“My first HPDE event was in 2002 and I was immediately hooked. Like many, I was concerned about what would happen to my car if I was unfortunate and had an incident at the event,” says Ryan Staub.
Track Day Insurance: Do You Need It? How to Get It.
By Ziva Allen
So what is the deal with insurance coverage for track days? Back when my husband and I first started discussing my joining him at track day events, my first question was, “what happens if our car crashes on the track?” I love our Car! He shrugged. I immediately called our insurance agent. At that time we were insured with State Farm. No longer. My conversation with our State Farm agent went something like this:
“I am interested in taking my car to an HPDE event. Will my car be insured?”
“Will you be driving at high speeds?”
“Yes. But for driver education purposes only.”
“Will you be racing anyone?”
“Will you be timed?”
“But you will be driving fast on a track?”
Our agent explained to me that one of the differences between State Farm and most other insurance companies is that State Farm has zero exclusions written into their policies. Which means that if you crash your car, no matter what the circumstances (or where), they will cover you. And if it is on a race track, after they cover you, they will drop you. And then see how easy it will be to get insured after that and what kind of increase you’ll be slapped with. We purchase our insurance elsewhere now.
Subsequent to my conversation with the agent and upon researching this further for this article, I have found that there are many exclusions in State Farm’s policy and there is one specifically excluding coverage while “on a track designed primarily for racing or high-speed driving.’ Beware, as there is a lot of mis-information out there from bad or uninformed insurance agents.
When investigating track day insurance, I have found that many track day sponsors will offer insurance. However, this type of insurance will not cover the vehicle. Oftentimes people confuse collision insurance discussed in this article with insurance offered by sponsors. The insurance offered by sponsors is solely for liability and injury, but does not cover damage to the car. For that, you must purchase insurance separately.
Insurance coverage for track days has evolved over the years. There was a time when track day use sort of fell through the coverage loophole in that insurance companies were only flagging those cars used at timed events, but covering all others, which would be ours. They’ve since wizened up and began including exclusions for track day use into their policies, whether timed or not. However, you can purchase track day coverage through some specialty insurance programs such as Lockton Motorsports. I asked Ryan Staub of Lockton Motorsports how he first recognized there was a market for this type of specialty insurance. Says Staub, “My first HPDE event was in 2002 and I was immediately hooked. Like many, I was concerned about what would happen to my car if I was unfortunate and had an incident at the event.” Staub began participating in HPDE events and autocross in 2002, started Club Racing with BMW CCA and SCCA in 2006, and is the Chief Instructor for the Kansas City Chapter of BMW CCA. He also instructs regularly for BMW CCA, PCA, Audi Club NA, and many others. Staub began to research and talk to event organizers and learned that at that time his street insurance policy would provide coverage if he had an accident. He explains, “At that time, most policies had a ‘timed or competition event’ exclusion. Since HPDEs are non-competitive and educational, most policies would provide coverage if you had an incident at an event.”
“Fast forward to 2005 and a couple of my good friends had incidents at HPDE events that were denied by their street insurance. Over a 3-4 year period, the vast majority of insurance companies started changing their exclusions to specifically take coverage away while an individual is: ‘at a racetrack facility,’ ‘participating in a performance driving event,’ or ‘operating your vehicle on a surface used for racing’. After seeing a couple specialty insurers enter the HPDE insurance market and fail quickly, I was determined to build a program that would benefit my HPDE friends and be sustainable and reliable. As a HPDE enthusiast, I love that our program plays a major role in keeping people involved and attracting new people to this hobby; without insurance, many individuals would not participate in HPDEs.”
But being a specialty product, is it a viable one? Are there enough customers to keep it profitable? Staub says that overtime Lockton has “grown to a point where our program is both stable and viable. As one of the most experienced program administrators in the country, we recognize the need to maintain a healthy program and we have the experience and resources necessary to do that. We consistently evaluate the program and make adjustments as necessary to maintain a healthy underwriting relationship and ensure that we have an insurance solution for the HPDE community.”
In fact, Staub has noticed that since Lockton launched its program back in 2008, “we have seen growth of track day enthusiasts. 2008 seemed to be the low point – with a difficult economy and a lot of financial uncertainty, I think a lot of people either didn’t have money to spend on their hobbies or they minimized their spending. Since 2010, the HPDE/track day community and activity level has been slowly growing.” Staub sees higher attendance numbers at events which he attributes to “new participants entering the hobby and active participants becoming more active.”
I asked Staub to explain to me a little bit about how track day policies are structured and whether there are different levels and options. “Generally speaking, the policy covers physical damage to your car that occurs at a racetrack during a covered HPDE/track day event. Due to broad exclusions on some street policies (i.e. “racetrack facility” exclusions), we made sure that our policy not only covers our customers’ cars on the track but also provides coverage in the paddock. When building this program, I made sure to negotiate a lot of features that would be important and helpful to my friends involved in this hobby. We offer an ‘agreed value’ policy and we allow our customers to insure modifications. Our customers are allowed to add a 2nd driver at no additional charge, and the car is automatically covered if your HPDE Instructor is driving your car. Our program was built by enthusiasts for enthusiasts. Because many enthusiasts only do a few events each year, we offer single-event policies that have been very popular with the community. For the very active enthusiasts, we offer a multi-event/annual policy with options to cover 6-events, 9-events, 12-events, or 15-events. Since risk tolerance varies from person to person, we also offer two different deductible options. Our policies are sold online and can be purchased in 5 minutes or less.”
When claims are made for on-track crashes, I have learned that the loss is usually a significant and total loss. Staub agreed with this assessment and even believes it is getting slightly worse over time. He goes on to explain, “When I started doing HPDEs in 2002, a car with 250hp was considered fast. Now that 400hp+ is becoming the norm, speeds have increased and when a car is involved in an incident it typically contacts walls/barriers at a much higher speed. In addition to that, manufacturers are using more and more exotic materials ($$$) to minimize weight in sports cars. The combination of these two factors are slowly making the average cost of damage increase for HPDE incidents.” Even so, those that are properly insured tend to get back out there within one to two months following an accident, thanks to the insurance coverage, says Staub.
When budgeting your expenses dedicated to HPDE events, if you haven’t already, you might consider protecting the one thing most necessary for track day participation. In addition to Lockton Motorsports, there are a handful of other insurance companies who offer on-track coverage. If you are considering purchasing HPDE insurance, check out Lockton Motorsports online or speak to your agent about Lockton and the handful of other companies who sell this specialty insurance.