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

Alex C. alexanderanson
Wed Oct 22 17:18:25 CEST 2008

Just playing devils advocate here, but I had another thought about all of
this as I was falling asleep last night.  What about this example:

A guy goes out and buys a Ferrari F355, always wanted one and had the money
to do it.  He's always wanted to push the limits of the car a bit, but knows
that the safest environment to do that at is a track day or FATT.  He goes
to the track and has a minor issue - Lets say he bakes way to late into turn
one, loses control (in a straight line) and takes the lower fascia off the
car and spears the tire wall with just enough force that it looks like he
did about a 15 mph collision with a car at a stop light.  Now, this guy did
the right thing - he didn't go out and risk his life and others by playing
on the toll road at 315 in the morning one Saturday to test his car, and
while his car is fixable, he still has to pay.  Its just Ironic to me,
because that's what these cars are here for  - to go fast and to have fun
(and with some of them, to look good while doing it).  If this wasn't to be
the case, we would still be using Hitler's idea of the "peoples car" and all
of us would be driving around in black VW bugs.  I guess what I'm saying is
that people that go to the track to do it the right way shouldn't be

Now I'm seriously rethinking wanting to take my 350Z out to the track,
although I have wanted to for some time.  Its not like I wanted to do it
multiple times and beat the heck out of it, but I really would have loved to
hear that thing whine down the front straight going into turn one while
looking at the speedo to see how fast I was able to take it. 


- Alex 


-----Original Message-----
From: spec7-bounces at specrx7.com [mailto:spec7-bounces at specrx7.com] On Behalf
Of Mr. Ryan George McGovern
Sent: Wednesday, October 22, 2008 8:54 AM
To: Spec RX-7
Subject: Re: (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 Virginia. 


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

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
rke_ag/index.html?inline=nyt-org>  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
iew.aspx?inline=nyt-classifier>  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
px?inline=nyt-classifier> , 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

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
verview.aspx?inline=nyt-classifier>  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."


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