Of 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," 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.