
A Startup Trying to Help Car Dealers Weather Hailstorms - prostoalex
https://www.bloomberg.com/news/articles/2019-11-12/how-one-startup-is-trying-to-help-car-dealers-weather-hailstorms
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pg_bot
Wouldn't installing canopy systems be a more cost efficient solution to this
problem?

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?

~~~
lllr_finger
It's a good idea to solve the problem instead of what the article describes,
but there's an issue with canopies.

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.

~~~
herendin2
Maybe a soft one-inch foam canopy secured closely to the vehicle so wind can't
catch it, with couple straps under the vehicle chassis? Could that work? Could
it be put in place in time?

Alright, that's not really a canopy, more like a shield or body armor.

</edited>

~~~
dsfyu404ed
Just armchair engineering here:

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.

~~~
herendin2
Alright! StormShield, YC S20, is officially launched! First round starts at
$20m!

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?

~~~
kaibee
Where are you storing the mats also? I can't imagine that they'd be small,
even rolled up.

~~~
herendin2
Right, those mats wouldn't be small. They would need lots of storage area.

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?

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neonate
[https://outline.com/psTmaB](https://outline.com/psTmaB)

[https://web.archive.org/web/20191112155656/https://www.bloom...](https://web.archive.org/web/20191112155656/https://www.bloomberg.com/news/articles/2019-11-12/how-
one-startup-is-trying-to-help-car-dealers-weather-hailstorms)

~~~
rudiv
You are a gentleperson and a scholar.

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caseysoftware
Let's apply some old school tech. Forget about insurance and canopies, think
Atari Missile Defense.

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. :)

~~~
benjohnson
Gut reaction: Because Ice/Snow needs an incredible amount of energy to go from
solid to liquid, the lasers would have to be melt-flesh-in-an-instant
powerful. Not so good for the eyes of airplane pilots.

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giarc
I live in a city with big, annual summer hail stones. Many dealerships have
built canopies and it seems to be working.

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.

~~~
travmatt
Dealers can take the money, fix the damage and still sell the car as brand new
- if it hasn’t been titled yet, body work doesn’t need to be disclosed to the
buyer. Dealers usually have in house body shops or relationships with body
shops and pay labor + supplies in the repairs. A bigger issue is the backlog
of work that quickly accumulates in the aftermath of a hailstorm.

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t0ddbonzalez
>"Two years ago he paid about $160,000 to insure $20 million worth of
Cadillacs and Volvos on his lot, where about a third of the inventory is kept
outside. This year he’s paying almost $600,000."

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](http://www.wssl.com/Car_Lot_Canopy.html)

~~~
eunoia
A little weird I can answer this, but I bought my Volvo through this exact
dealership.

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.

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LatteLazy
Am I missing something or will this make no real difference?

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.

~~~
Cthulhu_
Yeah, reading the headline I was suspecting it would be something that would
erect a cheap weather-proof roof or something like that. Why not put on
inflatable car covers when there's bad weather coming up?

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.

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zackbloom
Can anyone help me understand how having this data actually lowers insurance
premiums? The same number of cars are being damaged by the same number of
hailstorms with or without them.

~~~
lordnacho
You want to look up adverse selection and moral hazard in an economics text
about insurance.

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.

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whitebread
I can see where relying on a black box could get really hairy though. What if
it’s a light storm that produces virtually no damage but the device produces a
payout? What if the exact opposite happened? Who is programming and vetting
the code?

~~~
lllr_finger
Great points. Basing a damage payout on anything besides actual damage feels
counter-intuitive.

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.

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viggity
ok, so a canopy is likely to catch the wind and possibly cause additional
damage. But what about a net canopy system. Say, perhaps with 1cm sized holes.
Big enough holes that the wind can't do a ton of damage, but small enough that
the really disastrous hail gets caught and the mid size stuff gets slowed down
as it likely deflects off the net. Anything that gets through undeflected is
unlikely to damage the vehicle.

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auiya
I've never understood why car lots carry so many redundant inventory choices
to just sit around in the elements and rot. It seems immensely wasteful.

~~~
sokoloff
Money is cheap to borrow and selling used cars is fairly profitable. Better to
sit on a car for an extra 6 months, paying 2-3% than lose a sale entirely.

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nulbyte
The startup may be new, but the rain lottery has been around for a while. Are
car dealers really just now getting wind (no pun intended) of it?

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chasingthewind
What if we built solar farms on top of car dealership lots that doubled as a
canopy? Canopy + energy. I wonder if anybody has done that yet.

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seattle_spring
This was basically The Climate Corporations business model to the T, before
they switched to farm insurance. Their name was Weatherbill.

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mhb
I was wondering how they were going to do this with AI and drones...

~~~
netsharc
Drones fly around and use ML to recognise hail, and when it detects hail,
sends a signal to self-driving cars to (cue Monty Python's Holy Grail:) "Run
away! Run away!"

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quantumfoam
Please stop trying to help this industry, let it die.

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heyflyguy
Wohooo! Real people solving real problems.

