Dec
31
2006
Snow Insurance
Author: balveyRisk management at the municipal level includes analyzing the costs associated with severe weather. Because there is insurance available for just about everything in this world, cities can buy policies that provide coverage for public works department cost overruns due to weather. This time of the year, one of the most important policy clauses is insurance for snow removal coverage whenever the municipality overspends its budget for removing snow or under-anticipates the total amount of snowfall during a certain winter period.
Last year, the Midwestern and Northeastern states were beset with an overabundance of snowfall which closed airports and clogged up municipal streets and state thoroughfares. While mild winters seem to be an ongoing byproduct of global warming, severe storms can test a town’s budget nonetheless. A policy for excessive snowfall varies in cost, depending on the community’s budget for snow removal and location of the community.
Snowfall coverage is applied in this fashion. The insured municipality selects a dollar limit of coverage per storm. The total available under the entire policy is 10 times the limit per storm. Next the insurer determines the average snowfall per storm for the community. The insurance coverage is tripped every time the amount of snowfall in any one storm (a 24-hour period) exceeds the amount declared in the policy.
As an example, a community that has an average snowfall of four inches per storm chooses a $15,000 limit each time it snows five inches or more. If there are five such storms during the policy period, the municipality can receive as much as $75,000, less any deductible. If you’re the Buffalo city manager, a policy like this is going to be a priority. In places like Missouri, which was hammered in December with snow and ice, the risk is questionable. What is not questionable is the cost of overtime and the maintenance of heavy duty vehicles involved in keeping the streets open during a rough stretch of winter.
