(MARRS-RX7) FW: Car Insurance May Not Cover You at the Track

Wed Oct 22 02:53:31 CEST 2008

what insurance are most running on thier cars

Danny Matula
AMC Fabricators, llc
ph# 540 295 7694 
Fax# 1-800-763-1731

Date: Tue, 21 Oct 2008 12:13:16 -0400
From: AGervais at newcorp.com
To: spec7 at specrx7.com
Subject: (MARRS-RX7) FW: Car Insurance May Not Cover You at the Track


Interesting.  Not sure of the
source of this story, it arrived as an E-mail..  But apparently the old FATT party
line of ?You?re insurance will cover you because this is a driving school? may
no longer be true.  -AG


Car Insurance May Not Cover You at the Track 


Shelby American Automobile Club

CHECK THE POLICY Some insurers no longer
cover drivers who participate in track events like these in Utah, above, and


Published: October 17, 2008 

IT?S no secret that insurance companies don?t like the people they cover to
drive fast. So it shouldn?t be a surprise that the industry has been removing a
policy loophole that insured drivers on racetracks.

That has left weekend warriors uninsured if they
participate in track days or attend high-performance driving schools. Jerry
Kunzman, executive director of the National Auto Sport Association, said that
participation at its track events had jumped fivefold since 2003 and that many
of those drivers had no idea they were not covered..

?Maybe 25 or 30 percent have done the research, the middle third just
assumes they are covered, and the top third just don?t have a clue,? he said.

What?s happened is that many insurers have redefined the term ?racing.?
Policies have long had exclusions for racing, but it was defined as a ?timed

High-performance driver education neatly avoided that definition. Although
cars may take laps at top speed, they aren?t timed.

At many schools, including those held by the Porsche Club of America and the
BMW Car Club of America, students are
required to attend classroom sessions. On the track, drivers get one-on-one
tutoring from an instructor under controlled conditions. The cars are generally
sent around the track in small groups with passing limited to straightaways ?
and only when the driver being passed signals that doing so is all right. So
because these runs were not timed, many drivers were covered by their normal
automobile policies. 

That loophole did not escape the attention of insurers ? some clubs
practically taunted them in their newsletters. ?There was a period of time when
clubs were openly flouting this. ?Take driver?s education and your insurance
will cover you. Drive your car the way it was meant to be driven,?? said McKeel
Hagerty, chief executive of the Hagerty Insurance Agency, an automotive
specialty insurer.

So the industry began to add a new exclusion to its policies in the late
1990s, with most companies adding it within the last few years. Instead of
trying to define racing, policies exclude damage at any location that could
accommodate racing, timed or not. That eliminated coverage during
high-performance driving schools and track days.

Chris Soignier of Austin, Tex., will not be taking his Porsche Cayman to the track, which he had done with his previous
cars. When he read his renewal notice from Progressive Insurance last November,
he found that the Cayman was not covered on the track.

?I don?t feel like I?m that much at risk, but the magnitude of the loss is
too great for me to be comfortable,? he said.

Not all drivers got word of the change, or, like Mr. Soignier, read their
new policy. Also, because insurance is regulated by the state, exemptions in
Michigan, for example, may differ from those in California.

To make matters worse, asking insurers to clarify coverage could result in a
nasty surprise. Mike Barr, a dentist from Palm Beach, Fla., called the insurer
USAA to see if his policy covered his Subaru WRX STi on the track.

?Some months later I got a letter from USAA saying they were going to
discontinue coverage,? he said.? ?They dropped me because I asked about?
performance driving schools. ?They confirmed it verbally when I called to
inquire further.? A USAA spokesman said Dr. Barr was canceled for ?several
reasons,? but would not elaborate.

Some drivers reduce their exposure by getting an inexpensive track car. As
an insurance underwriter for Chubb insurance in Whitehouse Station, N.J., you?d
think Eugene Lim would be averse to risk, and he is. But he is also a driving
aficionado who is qualified as a high-performance driving instructor. After 40
track days in his Acura NSX, Mr. Lim discovered he was uninsured on the track. So he
bought what is essentially a disposable car. ?When I got really serious, I
bought a turbo Miata. Six thousand dollars would still hurt, but it?s not my
NSX,? which was worth about $45,000.

Such a growing market would seem to be an opportunity ? and it is. Specialty
insurers have tried offering high-performance-school insurance.

?It was a difficult program,? said Laura Bergan, vice president for
marketing at American Collectors Insurance. ?Difficult as in, we were paying a
lot of claims.? American phased out its performance-school coverage last year.

American, like other insurers who have tried the insurance, ran into a
series of hurdles. To attract a pool of clients and spread risk, the policies
were priced low ? an average of $500 to $750 a year, Ms. Bergan said. The
number of claims wasn?t a problem, but the cost of the claims was. ?Most of the
claims were total losses,? she said.

Other companies tried higher pricing, but found few takers.

Cost is not the only barrier. Many drivers don?t think they?ll crash, and
unlike regular car insurance, track insurance is not mandated by states.
Drivers often confuse track insurance provided by clubs, which in most cases
covers only liability and injury, with collision insurance.

The growing market still attracts new insurers. Laura Hauenstein, president
of the WSIB Insurance Agency of Jackson, Mich., which specializes in
motorsports coverage, was initially against offering performance-school
insurance. She changed her mind three years ago when WSIB found a way to
streamline the underwriting process.

?I would say we had 100, the first year or two, but this year we put ads in
Porsche Panorama,? she said. ?My numbers might be off ? it could be 500.?

The WSIB premium is 3 percent of the car?s value. The deductible is $2,500,
or 4 percent of the car?s value, whichever is greater. So an experienced driver
on an approved track with a $100,000 Porsche 911 Carrera S would pay $3,000 to cover 10 events in one
year, with a deductible of $4,000. Other companies, like K & K Insurance
Group of Fort Wayne, Ind., and Motorsports Insurance Services of Los Angeles,
have begun to offer the insurance, but use a more complex formula to price it.

Gene Cottingham, former chief financial officer of Champ Car World Series,
which held open-wheel races, knows what track accidents can cost. So he insured
his modified 2006 Mustang GT pace car for $40,000. The $1,200 premium seemed
high at first, but ?when you spread that cost over five to six weekends, it?s
really not that much money,? he said.

?The purpose of insurance for me,? he added, ?is peace of mind.?


When your life is on the go?take your life with you.
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