In an apparent case of first impression nationwide, Mountain Creek Resort, Inc. has sued its insurance carrier, Everest Indemnity Insurance Company, in an attempt to force the insurer to pay a claim under a weather insurance policy underwritten by the company. Although this lawsuit appears to be the first of its kind anywhere in the United States, the lack of case law is hardly surprising given the way in which weather insurance policies for ski resorts are drafted. In essence, weather insurance is business interruption insurance with a twist. It is designed to protect a ski resort against weather so bad that it would almost certainly prevent the resort from opening in time for the Christmas holiday. Unfortunately for skiers across the country, that was exactly the type of unprecedentedly warm “winter” weather that hit much of the country last December.
Ski resorts all rely on one essential ingredient – snow. Without snow (and lots of it) a resort cannot open. Many ski resorts have bought another insurance policy of sorts by investing heavily in snowmaking to produce artificial snow when Old Man Winter withholds the natural variety. Wyoming’s Grand Targhee resort may claim that their snow comes “from heaven, not hoses,” but for most North American ski resorts, snowmaking is essential to opening in advance of the lucrative Christmas holiday season. Of course, even snowmaking has its limitations. Snowmaking generally requires temperatures of below approximately 28° F.
But what is a resort to do if the weather is both snowless and warm? December 2012 was a (not so) perfect storm of both record warmth and non-existant snowfall across much of the country. Many resorts struggled to open at all because high temperatures prevented them from switching on their snowmaking systems. Enter weather insurance.