined. As rainfall accumulates to levels that exceed each of the three thresholds, a claim amount is paid. Assume that you had a significantly large, outdoor event for which you have


annually purchased traditional coverage that would provide for a $100,000 claim should 0.33” of rainfall accumulate between the hours of 5pm and 10pm. Is that coverage respective of the true nature of the risk of rainfall? Will there be reve- nue losses associated with an evening of rainfall that does not accumulate to 0.33”? Was 0.33” chosen because it seemed like an affordable, happy median option?


As an alternative, you could obtain a stepped-coverage option, for the same


coverage hours that provides for a $10,000 claim should rainfall be 0.10” or greater, an additional $30,000 should rainfall continue to accumulate to 0.25”, and an additional $60,000 should rainfall accumulated to the 0.50” level. This incremental, or stepped coverage, may better reflect the risk profile of the event. Basically, subject to the specific policy terms, the more it rains the greater the claim payment.


Nonconsecutive Dry Hours Coverage Do you have an event that is planned to take four hours to complete, but have a much longer period in which to complete it? If so, nonconsecutive dry hours coverage may be the best insurance option. Rather than insure against an amount of rain that occur during your coverage period, this coverage is based on the number of hours during which rain occurs. If the number of hours during which rain occurs exceeds the insured threshold, a claim payment is made. Event Cancellation Insurance Beyond rain, events can be affected and ultimately cancelled for a wide range


of reasons outside their organizers’ control, such as severe weather, a power outage, fire at the venue, nearby wildfire, earthquake, terrorism, and nonappear- ance by key individuals just to name a few.


Event cancellation insurance helps


to protect against financial losses associate with a forced cancellation or aban- donment associated with these and other causes. Unlike rain insurance howev- er, the event must be canceled or abandoned, and the insured must prove their loss.


Event Cancellation Plus Also recently developed, cancellation plus rain coverage enables event organ-


izers to help recoup costs for both cancelled events and those that go on while suffering from poor attendance due to conditions that are exceptionally rainy. Policies with a Cancellation Plus endorsement provide a sublimit to pay out a percentage of projected gross revenues once an agreed trigger and coverage time period is reached – for example, half an inch of rain between 2:00 pm and 8:00 pm. This coverage option is rapidly becoming the preferred option, as it combines the attributes of both rain insurance and cancellation coverage. Closing


When planning your event, be sure to investigate the variety of weather insur- ance and event cancellation insurance options available to you. Contact a bro- ker that specializes in this type of coverage, as they typically have a wealth of experience provide coverage for an event similar to yours, as well as a broader market reach, which may ultimately save you premium dollars. After discussing your needs and considering prices for the best options, you will be able to make a much more informed decision. Just remember, after all of your careful prepa- ration and contingency planning, Mother Nature always bats last! Bio


Robert Holmes is President of Spectrum Weather and Specialty Insurance,


Inc. Spectrum offers a variety of event-related insurance products including rain insurance and event cancellation coverage, and is the largest independent weather insurance brokerage in the U.S. Mr. Holmes earned B.S. and M.S. degrees in Atmospheric Science from the University of Wisconsin-Madison and is a licensed insurance producer in 48 states. Robert can be reached by email at rholmes@spectrumweatherinsurance.com.


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