Fixed Ops Journal - April 2021 - F25

FIXED OPS JOURNAL

Hail risks increase, so Denver
group develops netting system

INSURANCE
RIDERS ON THE STORM

ALEX KWANTEN
foj@autonews.com

f the 12 costliest hailstorms in Colorado history, nine have taken
place since 2008. Caught directly
in the crosshairs of No. 8 on the list
- a June 2018 storm that resulted in $276.4
million in damages - was Denver-based
Schomp Automotive Group.
" That month we purchased three new dealerships on the east side of Denver, and within
a 10-day period they were hit with hail three
times, " says Michael Dunlap, vice president of
business development at Schomp, which operates nine dealerships in the Denver area.
" We had cars that were damaged, repaired,
put back onto the front line and then damaged again. "
The group's 2018 hail losses totaled nearly
$200,000, prompting Schomp to start looking
at protective solutions.
That same year, insurers began backing
away from offering Dealer Open Lot coverage
because of the increasing severity of hail damage. Zurich NA also decided not to renew
hundreds of policies in hail-prone areas in
2018 citing " catastrophic losses, " though it
does continue to provide coverage in many
states.
Other insurers have continued to drop the
coverage, says Kevin Gast, Dealer Open Lot
program manager at Ryan Specialty Group, an
insurance broker. According to Gast, up to 70
percent of carriers have exited the space.
" Hail's getting bigger and cars are being
made with more lightweight parts, so the cost
per car to fix has gone up, " Gast says. " Even on
the East Coast and outside the hail belt, there's
more damage. But in hail alley, deductibles
have gone from $500 a car to $3,500 with no
aggregate, so dealers in places like Colorado
are really getting hit hard. "
From 2015 to 2021, Schomp's premiums for
Dealer Open Lot coverage went from $28,000
a month to $141,000 - a nearly 400 percent
increase, Dunlap says.
In response, the group developed " Hail No, "

Schomp Automotive
Group's Hail No system
uses translucent high-strength
netting that protects against hail
while keeping the vehicles visible
to customers.

a system that uses translucent high-strength
netting mounted between metal posts driven
into the ground to shield vehicles from the
damage.
Unlike hard canopy solutions or large tents,
the system allows inventory to be seen by customers and staff and it can be easily taken
down and stored during winter months, Dunlap says. If the netting does get snowed on, it's
designed to flex under the weight of one foot
of snow.
" We tested the system at our dealer campus
in Highlands Ranch, and then refined it after
seeing it in action, " Dunlap says.
The group plans to install the system at all of
its locations.
" We're getting about a 50 percent reduction
on our insurance premium for the inventory

that's covered, which should pay for the system within a couple of years, " Dunlap says.
Schomp is in talks with other dealers about
installing Hail No.
The system costs about $1,400 to $1,750 per
vehicle stall - or about $8.25 to $10.30 per
square foot.
" Most of the cost is in the steel support columns, " Dunlap says, noting the installation of
the columns varies depending on complexity
of a site.
Hail No isn't the only netting-and-post solution on the market. British Columbia-based
WeatherSolve, which specializes in weather
barrier solutions, offers a similar product
called Hail Canopy.
see NETTING, Page 26

APRIL 2021

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Fixed Ops Journal - April 2021

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