In 2015 at his three dealerships in the heart of Alberta’s Hailstorm Alley, Garrett Scott felt Mother Nature’s wrath: 600 vehicles damaged with an average claim of $11,000.
“We got clobbered in ’15,” the Red Deer dealer principal said. “Even with the insurance, it still cost me money.”
Scott owns Kipp Scott GMC and Scott Subaru, and in 2015 he also owned a Nissan store, all on the same block. He said insurance repaired all the cars, but all were depreciated by the event.
“The hard part is just the value it knocks the vehicles down, about $5,000. It shows up in the Carfax report,” he said. “It’s a bit of a double-edge sword, because when we take in a car on trade, we devalue it when it’s hail damaged, too.
Hailstorm Alley roughly follows a 240-kilometre line from High River north through Calgary, Red Deer and Lacombe, and 90 kilometres west to Rocky Mountain House.
HAIL COVERAGE IS SPOTTY
Scott said he’s fortunate there are still three insurance dealers in Red Deer willing to underwrite hail coverage, but auto dealers in north Calgary and Airdrie aren’t as lucky, either denied coverage or paying annual premiums as high as $500,000.
With weather patterns changing, more severe storms can be expected and dealers with extensive inventory that must be stored outside are vulnerable. However, there are new measures available to prevent, or at least mitigate, hail damage.
Scott has considered a steel netting system that can be deployed when weather threatens, or shelters covered in solar panels.
The latter is under consideration for a new building at his Subaru store, a “high performance” energy-efficient passive-house design that he estimates will cost about $200 a year in energy.
He said the solar-panel approach would cost $850,000 to install and would be a natural fit with the passive-house building standard.
Trey Jarrard is co-founder and CEO of Renewvia, in Atlanta, Ga., which is outfitting dealerships in the United States with hail-protection shelters that he says pay for themselves in five years.
For one client, whose installation was under way in early May, any energy savings were just gravy. “He told me, ‘I have $4 million in inventory, and if we have just one event, this has paid for itself.’”
The solar generation of such systems will depend on latitude, he said, which affects both the angle and duration of sunshine. Based on testing in Colorado, every 100 parking spots generate a peak 275 kilowatts of electricity, or about 387,000 kilowatt-hours. He said a 500-space system would generate sufficient energy to cover about 80 per cent of a dealership’s electrical needs.
Jarrard said in the United States, most customers use two-way metering, which allows them to sell excess electricity to the utility. The net effect is using the electrical grid as a battery, effectively selling excess electricity and then buying it back when needed.
South of the border, hail damage is a US $8-billion to $10-billion cost to the industry. Canadian statistics are not available, the Insurance Bureau of Canada said. Private insurers in Canada consider such numbers proprietary, so only anecdotal information is generally available.
