Whether to buy Weather Insurance: Some tips for insuring your show against Mother Nature

Posted by Steve Beatty on Jul 3, 2015 1:06:00 PM

It’s outdoor performance seasonWeather Insurance – Shakespeare in a park, concerts, festivals, and all sorts of other great art is being created under the sun and stars. All of us have cherished memories of outdoor shows, but we also know what it’s like when Mother Nature reminds us she is a powerful force.

The majority of show and festival producers have ‘rain or shine’ policies and will not refund tickets if a few rainy days mean people have to huddle under their umbrella or cover up with a poncho.

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But what happens if dangerous weather conditions prevent your crew from setting up for the show or make it impossible for your talent to make it to the stage? As a show producer, you need to be able to deliver on your promise to present the show – but if you have no stage, or no performers, or if you are forced to cancel the show, ticket refunds are a reality you need to face.

There are different forms of Performance or Event Cancellation insurance available from domestic & foreign insurance companies. Many will automatically exclude weather-related cancellations, postponements or interruptions; never assume that the cancellation insurance you’ve purchased includes cancellations caused by weather. You need to read the policy exclusions in your policy to be sure.

The thing you need to clearly understand when buying weather insurance is what type of weather ‘event’ will trigger your policy and allow you to submit a claim to your insurance policy. Is it only adverse weather that poses a serious safety threat to your audience, crew and talent? Does it cover your set-up period, or just the performance time? Will a cancellation be insured if you decide to cancel the show or does some other authority need to mandate or order the cancellation?

Understanding the scope of coverage offered by your policy is important. But equally important is having clear lines of communication with your production team, your insurance broker and your insurance company in advance of the weather day.

Here are some things to think in advance of your show or event:

  • Buy insurance early. When you decide that weather insurance is something you’d like to purchase talk to your broker early so you have your quotes well before your show or event. Most insurance companies will not bind insurance on events unless you are at least 10 to 14 days from your event dates. And remember, buying an umbrella on a rainy day always seems impossible and more expensive!
  • Who will monitor and document the weather? When you are close to city centres, it’s much easier to document what the weather conditions were at your venue at the time when you called your show.
  • Consider hiring a Weather Monitor to be on-site; your own meteorologist. There is a cost of course, but if you are concerned about the distance between your venue or site and the nearest weather station, a weather monitor will be a valuable part of your production team. They can document the amount of rain fall, wind speeds and lightening conditions. Some insurance companies mandate that you use an approved Weather Monitor.
  • If you don’t have a Weather Monitor in the budget, ask your insurance company what documentation they will require to substantiate your insurance claim. They might ask for photos, local or regional weather report and warnings, wind speed readings. Consider renting or buying wind speed monitoring equipment.
  • Learn about lightening and understand standard safe operating protocols when dealing with it. I often say to clients, if you can see it then you need to consider it a risk. A helpful resource that I like to reference is http://www.ec.gc.ca/foudre-lightning/default.asp?lang=En&n=73364E34-1 If you have a tent or other temporary structures including lighting grids, stages, tents or canopies, know what wind speeds or weight loads will compromise these structures. Tent manufacturers or suppliers should be able to provide you with all of the safety specifications you need. If they can’t then perhaps you need to use a different vendor. During periods of unsettled weather you need to monitor & document what stresses or loads were being experienced at that time.
  • Establish a Management ‘chain of command’ and designate the ultimate decision-maker. Where safety is an issue there is no time for wasted time. It needs to be clear with all members of your team who will be making this decision to cancel the show.

While this Blog Post is about weather insurance, you need to be aware that failing to act swiftly and decisively when people’s safety is at risk creates a big liability exposure for you and your company. You can face lawsuits, penalties, or even criminal charges if you allow your crew, talent or your audience to be exposed to unsafe conditions by failing to make a decision and take action.

As a final thought on weather insurance, you need to think about how much money you expect when making your claim with the insurance company. At the time of purchasing your policy you will generally have 2 choices of loss settlements:

  1. Gross Event Revenue: Your insurance claim will include gross box office revenue from all ticket sales. When your event has a high volume of pre-sales, it’s easier to show the insurance company your ticket revenue; however, if you rely on ‘day-of’ sales or have surges in ticket sales the week of the event, then this variable may pose a challenge when making your claim for lost revenue.  Remember it’s not only Producers and insurance companies who watch the weather, so do your ticket buyers. And don’t forget ancillary revenues like merchandising or your food and beverage sales;
  2. Production Expenses: This is probably the more common approach to insuring event cancellations. There are less variables as your claim will be based on the production budget that you submitted with your insurance application. Be sure to update your insurance company if you make any significant changes to your budget so the amount of insurance can be adjusted. The policy will pay your fixed expenses and any expenses that you are contractually obligated to pay. You may want to make allowances for variable expenses that may not be incurred if you cancel your show.

To sum it up, read your policy and understand it. If you have questions, ask them. Work with your broker to determine the amount of insurance you need to cover your potential financial loss and be sure that the policy matches your expectations.

So, here’s to a great season of making memories under the sun and stars.

 

Tags: Rain Insurance, Weather Insurance, Special Event Insurance, event cancellation insurance, concert insurance, Festival Insurance, Ticket Refund Policy, Performance Cancellation Insurance

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