Dealerships need to plan for convective storm risks:
More common natural hazards can be as dangerous to your business as larger-scale disasters.
The devastating, heartbreaking results of major wildfires, hurricanes and floods fully warrant all the attention they receive from the public and media, but the scale of those disasters can lead property owners to overlook other natural hazards. While damage from these other hazards may be less widespread on a per-event basis, they can be every bit as calamitous for property owners impacted by them.
For auto dealerships, severe convective storms (SCS) pose one of the most serious risks they face. While hurricanes are also convective storms, climate analyses usually separate them from other SCS events. Also, while the intensity of hurricanes and other tropical cyclones has increased over the last 40 years,1 the number of these events annually is dwarfed by other types of convective storms. On average, two hurricanes make landfall in the U.S. each year2 (2024 was on the high end with five3). Compare that to these more common storms:
Tornadoes: The U.S. has averaged 1,225 twisters annually over the last 30 years (with a whopping 1,735 in 2024).4
Tornadoes: The U.S. has averaged 1,225 twisters annually over the last 30 years (with a whopping 1,735 in 2024).4
Hail: The nation has seen approximately 5,300 hail events annually over a ten-year period.5
Hail: The nation has seen approximately 5,300 hail events annually over a ten-year period.5
Lightning: Lightning strikes in the U.S. an incredible 25 million times a year!6 While the vast majority of those strikes do not impact humans or property, fires caused by lightning account for around $2 billion in losses each year.7
Lightning: Lightning strikes in the U.S. an incredible 25 million times a year!6 While the vast majority of those strikes do not impact humans or property, fires caused by lightning account for around $2 billion in losses each year.7
Water and wind damage from severe storms also create frequent and costly losses. Flooding in the aftermath of a convective storm is not uncommon, especially in flood-prone areas, so ensure your business has a comprehensive flood plan to go along with addressing storm risks.
To put all this in focus, one industry report in 2023 had SCS events claiming seven of the top 10 global insured loss events that year, and six of those were in the U.S.8
While SCS events are a risk many types of businesses face, auto dealerships have a unique challenge in that most have limited indoor space for inventory, so the vast majority of vehicles on-site are outdoors, exposed to the elements. Canopies capable of fully covering outdoor inventory are expensive, so are less commonly used and, though effective during some storm events, they can be susceptible to damage or failure during windstorms or heavy snowfall.
Water and wind damage from severe storms also create frequent and costly losses. Flooding in the aftermath of a convective storm is not uncommon, especially in flood-prone areas, so ensure your business has a comprehensive flood plan to go along with addressing storm risks.
To put all this in focus, one industry report in 2023 had SCS events claiming seven of the top 10 global insured loss events that year, and six of those were in the U.S.8
While SCS events are a risk many types of businesses face, auto dealerships have a unique challenge in that most have limited indoor space for inventory, so the vast majority of vehicles on-site are outdoors, exposed to the elements. Canopies capable of fully covering outdoor inventory are expensive, so are less commonly used and, though effective during some storm events, they can be susceptible to damage or failure during windstorms or heavy snowfall.
Don’t underestimate hail exposures
The average person may view hail as a minor inconvenience, but no business would see a loss of $26 million in that light. That’s approximately what one dealership group experienced in the fall of 2023 when hundreds of vehicles at three of its stores suffered major damage during a supercell storm that produced softball-sized hailstones.
Planning for hail can be tricky. The timing, location, and anticipated impact of hail events can be difficult to forecast, limiting the actions a business can take immediately before a storm’s arrival. Also complicating mitigation is that small hailstones sometimes leave little to no marking on a vehicle, so dealers in areas less prone to severe hail may not see it as a serious threat. But dealers should not be complacent in addressing this exposure.
Consider these facts:
- The average cost of hail damage to a single passenger car is about $2,500.9
- Hailstorms cause 50-80% of thunderstorm-related losses annually.10
- Research indicates the frequency of hailstones 1½ inches or larger will rise by 15% to 75% as our planet warms.10
While softball- and grapefruit-sized hail may grab headlines, average-sized and even smaller hailstones can do real damage. Vehicles are not the only property at risk either. Building rooftops, exterior fixtures, lot surfaces, lighting, and equipment — such as photovoltaic (PV) panels — can also be damaged. Ensure rooftops and PV panels are inspected following any type of convective storm, but especially after hailstorms. If storm damage results in cracks in PV panels, it may lead to a fire hazard.
Damaging hailstorms are more common in Central/Midwest states but as this FEMA map shows, scattered areas in other regions are designated as significant hail risks.
Considering all these factors, there are actions and investments dealerships can take to help prevent or minimize potential losses.
In the same region where that dealership experienced the $26 million loss, a different auto group with extensive hail netting was able to protect much more of their inventory. However, measurable reliability of hail nets is still undetermined,* so they should not be seen as a guaranteed solution.
One Zurich customer in a region regularly hit by hailstorms has successfully mitigated impacts through use of early-warning weather software and by conducting regular hail drills to move vehicles out of harm’s way on short notice. Combining these kinds of practices with roofing overhangs and canopies can help in bolstering property resilience. Also keep in mind the importance of using robust materials appropriate for the hazard during any new construction on your premises.
*At this time, Zurich Resilience Solutions does not have a hail net recommendation.
Property coverage for a volatile climate
In an era of escalating frequency and severity of extreme weather events, having the right coverage and updating it as needed has never been more important. Zurich’s Unicover policy combines key Property & Casualty coverages and value-added services, including comprehensive loss exposure analysis, risk management and loss-control services, and more.
Property coverage for a volatile climate
In an era of escalating frequency and severity of extreme weather events, having the right coverage and updating it as needed has never been more important. Zurich’s Unicover policy combines key Property & Casualty coverages and value-added services, including comprehensive loss exposure analysis, risk management and loss-control services, and more.
Tornadoes and lightning: Where severity surpasses frequency
Fortunately, direct impacts of tornadoes and lightning on dealership property are not as common as hail, but both SCS events can be potentially disastrous.
Tornadoes can level an entire dealership, and those tragedies have occurred, but it does not take that magnitude of damage to halt operations, or even put a dealer’s ability to stay in business in jeopardy. If a significant portion of vehicle inventory is lost or damaged, or service areas and showrooms are not usable for an extended period, business continuity can be hit hard.
Fires resulting from lightning strikes cause up to 5% of all U.S. commercial property insurance claims.11 Vehicles are less likely to cause fires, even if hit directly by lightning. Fuel storage tanks are more often the ignition source, but oil, hydraulic fluid, and other flammable materials used in service areas can also be a lightning fire risk. A lightning protection system is an effective means to limit the risk of fire after lightning strikes.
Emergency response and management plans
No business is immune from the impacts of SCS events, but dealerships can become more resilient with effective mitigation, response and recovery plans. Zurich’s Convective Storm Resource Hub offers broad guidance on these plans with articles covering lightning strikes, hailstorms and tornadoes. (It’s part of our larger Natural Hazards Resource Hub, which also offers similar guidance for hurricanes, wildfires, floods, earthquakes and winter storms.)
Zurich Resilience Solutions (ZRS) can also help your dealership with these plans, and ZRS offers a wide range of services including business continuity and climate-focused tools and strategies. A thorough risk assessment is an essential early step in building resilience. If you are impacted by an SCS event, please reach out to your Zurich representative as soon as possible. We will work with you to help your business recover and safely resume serving your customers.
- Environmental Protection Agency (EPA). “Climate Change Indicators: Tropical Cyclone Activity.” Updated June 2024.
- Ibid.
- National Oceanic and Atmospheric Administration (NOAA). “Atlantic hurricane season races to finish within range of predicted number of named storms.” 25 June 2024.
- National Centers for Environmental Information (NCEI). “Assessing the U.S. Climate in 2024.” 10 January 2025.
- Keegan, Jennifer. “Designing for the Impacts of Very Severe Hail.” Continuing Education Center: Architecture + Construction. August 2024.
- National Weather Service. “Understanding Lightning Science.” Accessed 14 January 2025.
- Insurance Information Institute. “When Lightning Strikes: How Business Can Protect Its Bottom Line.” 24 April 2023.
- Gill, Mehr. “New normal: Secondary perils are reshaping dialogue on cat losses.” Insurance Insider: 1 February 2024.
- Keegan, Matthew. “Hail Damage and Your Car: What’s the Cost?” Auto Trends Magazine. 10 April 2024.
- Bush, Evan. “Hailstones may get bigger as the climate warms — bringing higher insurance costs.” 2 September 2024. NBC News.
- Insurance Information Institute. “Struck by Lightning: How Businesses Can Become More Resilient – Triple-I and LPI.” 29 April 2024.
_____________
4 CONVECTIVE STORMS