LearnPromotions
How do I offer a “refund if it rains” or snow-guarantee promotion?
Pick a weather outcome that can be measured clearly, such as at least 1 inch of snow on Christmas at an agreed weather station. Promise a refund to customers who buy during a set window if that outcome happens. Then decide how to cover the refunds: weather or contingency insurance, your own cash, or event contracts. Use the same station, date and threshold in the customer terms and in the protection, so that both follow the same measurement.
What are your options?
| Option | What it covers | How it pays | What you pay upfront | Main limit |
|---|---|---|---|---|
| Weather or contingency insurance for promotions | Refunds tied to an agreed weather outcome, under the policy’s terms and conditions. | You make a claim. The insurer checks its weather data against the policy, then reimburses your business. | A premium set by the insurer. | The premium isn’t returned. The insurer’s weather source decides, and readings can be disputed. |
| Self-funding | Any weather offer you choose to make. | Your business pays each refund from its own cash. | Nothing, though you may need to hold cash in reserve. | One snowy or rainy day can cost the full value of the eligible sales. |
| Event contracts set up by Crux | Offers tied to a clear, measurable outcome, such as snowfall on an agreed date or the average temperature over a season. | The payout follows the agreed weather measurement. There are no loss adjusters. | An upfront cost that you see before you approve anything. | Not every place or outcome can be covered. Tell us the offer and we’ll confirm what we can protect. |
| Do nothing (run a standard sale instead) | No weather risk from the offer. You know the cost in advance. | No payout. You give up part of the selling price on every eligible order. | Nothing. | The discount costs you on every sale, whatever the weather does. |
How is the weather measured?
Your offer refunds customers when the measured weather meets the agreed terms, whether or not anything is cancelled. The weather is measured at an agreed local weather station. The terms name the station, the date or period, what is measured (snowfall, rainfall or temperature) and the threshold, such as at least 1 inch of snow.
The choice of station matters, because readings can differ from place to place. The National Weather Service calls snowfall one of the most difficult weather elements to measure accurately and consistently. Its observers measure new snowfall to the nearest tenth of an inch.
Two public cases show how this works in practice:
- A named airport station. Art Van Furniture promised refunds to customers in Illinois, Indiana and Ohio if more than 3 inches of snow fell at Chicago’s O’Hare International Airport on Super Bowl Sunday in 2015, Business Insurance reported. It did, and the retailer prepared to refund about $2.4 million to about 3,000 customers once the snowfall was officially certified.
- A disputed reading. In 2020, an Idaho jeweler promised refunds if at least 3 inches of snow fell in Coeur d’Alene on January 11, the Associated Press reported. A local station measured more than 3 inches, but the company that verified snowfall for the insurer first recorded 1.8 inches, and the insurer at first declined the claim, the Bonner County Daily Bee reported. After the store sent more evidence, the reading was revised to at least 3.6 inches, and the refunds went ahead.
How large can the refund be?
That depends on the outcome and the amount you want covered. With Crux, we’ll show you the terms and price before you commit.
The purchase window, the products that count and what you refund set the largest amount your business can owe. In the Idaho case, the refunds came to more than $500,000 for more than 300 customers who bought between November 22 and December 31, the Associated Press reported. Art Van’s refunds included the purchase price, tax and delivery fees, Business Insurance reported.
The larger the promise, the more it costs to cover. For prize indemnity insurance, a law firm that advises on promotions reports premiums of about 2% to 20% of the prize, depending mostly on how likely the event is and how large the prize is. The Idaho jeweler paid a percentage of its sales to insure its promotion.
Is a weather refund offer the same as cancellation insurance?
No. Your offer refunds customers when the measured weather meets the agreed terms, whether or not anything is cancelled. The weather is measured at an agreed local weather station. It doesn’t cover cancellations or other losses.
Event cancellation insurance is a separate product for losses when an event is called off. A weather refund offer pays only on the measured weather, not on what your business lost. If bad weather could also cancel an event you run, a weather refund offer won’t cover that loss. See What is the difference between parametric weather insurance and weather event contracts?
How do event contracts work for a weather offer?
An event contract pays a fixed amount if a stated outcome happens. The Commodity Futures Trading Commission (CFTC) notes that event contracts can be used to offset real-world risks, and gives the example of a citrus farmer who buys a weather event contract to hedge against a sudden freeze.
With Crux, you tell us the offer you want to run. We set up the protection and show you the terms and price. You approve it through an account in your business’s name that we help you open. Your business honors the offer, as with any promotion. If the agreed outcome happens, the contract pays your business under the agreed terms. The payout follows the agreed weather measurement. There are no loss adjusters.
A worked example
Give holiday shoppers a reason to buy now. Offer a refund on holiday jewelry purchases if at least 1 inch of snow falls on Christmas.
| If Christmas brings | Contract payout | What it means |
|---|---|---|
| 0 in. of snow | $0 | No refunds are due. The $40,000 protection cost still applies. |
| 1 in. or more | $500,000 | The contract payout covers your customer refunds. |
Protection cost: $40,000 upfront
Based on $500,000 in eligible jewelry purchases. Illustrative example. Terms and pricing agreed upfront.
What are the limits?
- If the agreed event doesn’t happen, the contract doesn’t pay out, and the upfront cost isn’t returned.
- The agreed event may not match your actual loss. A contract pays on the measured outcome, not on your own costs or sales. This gap is called basis risk.
- The payout follows the contract terms and the agreed measurement source, such as a published price or a named weather station.
- Snow or rain can fall nearby but not at the agreed station. The payout follows the station, not what customers see.
- Your business owes customers the refunds it promises, whatever the protection pays.
When is Crux not a fit?
- Your main risk is an event being cancelled. Event cancellation insurance is built for that.
- The possible refunds are small enough to pay from your own cash.
- No reliable weather station is close enough to measure the weather your customers see.
- You want a fixed, known cost on every sale. A standard sale may fit better.
Related guides
Sources
- Snow Measurement Guidelines for National Weather Service Surface Observing Programs, National Weather Service (NOAA), September 2013.
- Blizzard drops free furniture on lucky shoppers, Business Insurance, February 3, 2015.
- Clark’s declares victory in snow promo dispute, Bonner County Daily Bee (Hagadone News Network), February 12, 2020.
- Settlement means jewelry shop will give refunds to customers, The Associated Press, via Idaho Business Review, February 12, 2020.
- Time to Take Your Shot: Prize Indemnity Insurance Edition, Verrill, November 2, 2017.
- Understanding Prediction Markets and Event Contracts, Commodity Futures Trading Commission, October 2026.
This guide is general education. It is not an offer, and it is not financial, legal or tax advice. Terms, prices and availability depend on the contract.