DEFINITION of 'Weather Insurance'

A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable temperatures or other adverse, measurable weather conditions. Weather insurance is used to insure an expensive event that could be ruined by bad weather, like an outdoor wedding or an outdoor film production.

BREAKING DOWN 'Weather Insurance'

The premium for weather insurance is determined based on location and time of year, in other words, based on the likelihood of the insured weather event occurring and the amount of potential loss. Weather insurance is highly customizable, the insured can choose, for example, the number of days, weather events and severity of weather that will be covered by the policy.

RELATED TERMS
  1. Weather Future

    A type of weather derivative that obligates the buyer to purchase ...
  2. Weather Derivative

    An instrument used by companies to hedge against the risk of ...
  3. Personal Lines Insurance

    Property and casualty insurance products for individuals that ...
  4. Insurance Industry ETF

    A sector-following fund that invests primarily in insurance companies, ...
  5. Insurance Premium

    The amount of money that an individual or business must pay for ...
  6. Life Insurance

    A protection against the loss of income that would result if ...
Related Articles
  1. Trading

    Any Way The Wind Blows, You Can Trade The Weather

    You can trade on anything these days, including the weather.
  2. Trading

    Introduction To Weather Derivatives

    Learn about a financial instrument that makes temperature a tradable commodity.
  3. Investing

    IBM Subsidiary to Relocate HQ to Atlanta (IBM)

    International Business Machines Corp. (IBM) subsidiary The Weather Company will move its headquarters to Atlanta.
  4. Investing

    Does Weather Affect the Stock Market?

    Find out if the weather can change the stock market, and why economists and meteorologists will probably always struggle to know the answer.
  5. Investing

    5 Businesses That Rise As The Temperature Falls

    Not many people welcome the snow and cold, but these businesses depend on it to increase sales and profitability.
  6. Trading

    An Overview of Weather Derivatives

    Investopedia explains: Weather derivatives allow businesses to safeguard against unusual temperatures or levels of precipitation that may adversely affect financial performance.
  7. Investing

    IBM Spends $2 Billion to Predict the Weather

    IBM (NYSE: IBM) announced a deal this week to pay over $2 billion to acquire the digital and data assets of Weather Company. However, the deal would reportedly exclude The Weather Channel cable ...
  8. Investing

    6 Stocks That Benefit from a Weather Event

    Discover companies that enjoy an increase in business as a result of a major weather event and how this translates into higher stock values.
  9. Investing

    5 Tips on Last-Minute Home Winterization

    To ensure your home is in the best shape to survive the chilly weather ahead, here are five, last-minute tips to help winterize your home.
  10. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
RELATED FAQS
  1. How does weather impact the share prices of utility stocks?

    Learn how investing in the utilities sector can provide stability to a portfolio; understand the factors that impact stock ... Read Answer >>
  2. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  3. What impact does weather have on my investment in the airline industry?

    Learn more about how adverse weather conditions impact airlines and how investors in the airlines industry may suffer losses ... Read Answer >>
  4. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  5. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  6. What caused the European / Eurozone debt crisis?

    Understand how insurance companies price insurance premiums, and learn the importance of data and statistics in the insurance ... Read Answer >>
Hot Definitions
  1. Co-pay

    A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such ...
  2. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  3. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  4. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  5. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  6. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
Trading Center