(Actually, hail claims have been going up: http://www.claimsjournal.com/news/national/2014/05/02/248354... )

Of course they can cover. It's a matter of how much you pay for your insurance, and to a large degree how much they company saves up. In the case of a hailstorm it's not because they cannot pay, it's because they don't have proper savings to cover it. A hailstorm with fist size hails is not going to cover the entirety of California, so it's very manageable.

An example, when a fireworks factory in Denmark exploded the total claim of material damage was 750 million DKK (113 million USD). The vast majority was covered by insurance companies, even though that would fall under correlated risks. One of the way insurance companies handle this is to have a joint fund with other insurance companies (I think this is government mandated), where they can withdraw in cases like this.

Also, it's not safe to drive during a massive hailstorm. You should be pulled over anyway.