Drought insurance

The effects of drought are increasingly evident in the Netherlands, impacting both private individuals and businesses. While not all drought-related damage is insurable, there are options available through existing insurance policies to cover certain risks.

Private insurance

For private individuals damage to homes caused by wildfires, which may occur during prolonged dry periods, is generally covered under most standard home insurance policies. This means that damage to the structure of the house, such as fire damage to the roof or exterior walls, is typically reimbursed. Similarly, damage to private vehicles caused by wildfires is covered, provided the vehicle is insured under a comprehensive or all-risk policy. Importantly, such claims do not affect the no-claims bonus, so premiums remain unaffected.

Business insurance

For businesses, similar coverage applies. Damage to commercial buildings and inventory resulting from wildfires is usually insured. This offers some financial protection to business owners in the event of incidents linked to extreme drought. However, there are clear limitations. Damage to crops, for instance, is not covered under standard business insurance policies. Separate agricultural insurance products, such as crop or harvest insurance, are required for this type of risk. Additionally, damage caused by groundwater salinisation—particularly in coastal or estuarine areas—is not covered. This type of damage is considered difficult to insure due to its complex and long-term nature.

Business vehicles are also covered for wildfire damage under comprehensive or all-risk policies, and as with private vehicles, such claims do not impact the no-claims discount.

Broad weather insurance

The Broad Weather Insurance Scheme has been available in the Netherlands since 2010, offering agricultural entrepreneurs the opportunity to insure themselves against damage caused by extreme weather conditions. Previously, such damage was often compensated by the government, but with the introduction of this insurance, the risk has been transferred to the market. The scheme is intended for open field crops and covers damage caused by, among other things, precipitation, drought, frost, snow, hail, and lightning.

To make the insurance more attractive, the Dutch government subsidises up to 60% of the premium. Additionally, the insurance is exempt from insurance tax. Nevertheless, research by Wageningen University & Research and Ecorys shows that the insurance remains too expensive for many farmers. In 2022, only 15% of farms with weather-sensitive crops were insured. Among fruit growers with apples and pears, this percentage was higher, around 60%. According to the research, the insurance would not be viable without the subsidy. For 2025, a subsidy budget of €17.5 million has been made available.

The broad weather insurance thus provides a valuable safety net for farmers, but it also has its limitations. It is not a solution for all types of damage, and affordability remains a key concern.

Although drought is an increasingly pressing risk, insurers primarily focus on the direct and acute consequences, such as fire. Long-term or indirect damage, such as soil subsidence or foundation issues, is often excluded from coverage. This highlights the importance of taking preventive measures and seeking timely advice on supplementary insurance options, especially for businesses operating in vulnerable regions.