A Startup Trying to Help Car Dealers Weather Hailstorms
bloomberg.com
bloomberg.com
Let's do some math, The dealership listed in the article (Rickenbaugh Automotive Group) currently has ~536 cars listed on their website(s) for sale. I'm going to assume that this number is a little lower than what is actually in inventory given that there are trade-ins and they probably don't restock inventory during the middle of the month. So I will round up to 600 cars to give them wiggle room for expansion and sales. Given their insurance policy is costing them $600k per year we are approximately spending $1,000 per car per year for insurance.
There seem to be companies that make canopies for this exact situation. While I can't find pricing I would have to imagine that the ROI looks pretty attractive given the sheer cost of their insurance and the simplicity of the materials involved in building a canopy. (metal beams and mesh netting)
Why not just solve the problem entirely instead of coming up with an exotic insurance policy?
The types of storms that produce hail, usually supercellular, often have damaging straight-line winds. While out storm chasing, I've seen several gas station canopies collapse from strong winds - I'm struggling to think of a canopy solution that wouldn't have the risk of collapse.
Also, I'm imagining canopies getting in the way of 1) making inventory highly visible (both from the road and other parts of the lot) and 2) making it harder to pack cars really close together because you have to deal with all the canopy supports.
Just musings...
A canopy that isn't solid and allows the wind to pass through. A mesh or screen should do the job. The opening size can also be larger so perhaps even netting with openings upward of a few cm could work.
The forward flank downdraft or rear inflow jet of a linear convective system/bow echo can see winds of 50mph+ rather commonly. The more interesting part IMO, is the rear flank downdraft, because it is closely related to tornadogenesis and can also have winds up to 100mph. The RFD is co-located with the hail core in a supercell, so some hail will get caught up in this wind that exists even when there isn't a tornado.
Now terminal velocity of your average baseball-sized hail is roughly 100mph, but you can imagine with 100mph horizontal winds that there can be a strong non-vertical component to the hail in certain portions of the storm. I've personally been hit by smaller 1-2" hail that is traveling nearly horizontal, and I've seen evidence of larger hail impacting at the same angle.
It's a safe assumption that the larger the hail is the more damaging it is, but not all hail is created equal! Depending on how accretion happens and the warmth of the atmosphere, you can have very hard 1" hail that damages cars, and very soft 2.5" hail that doesn't damage cars. My personal rule of thumb is that you need to be wary of anything 1.75"/golf ball or larger.
Alright, that's not really a canopy, more like a shield or body armor.
</edited>
It wouldn't be hard to make some thick foam mats with straps sewn to them that can be rolled out and fastened to cars in under a minute each. Maybe toss in a couple plastic strips to make it unroll itself like the reverse of a slap koozie. Weather forecasting is pretty good. It's not like you don't have decent warning. You can cover everything out back and leave the cars that are on display out front uncovered until the last minute.
Tossing a mat over a high roof van or large pickup wouldn't be easy but the hordes of crossovers could be well protected.
OK, maybe it does almost sound feasible, but I wonder what someone with outdoor car dealership experience would say? Is this a practical idea? How often do you need to unroll those mats?
Maybe a few be stored, rolled up, under vehicles at the back of the lot that are less likely to be moved?
And the rest could be stored indoors. They shouldn't be heavy, so maybe they can be stashed in the ceiling, or somewhere high up out of sight?
You could even offer a deluxe version with a CO2 cartridge.
You made a good point, anyway. Foam could absorb water, and air, and get dirty, and smell bad.
I was musing at the time why someone on Amazon wasn't selling some kind of hail protection padded car cover.
I have tons of great ideas, but I never connect on them. Then I watch other people make a fortune off that same idea. Shrug...
The article should have pointed out to the reader that this should bring premiums down in areas that have so little chance of hail that it is not worth building physical protection. Right now, the data is not granular enough so insurance companies spread the cost over areas that they shouldn't.
A swarm of small pulse lasers surrounding lots, along poles on the inside, and generally build a defense network that takes out hail on the way down. Design it after Israel's Iron Dome. Sure, the targets are smaller, in a adversarial environment, and don't have heat signatures but it would be amazing. :)
I also have friends in the auto industry and the interesting thing is they said hail isn't the worst thing, they actually profit quite a bit. Basically insurance will appraise the new value of each car and write a cheque (ex. $10k for each car). The dealership can still sell the car as "hail damaged" and offer the buyer a $5k discount. Buyer thinks they are getting a great deal, the car just has some dimples, but $5k is $5k right. The deal then makes an additional $5k off the car. However this breaks down if hail insurance premiums are going up.
Surely a dealer could install some hail-proof canopies for a lot less than $600,000?
Something like this perhaps? http://www.wssl.com/Car_Lot_Canopy.html
They have a very space constrained layout especially for inventory display, as their dealership is at the junction of some odd angled non grid streets (namely Speer).
I.e they’re an urban dealership that just doesn’t the have room.
Ultimately if there is a hailstorm then the insurer has to pay out, premiums have to cover that. Measuring whether there was a hailstorm or not might help to prevent fraud. Fixed payouts would help to reduce the cost of accessing damage. But neither change the core maths here: more, heavier hail means more payouts, means higher premiums.
Or invest in a bigger showroom or a roof without windows; if the insurance premium for not having that is 100's of K's a year then it makes financial sense to invest in something like that.
Basically if you have some mixed population where some are lower risk and some higher, and they're separable, the low risk people will decide the insurance is not worth the premium. That leaves the higher risk population on the books, which will cause problems for the insurer of they had assumed they'd get a nice sample of the population.
So maybe some car dealers are aware of possible hail storms in their region but for some reason their particular shop is protected. Maybe by hills that drop the hail on the other side or something that which gross aggregates might miss.
Moral hazard plays in as well. If you're protected maybe you place more cars outdoors than you would otherwise, raising the costs to the insurer.
Insurance companies already know where heavy hail falls - there are several companies with products that correlate hail reports with the dual-pol radar Hydrometeor Classification Algorithm product.
Any sort of black box won't be able to assess the hardness of hail, the distribution of hail or how the wind is driving it. I've seen damage from dense, hard 1" hail cores, and I've driven through softball hail thrown out the back of a storm without any damage.