April, 2012 Escape Velocity Magazine - Space Coast PCA Home ...

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Insurance for the Unthinkable By Tom Kirk During my physical therapy for action-sport related injuries, my therapist would say, “It’s all fun and games until someone gets hurt.” Running your car in a DE or autocross event is a blast, and I have written several articles for Escape Velocity that have extolled the virtues and benefits of such events. But what if the unthinkable happens? You wreck your car. Or even worse, you cause damage to someone else’s car or cause them bodily injury. Then what? Some of us who have been using our cars in this kind of activity have assumed / hoped this would be covered by our existing traditional auto insurance policies. However, I have had a bad feeling in my gut that maybe it’s not. That bad feeling got a lot worse after my July DE at PBIR. In the course of thirty minutes I saw three cars after they hit the wall. So, I decided to do some research and here is what I found out. One sure way to be covered for damage caused to your car while participating in a DE event is to purchase a stand-alone policy like those offered by Lockton or Leland West. These companies have been vetted by the PCA and offer a discount to PCA members. They sell insurance in single and multiple event packages. Coverage is for an agreed upon value - $50,000 of coverage costs about $300 for a single event. Rates are slightly less expensive per event for a multiple event package. But, they do not cover autocross events. The personal liability you could have for damaging someone else’s car or causing them bodily injury may be covered by the insurance purchased by the track operator and / or event sponsor. K&K Insurance will provide you with a policy to give you coverage for personal liability claims in excess of that provided by the track operator or event sponsor. But, they do not cover autocross events either. Hmmm. I am beginning to see a trend here. What about your regular car insurance policy? The traditional auto insurers I contacted said at best they would cover your first incident on a car they insured, but then would likely cancel your policy. Some policies contain exclusions for the use of your car in a race track environment (DE) or a timed event (autocross). If you have this exclusion in your policy, you are likely not covered at all. There are members of our club who have had representation from their agents or underwriters that they would be covered by their traditional auto insurance policy if they had an incident at a �� 10 volume 6, Issue 1 DE or autocross event. I suggest getting this in writing as none of the carriers I contacted said they would cover such a claim more than once and some not at all (refer to spreadsheet). This dilemma is a good example of the kind of analysis that should be applied to all our risk management decisions. The broad choices for risk management are: 1) avoid the risky activity all together, 2) participate in the activity but retain the risk by self-insuring, or 3) transfer the risk through purchasing insurance. You may be willing to retain (self insure) the risk for damage to your own car. But you may want to transfer the risk of damaging someone else’s car or hurting them physically by purchasing excess liability coverage like that offered by K&K Insurance. There are other asset protection strategies besides insurance that can protect your wealth from law suits, such as asset titling and �� statutory protection. �� Using these techniques can give you another �� layer of protection by �� rendering a liability claim against you to be �� unenforceable. ��

The good news is that if you are concerned that your personal wealth may be exposed to personal liability claims while at a DE event and / or you want to be sure potential damage to your car is covered, there are insurance policies you can purchase for this. The bad news is that this insurance does not appear to cover autocross events, and any coverage from your traditional auto policy appears tenuous at best. High performance driving events are great fun and allow us to experience what our cars are designed to do. Be sure you have affirmatively decided how you are going to manage the risks that could be involved so that if they become a reality, you are adequately prepared. �� volume 6, Issue 1 �� Drive safely . . . and insure wisely 11

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