Lockton Motorsports Track Insurance

Ryan Staub - VP/Producer for Lockton Affinity / Lockton Motorsports

Sales/business development professional with 10 years experience in the financial services industry. Producer in Lockton Affinity’s Overland Park, KS office, responsible for managing client relationships, service delivery, and developing new business opportunities.

Contact: Ryan Staub at RStaub@locktonaffinity.com | N/A | Visit Online!

       

**Note: This episode was inspired by true events in 2018; Check out the original article by Brad N about John R and Erin K – and their experience with Track Insurance.

• How Lockton first formed their HPDE Insurance solution and Ryan’s involvement in HPDEs since 2002.

• How does someone sign up for Track Insurance? What are the costs/plans? Are there packages? How do you determine “declared value?”

• What does the policy cover? The car, the driver, or both?

• What about an incident in the paddock? What about in transit? Is the trailer covered? What if something happens while the car is on the trailer?

• How much personal liability insurance is provided when track insurance for a vehicle is purchased?

• Common types of incidents and claims – what are the common causes? How does the claims process work?

• Q&A session with questions from our GTM members and more!

and much, much more!

[00:00:00] Hello and welcome to the Gran Touring Motor Sports Podcast Break Fix, where we’re always fixing the break into something motor sports related.

Safety is always paramount in any sport, and motorsport is no exception. However, for many of us, track insurance is still a hit or miss idea. There are a number of us who drive cars cheap enough that we feel we can take the risk, and then there are others who drive expensive cars that would financially and emotionally tear them apart.

If something bad were to happen, some of our more senior members will tell you. Don’t drive something on track that you can’t afford to walk away from. Well, not everyone shares his viewpoint. That’s right. Brad Insurance is a funny thing, and in most cases it’s a necessary evil. It’s something that we all pay for, but we also hope to never have to use.

And in the world of motorsports, especially high performance driver’s education, H P D E, there are few companies out there that may offer track insurance. But on this episode, we’re gonna focus on one [00:01:00] specific company, Lockton Motorsports, the original and largest track insurance provider in the United States.

And joining us tonight from Lockton is Ryan Staub to educate us on all the intricacies and details surrounding track day insurance. And as always, I’m your host Brad. And I’m Eric. So let’s roll. Welcome to Break Fix, Ryan. Thanks guys. Glad to be here. Let’s talk about how you’re involved in Motorsports, what your background is, and kind of lay it out for folks if we get to know you a little bit better.

Yeah, sounds good. Uh, so I’d say, uh, you know, the, the sickness has always been there. Uh, you know, the love for cars, the, you know, desire to do things fast in cars. And, gosh, I was 22 years old, got my first, uh, I’d say kind of real performance car at E 36 M three. Uh, that would’ve been 2002. You know, my young kid stumbled into a, uh, BMW car club gathering at my, uh, [00:02:00] kind of in my area in Kansas City, and a whole bunch of these guys started talking about these H P D E Track Day events, which I had never heard of before.

You know, the, the hook, you know, went in pretty hard at that point. Heard a little bit more about this stuff and decided to, uh, to, to really get engaged and involved in it. So it was a slippery slope from that point. I, I think I did my first, yeah, I did my first H P D E event before I did any autocross.

The first couple years was, it was a pretty good mix between the two, but, you know, doing on track events as opposed to autocross, uh, kind of really excited me, you know, kind of played more to my passion. So did that a whole, whole lot over the next three years. I think, uh, those first couple years I was doing 8, 9, 10 events a year, and, uh, about 2005 started instructing.

About two years after that, Phil, relatively young, 28 years old at that point, and the [00:03:00] local b BMW club, the chief instructor decided to resign, got my shoulder tapped as kind of a up and coming instructor to be the chief instructor for my local B M BMW club. Uh, right around that time, started club racing.

And since that point have continued to race, continued to act as chief instructor for my local b BMW club, and also do quite a bit of instructing with other organizations, whether it’s, you know, pca, Audi Club, nasa, so on. Right. So let me ask you this question, cause we’ve all heard the jokes, we’ve all seen the movies and, and the sitcoms.

You know, the, as the insurance adjuster, it’s not the most exciting personality in the world. It’s not the ex most exciting job in the world. So how do you go from tried and true petrol head to working for an insurance company? Yeah, so, so kind of in that progression around 2005, I want to say 2006, uh, you know, I had had friends that had had on track incidents [00:04:00] prior to that, but no one really ever had any issues with claims there.

You know, you always heard the stories of the, the people that. Reported the, the claim to their insurance company and insurance company basically gave ’em, you know, no hard time about covering the claim since it was an educational event and most insurance policies had timed or competition event exclusions.

For the most part, people didn’t have issues. We also heard the stories of, you know, people that drove the, the, the car or towed the car away from the track, put it in a ditch, and then tried to, you know, yeah, e explain the situation, how they lost control. And somehow the car ended up in the ditch and got damaged on, you know, three different sides of the car that looked like they hit Armco.

But anyway, that would never, that would never happen. Never, never, never. It’s also great that they do it two miles from the track too. Yeah, exactly. So,

I had my first couple friends that, uh, all [00:05:00] of a sudden reported claims and, you know, claims weren’t covered at that point in time. I was in the insurance world, but not in the motorsport insurance world. Saw, you know, really, uh, a in an opportunity, but b an industry that really needed an insurance solution to, to really be sustainable.

Cause, uh, I think to Brad’s point earlier, there’s a lot of folks that have cars that, you know, frankly, they can’t afford to write off, should the worst happen, and, and they need some sort of financial protection through insurance to be able to do that. So, uh, you know, essentially went to the executive committee of Lockton.

So Lockton we’re the largest privately held insurance brokerage firm in the world. And the role that I’m in is that of a producer, essentially producers at Lockton, you know, build a business and whatever sorts of industries they want. Motorsports obviously being my passion. I, I, you know, found a way to do that.

So I got their approval to do it. You know, went out to the market and heard a whole whole lot of [00:06:00] nos from various different insurance companies that we tried to engage to, you know, provide this sort of solution. Eventually, you know, found a insurer that was willing to listen to us, uh, to actually go to an event and see the structure in a typical H P D E event with classroom and incar instructors in a designated passing zone, so on and so forth.

And I really launched the, the first viable insurance program to cover participants in H P D events at that point. So how does someone sign up for track insurance? What are the costs, the plans? Are there different packages? Yeah, so, uh, we do this all online. Of course, we’ve got support available via phone if, if any individuals need help with it, but it’s really pretty straightforward.

You know, our customers go to lockton motorsports.com, click on each p d e, track the insurance. From that point, they’ll put in details of the event that they’re going to. So event organizer, name [00:07:00] the track, the event dates, they’ll put in details of their vehicle. We have made some changes to that, which I think from the viewer questions you, you shared, we’ll, we’ll get into more details on kind of how you determine the value, but from that point, they put in a value for the vehicle, hit the quote button, spits out a quote if they wanna buy it.

They put in, you know, details of payment information and a policy sent to them within, you know, a handful of minutes following that. So today we only offered single event policies. Previously we had done multi-event policies. Be honest, the, the way that it was structured with insurance companies, uh, we, we had 6, 9, 12, and 15 event policies.

What we ended up finding is the policies were kind of a use it or lose it structure. So say you buy a 12 event policy, it’s an annual term, and you have a catastrophic engine failure. Life gets in the way. You get a work, reassignment work gets too busy, you can’t go through events, whatever the situation might be.

We had quite a [00:08:00] few customers that were not utilizing all their events. So the discount that we were able to offer on the multi-event policies was actually not benefiting them. So about a year ago, actually a little over a year ago, we moved away from those multi-event policies. So it’s just the single event structure today that honestly is what we came out with in 2008.

Single event, multi-event, versus what we’re used to with our actual automobile policies, where we’re paying by the year, we’re paying by the half year monthly or whatever it might be. Why not move to a structure like that? Yeah, so, so, you know, I think the big difference here is, you know, law of large numbers doesn’t help us quite as much in the H P D E track day insurance world, where there’s just a.

You know, you use your typical street insurance policy as an example where you know you’ve got millions of drivers covered throughout the United States. Your insurer will ask you basic information about your use of the vehicle, how many miles you do a year. Some of them will actually audit you based on that mileage, [00:09:00] but instant frequency rates.

When it comes to street insurance, it’s easier for those insurers as they have this massive scale of, of individuals that they’re ensuring to spread that risk and, and kind of come up with appropriate rates based on the use, the mileage, the value, so on so forth. In our world where instant rates are a little bit higher than they are on the street A and B, where there’s a pretty huge range in the activity of individuals ranging from, you know, your very, very casual H P D E track day person who does one or two events versus your very active person who does 18 or 20 events.

The risk changes so, so significantly to, to the point where, you know, there, there’s really just not a good way, at least at this point in time, with the number of individuals participating in the sport and also utilizing insurance solutions that, you know, the, the true annual coverage, regardless of events is, is really practical to a [00:10:00] point, right?

Because say I have an annual policy and my card breaks down halfway through the year. I’m still paying to cover the car, whether it’s driving or not, or say an incident occurs and I have to total it out. I guess it’s the same as the multi-car policy, like you said to your, to your use case. If somebody moved away or they can’t go to an event, it, the policy’s already prepaid for at that point, so.

I don’t know. I guess in my mind it’s a peace of mind thing because when I pay my normal car insurance, I’m covered for X amount of time, period, and then I don’t think about it. So I, I think then it doesn’t matter if I do three events back to back or if I do three events over three months. Right. It, it, it’s, it’s a weird, I guess, dynamic there, but I understand where you guys are coming from, but I think that also leads into the question about, you know, what does the policy actually cover when you do sign up for that single event?

Now, you know, essentially what the policy covers is. Essentially any physical damage that occurs to your vehicle once you enter the grounds of the racetrack that you selected between the effective and the expiration [00:11:00] date. So the dates that you selected for your event. So you know, driving your car to the track for a street license car, uh, that vehicle would be covered on the road.

Obviously, as you’re driving to the track by your street insurance policy, the moment you hit the grounds of the racetrack facility, coverage kicks in. So if a hail storm comes through while your car is parked in the paddock, if a low speed collision occurs in the paddock, you know, five, 10 mile an hour, but not.

Actually on the track surface itself, something like that would be covered. It’s very, very broad coverage from that point that you enter the track, but it only covers you between policy dates A and B once you actually enter the the racetrack facility. And it is unlike street insurance where say, you know, person A hits person B, and person A is at fault and person a’s liability policy covers the physical damage to the other person’s car and [00:12:00] their comprehensive and collision coverage cover their car.

This policy is regardless of fault. You know, from the moment that we designed this insurance package, a lot of it was built upon a lot of the risk management practices and the insurance practices and placed by event organizers that put on events. And by that I mean we all sign these waivers when we enter the facility.

A lot of people have never read those waivers, but essentially what what you’re doing is waving your right. Against the event organizer, against the track, and also against all participants, uh, to seek some sort of recovery from any damages that you might occur that could be quote their fault. So our policy is designed in that way to where, as an example, you’re going through turn one at v i r and uh, someone totally missed the break zone slams into you right?

As you’re turning in your policy that you bought still covers that damage. I was gonna ask about the declared value since you touched on it a little bit. So, for example, I’ve got a [00:13:00] 2003 G t I with a little bit of money put into it, but. Do you have safeguards in place that prevent me from saying that my car’s worth $75,000?

You know, for example, Brad, you’re a smart guy. I wish I met you a lot of years ago, but for the longest time we had a, a setup where you declared the base value of your vehicle, and then we had you input details of the modifications that you have kind of specifying, I’ve got these quill overs, these wheels, this intake, blah, blah, blah, and, and you know, basically the base value of the car plus all the modifications was your agreed value.

And for it’s a good number of years. We had no issues at all with that. And to be honest, we had a little string of some fraudulent claims with some cars that were probably worth about a third of the value that they declared. And a lot of the modifications that they said that they had on those vehicles might have not been there.

So, so to, to a protect for that [00:14:00] situation. But b, still makes the policy purchase process very simple and easy. We moved about a year ago to a different structure where, When you buy a policy, you list the value, the agreed value that you want to ensure the vehicle for. Within the policy terms, there’s now a provision that if you have modifications in excess of $10,000 of modifications, that you’re required to provide some documentation for those modifications should you have a client.

So that’s our kind of protection against that situation. It makes it way easier to buy a policy because, you know, as an example, if I take my race car to an event and ensure it, you know, for the event, the, the list of modifications would take me 30 minutes to input on our old website versus now I can just list a value.

I’ve got all the documentation on the modifications to it that I can provide, should I have a claim? Yeah, so this is a really good segue here because it can go one of two ways, right? In the old days, especially if you’re dealing with an insurance company, let’s say like for classic cars, like a [00:15:00] Haggerty or something like that, not to call them out, but they, they have their specialty as well.

You had to get an appraisal. You had to say, this car is worth X because of its age, because it has modifications or it doesn’t, it’s original, it’s been restored, et cetera. And then you come up, you know, and the appraiser, I always felt that they were super subjective, right? In the way they looked at things.

And it’s like, well, I have to compare it to another 1962 Maserati that three people own, right? It’s kind of weird and it’s just how it is, but in this case, And this is a, this is really a, a, a reachback to a previous episode we did with the guys from Tuner Log where they’re trying to capture this information to better quantify the value of a car because they, they want to capture all those receipts in a system that you would have, let’s say digitally or whatever.

And so you’re going in to a tuner shop and you’re getting those BB bbs rims and you’re getting those bills, teen coil overs, that’s all there. And it’s like, now I could turn that over to Lockton and say, Hey, hey, look, here’s my proof. This is what I spent, yeah, I spent it 10 years ago, but I spent it on that particular car.

Because [00:16:00] that’s also the sticky situation you get into with all this is depreciation. Well, those shocks have. 10,000 track miles on ’em, which is like, you know, 900,000 street miles. And so what are they really worth at the end of the day? Well, it’s, it’s the cost to replace them in full right. Is what we’re getting down to here.

So I can see where these staggering full value numbers come out from. And I, I, I agree with Brad. I don’t think his, I don’t think his GTI is worth 75 grand, but it wouldn’t be unreasonable for him to say, Hey, I need a declared value policy of $15,000 to cover everything that I’ve done to this, including labor hours and everything else over the years.

Right. Exactly. Yep. Uh, you almost sound like an insurance guy. Uh, so, so the depreciation is the actual cash value, which is what your typical street insurance policy would have, and they’d, you know, try to devalue a lot of the parts on your car based on that. So doing the agreed value structure, and you’ve got the opportunity to provide receipts for those things.

Cause Yeah, I mean, the, the reality is you’re not gonna find, well, [00:17:00] it’d be very difficult to find, you know, those PBS wheels, those NCS dampers or Stein, I think you said, you know, are, are you gonna find the exact setup that you have used with the same number of miles that you can, you know, replace exactly the condition that you had?

No, there’s no chance of that. So you’ve got to replace it. Well, it’s time to upgrade to oland’s at that point, right? Yeah. That’s way you think. Yeah. Right. If you’re gonna do it right. We focused a lot on the car. We keep talking about the car. The car, the car. And I think one of the bigger things that people think about, you touched on earlier about automotive insurance policies, is there’s that liability part of it that covers the person, right?

And then there’s the comprehensive part. There’s multiple pieces to the automotive insurance policy when you talk about track insurance. All you hear about is the car. And I know as we get into the q and a session later, there’s a lot of questions about what does the policy really cover? And I think we’re gonna unpack that as we continue the conversation.

But let’s focus a little bit on the driver. Does the driver [00:18:00] play into this equation at all from a coverage standpoint? It’s really just covering the car. And to your point, uh, I think some of the questions that you shared, you know, really step into that liability. And while the typical H P D E track day insurance policy that you find in the market does not provide coverage for any third party liability, there are some protections in place in some areas.

So we can, uh, again, unpack that a little bit. But you, again, your, your typical H P D insurance policy is just covering the vehicle itself. Not the, not the driver. All right. So let’s talk a little bit more about the car, and I’m gonna, I’m gonna steal a question out of the q and a pile here, because I think it’s important to the conversation we’re having.

So you talked about driving the car to the track, crossing the gate, you know, crossing that threshold onto the compound. Once you’re on the compound track insurance kicks in. What if I brought it in on a trailer and I know there’s trailer insurance. Right. So now we’re, we’re, we’re quadruple [00:19:00] stacking insurance here, right?

We’ve got the life insurance for to cover me at the track. We’ve got the automobile insurance to get me there. I’ve got trailer insurance to cover the trailer, and now I got track insurance for the track car. Oh my god. This is getting a little complex here. So does track insurance, as you said, once you cross the gate there, does it cover the car on the trailer?

Technically if the car is on the trailer and insured for the event, once you cross those gates, your H P D E insurance policy would cover that. We do offer, and there are other providers of this, we call it off track insurance. It’s sometimes called storage transit and paddock insurance, but for a non-licensed vehicle, this is essentially insurance that covers the, the car anytime that it’s not on the racetrack and not being driven.

The exception to that, we’ve got a carve out on our policy while the car car is being driven on and off a trailer that’s actually [00:20:00] covered. So, so this is intended only for, you know, vehicles that are not street licensed. And the policies are, in my opinion, kind of dirt cheap compared to, you know, your typical street insurance policy.

So for the guy with a dedicated track car or race car that they utilize in H HPD events, And or races or time trials, whatever it might be. They, they can buy these policies. That’s annual coverage. You can list the car, you can cover the trailer under that policy, you can cover any parts and equipment that you might have that are related to your h HPD events.

And you can also cover any tools and spares that are spec, you know, kind of specialized to, uh, your motorsport type activity. So the, you know, the intent of it is to be your one specialty policy that covers the vehicle and all your race related equipment everywhere, except for when the car’s being driven or driven on the track.

So parked in my [00:21:00] driveway on my trailer, let’s just say, or in the street getting ready for an event. The car and the trailer are covered at that point. Using that covered there. Interesting. Yep. That’s also in transit to the event or not. Correct. Yeah. The, the vast majority. And, uh, there, there, there’s a reason why the rates are so low on this.

You know, people don’t tend to have nearly as many claims on an off track policy as an on track h hp d insurance type policy. So the rates are very low. The, the vast majority of claims that occur are theft or like a trailer overturn type situation. You know, someone gets into a big sway condition towing their, their trailer to the track and have a trailer overturn something along those lines.

So, I wanna put a little asterisk there. Yeah, we’re still talking about covering the car though, because we, I’ve heard stories of guys, man, I was trailer, not the road Atlanta, and my wheel passed me at 60 mile an hour and it came off the trailer, right? And went across the median, like you hear those stories, next thing you know, the thing’s dragging across the [00:22:00] pavement and the trailer’s busted, broken axle, whatever it might be.

So kind of pulling these fine threads out, does it cover the trailer or does it cover the car on the trailer? Right. So is it comprehensive in that respect? Yeah, it covers the car for sure. Cuz you have to buy that policy. You have to cover the car. If you elected to have coverage on the trailer, it would cover the trailer in that situation.

But to take your little scenario, a step further, let’s say that wheel that just flew off, which I might have had happen once or twice over the last 20 years. So I have had that, that, that exact situation, uh, if that tire, uh, or wheel tire. Were to say, you know, cross into oncoming traffic and hit another vehicle.

Your tow vehicle insurance provides a liability coverage for that situation. So any third party damages that would occur would be under your primary auto liability coverage. That would be on your tow vehicle. Okay, G. Going back though to, to [00:23:00] one thing I. And it gets a little bit complicated with street license cars, not street licensed cars.

So, so in your situation of towing the, the car to the track, if you’ve got a street insurance policy before a licensed vehicle and you’re towing it to the track, your street insurance still should cover the car in transports and then your h HP HPD insurance policy wants to enter the grounds of the racetrack.

That’s when that would kick in. Okay. Well, we’re covering all bases here because even within GTM we have a huge mixture of folks that are driving to the track driving car or trailering cars with tags onto the track. And then there’s those of us that have unlicensed cars, uh, you know, that are going to the track or rather untagged cars going to the track y you know, one that people really never ask about and they, I, I hope most people understand this, but.

You know, as far as what the policy covers, uh, any auto-related policy is gonna have something called a mechanical breakdown exclusion. So this [00:24:00] is kind of the insurance company’s way to protect themselves for covering kind of wear and tear items and or things that on a newer vehicle would be covered under a warranty.

So obviously I think everyone understands, oh, my, my brake pads and my tires got very damaged at my H P D E as I was, you know, driving my car faster around the track. You don’t expect, you know, the quote damage or the where on those types of items to be covered under an insurance policy where, you know, I’ve only had a couple people not understand this, but I just wanna make sure people understand.

If you money shift your car for, for those with manual transmission cars, you’re doing a four to five upshift and you accidentally go four to three and zing the motor. It’s done, it’s dead. The, our insurance policy would not cover something like that, but let’s use a situation where you money shift the car backend checks up real bad.

As you’re going into the corner, you spin off the track and hit the wall. Any [00:25:00] resulting damage from a mechanical breakdown, whether that’s, you know, gring your engine by doing a money shift, or you’ve got a suspension failure, whatever that might be, any resulting damage that occurs after a mechanical breakdown would be covered.

I will use the example of the suspension failure. If say you’ve got a left front control arm, that that breaks as you’re going into a right hand turn and car goes straight ahead, straight into a wall. You know, I’ve yet to encounter a situation where we’ve had a, you know, the, the claims adjuster tried to fight a claim saying, oh, we thanked this control arm broke before it hit the wall, so we’re not gonna cover that control arm.

That, you know, that, that type of thing. I’ve never encountered, and, you know, to be honest, we’ve never encountered an issue over, what’s it been, uh, 12, 13 years of there ever being a question of, did the engine get damaged after the incident or [00:26:00] before the incident? But technically, if the, you know, by the way, most insurance policies were written, if the damage occurred prior to the incident and it was a mechanical breakdown type of situation, it would not be covered.

So I’ve, I’ve got two things here. One, so this past weekend I was at v i r and I had a, a wheel hub failure. And you, but you’re saying essentially is had my wheel come off and all kinds of damage would’ve been caused to the car from being dragged acro across the ground, across the track. Then you’re saying that would be covered?

Yeah. So all, all the resulting damage and the, you know, by the letter of the policy. The hub itself wouldn’t have been covered, but that wheel, if it smacked into something, the wheel, any damage that occurred to it wouldn’t be covered. So you’d be out, I don’t know what it runs on your gti, but, uh, whatever, 150, 200 bucks you’d be, have that part of it not covered.

Everything else would be covered. That’s only if he made contact though, right? No, no. Uh, well, I mean, he, he is gonna make contact with a ground after he [00:27:00] loses a wheel. Uh, you know that, that is contact. Any other, you know, damage that would occur associated with it would be covered whether it hits something or not.

So with modifications, you can either install them yourself or you can go to a mechanic to have ’em installed. Is there anything in the policy, any provisions against the Shade Tree mechanic and the people that are doing their own DIY. Does the policy say anything about that? Says absolutely nothing about that.

So that type of situation, you know, let, let’s use the total loss scenario. So an individual that hasn’t done their own work on their car, that has paid a performance shop to perform modifications when they’re coming up with their agreed value, they should be taking the base value of the, the vehicle and then adding the invoice for not just the parts, uh, that they put on the car, but also the labor associated with it.

So, and I, I do think we get some people that under insure, that have, you know, no sense of, of how to modify the car themselves and, you know, to [00:28:00] put themselves back in a whole position. Really should include the labor as part of that modification cost. But Brad, to your question, you know, if you’re doing the, the work yourself, in the case of that total loss, you add the mods to your value.

If you’ve got a total loss, you know, no question that, um, you know, that, uh, those modifications are gonna be covered subject to the, the value that you selected. If it’s a partial loss, the, the only risk that you’d run in that situation, if you’re the DIY guy that’s put all the modifications on yourself is your car could come closer to being totaled.

Uh, as the adjuster, you know, as they’re adjudicating the claim, kind of going through the process of handling the claim, they’re gonna come up with a higher repair cost cuz they’re always going to use a repair facility to come up with a estimate to fix the vehicle. And then there’s a, you know, calculation essentially that’s going on in the background to say what repair cost [00:29:00] gets to the point where it makes more sense to total the vehicle.

Regarding a total loss. I think in my experience with a traditional insurance company, the insurance company pays you for the total loss. They retain the vehicle, but then you have the option to buy the vehicle back. Uh, is that the similar process or the same process? Through the track insurance, every customer gets the opportunity to buy back the salvage.

I’d say, you know, the. The majority of our customers that end up buying back the salvage probably come out on top. As you know, performance vehicles with a lot of modifications and or higher performance vehicles don’t tend to attract as much money through the auction sources as they probably should. And you know, as a result, I think a lot of clients end up coming out pretty well, uh, when they buy it back so that you’ve always got the opportunity.

And, you know, essentially the way that it’s done is, you know, once they determine what the salvage value for the vehicle is, what’s expected, that it would be able to [00:30:00] get it auctioned. That dollar amount is offered to you should you not take it. You get your agreed limit of insurance minus deductible should you decide to keep the salvage.

You get agreed value minus deductible, minus salvage value and you retain the vehicle. And if, if your listeners or either of you are thinking about it, Unfortunately, they, you know, they’re kind of required to go through the process and put a, you know, a salvage title on the vehicle through that process.

So it’s not, you can, by buying it back, you can sidetrack having that salvage title that’s gonna live with the car forever. That’s okay. 90% of all Miatas already have salvage titles, so. Good point. Very true. So that, that leads me into the next question actually, since we’re still on this big topic about how the policy works, what it covers, what it doesn’t.

I think we missed a big point here in defining what a vehicle is. And so in our minds, we’re thinking production based cars. We’re thinking street cars. Does this [00:31:00] cover. We’re talking track insurance. Now, does this cover motorcycles? Does this cover, you know, dirt late models? Does this cover formula cars?

What kind of, what is a vehicle? Is it ATVs, ski, you know, boats? I don’t know. So, because yeah, we we’re multi-discipline, right? And we’re gonna, I’m gonna get into that in a minute as well. So it’s important to, I think, step back and define what’s a vehicle. Yeah, so, so one thing that we skipped, and I think it’s important from a context perspective, from the moment that we launched our insurance program, took a very different approach than I think anyone would typically take.

And the approach that we’ve taken is we approve particular event organizers that put on events as opposed to approving or underwriting drivers. In other words, you know, you go through a process of buying a policy from us. We never ask for your driver’s license number, we’re not checking on your driving history.

Honestly, we feel that the group that you’re [00:32:00] going to their event and who’s running the event, has the passing rules, has the instruction, has the classroom instruction, so on and so forth, is far more important in evaluating the risk than if you’ve had two DUIs 10 years ago. Uh, because at the end of the day, You’re, you know, if you’re a beginner, novice, uh, level driver, you’re gonna have an instructor in the car.

And once you move up to the, you know, ranks where you don’t have an instructor in the car, you should have already passed all the quote tests of the prior instructors to be able to drive solo. So with that, we only cover H P D E and track day events for vehicles. I’ve really wanted to and looked into doing motorcycle track days, honestly, as I’ve, as I’ve kinda looked at the market.

I’ve found that the majority of motorcycle track day type guys that I’ve talked to are not really that concerned about the financial loss that they feel like if they lay over the bike. And, and I, yeah, I’ll answer your question in a moment, but the [00:33:00] feedback I’ve gotten is if they lay over their bike, you know, most of the stuff’s relatively small.

The big one is, you know, you’ve been to fork and all of a sudden it’s, you know, totaled or, or very, very expensive. But honestly, just kind of the feedback that we got was. There there’s not enough interest or demand on that side to, to offer it. I, I want to answer your question, but to answer the prior part of the question, you know, uh, production-based vehicle, no problem.

Production-based vehicle turned into a track car, uh, no problem. Production car turn into a full race car, not licensed, no problem. Purpose-built type, race, car, or vehicle used in h hp d e and track day events, no problem. Whether it’s, you know, uh, something like, uh, spec Race or Ford, uh, formula Car. Yeah, we both have the same thought there.

Uh, and so, so any of that stuff, uh, no problem at all. Uh, snowmobiles? No, uh, cause we don’t approve any h HPD organizers that allow snowmobiles, but so, so essentially [00:34:00] any vehicle that the event organizers allow, and I’d say, you know, there, there’s probably less than 5% of event organizers that we’ve reviewed that we haven’t approved.

Okay. So this is, this is a really good segue because now we define what a vehicle is. So now we have to define what a track is. And you brought up about H P D E specifically. And so I’ve been thinking about this and I think H P D E has grown over the years because you could make an argument that when the motorcycles are on track and they’re doing their school to get the novice riders, they’re in a de For instance, if you go to Tim O’Neill and they do their, their ice racing up there and off-road rally stuff, you’re in a de If I go to, I do elite following formula cars, right?

For training. I’m in a de there’s many ways to define de, it doesn’t, it’s not just grounded in production cars. So I wanted to kind of just separate. There to figure out like how are you guys defining what is a track? Because there’s, there’s educational [00:35:00] aspects to off-roading, there’s educational aspects to rally cross, there’s educational aspects to autocross.

So you could say that all of those are high performance drivers education because none of it relates to the street. It’s all high performance driving. So how do you guys deal with that? Yeah, so I’d say we don’t have too many, I don’t know what I’d say, non-traditional tracks that are eligible for H HPD Insurance, New York Safety Track, if you’re familiar with that as one that’s on our approved list.

That in a lot of ways doesn’t kind of look like your typical racetrack. There’s um, oh gosh, there’s one in North Carolina that’s kind of a training type facility that we cover event car. Yes. Yep. So I’d say that’s kind of a non-traditional one. You know, the O’Neills of the world are dirt fish, as an example in the northwest, a a rally school, the those, for the most part, the vast majority of the activities that occurs there is in their own vehicles.

They’ve got kind of their own [00:36:00] self-insured programs that they utilize to cover those. I’d say that’s something that we could do. It’s just not really an opportunity that’s presented itself as an asterisks there. Audi Club, uh, back the old days when it was the Quatro Club and based out of like Minnesota and stuff like that, they would do, they would do ice racing, like with people would bring their cars, like they’re going to the track and they would go Yeah.

Racing the snow and on a, on a frozen lake somewhere. So, again, and I know that’s still very popular in North Central, you know, so we’ll call it Southern Canada, uh, to do that type of racing. Right. So again, it, it, to me it’s, it seems like there’s more. To what de is than what we just know on circuit racing.

Yeah, yeah. Um, you know, one that I don’t know, you know, we, we should get more interest on this than, than we have. We, we do offer autocross insurance. It’s actually sold as kind of a. A Bolton to our off track insurance policy. You don’t have to have a non-licensed vehicle to get the autocross part of the coverage.

So, [00:37:00] but, but it, again, I, I think it’s dirt cheap, you know, like a $30,000 car for season long annual coverage, unlimited number of events is like 300 bucks. So it’s, it’s pretty darn cheap. I, it’s counter to what I shared with you about, why don’t we just do the unlimited annual policy on h HPD policies. The, the big difference there is outside of cones, you’ve got your odd light pole here and there.

If the, the course was not designed quite right or you had a, uh, you know, Kind of unforeseen catastrophic failure that sent you to a, uh, a curb. But, you know, the damage that we’ve seen occur in Autocrosses from all the kind of intelligence that we’ve gathered of, of autocross incidents tells us that the, the frequency is extremely, extremely low.

And my personal experience says that as well. Rally Cross is an interesting one. Rally cross is frankly one that, that honestly I’ve overlooked. It’s been building really, really, really quickly. And, you know, I think it’s one that we probably should take a harder look at. I, I will say, [00:38:00] My handful of buddies that do rally cross seem to not be phased by any sort of damage that occurs.

Um, they just, you know, tend to be the, the types of guys that, you know, they bang this little thing up or this little thing up here. I don’t know. For whatever reason, all my rally cross buddies are, you know, very much guys that would never buy an insurance policy. We’re just gonna roll up our sleeves and fix it.

We, we call that the send it mentality. Yeah, exactly. And, and to touch on that point as well, I think the off-road market and the off-road courses and stuff like that is an untapped market cuz there are a lot of 60, 70, $80,000 jeeps and, and off-road rigs out there that break all the time. Well look at Roche Creek.

I mean, they have a whole educational program behind off-roading. It’s a cross between track de and autocross because they gotta do one, one truck at a time type of deal. But yeah, if a tree falls in the forest and it landed on your truck, what happens next? Right? So, but again, it’s un all under the [00:39:00] guise of education.

And you know, I think. Again, when programs were built, let’s say, you know, 20 years ago there was de and not a whole lot of anything else. And, and the guys that went vintage racing and the guys that went rally cross, it was, you know, a bunch of buddies in the six pack and they went driving in the woods and they didn’t tell anybody about it.

But now we have a lot of sanctioned events and we’re fortunate you’re talking about Rally Cross in the dmv that, you know, summit Point is back hosting Rally Cross for the WD C R C C A now. And that’s got a huge draw, right? So again, it’s right there on compound. You cross the gates of the Summit Point Motorsports complex.

You’re again, does the track insurance cover me at that point? Because I am on property, I am doing, I’m, it’s not like I’m on my buddy’s farm, you know, but we don’t need to belabor the point. But it is definitely something that people should think about. And, you know, what can I cover? How could it be covered?

Does Lockton cover me? You know, these are the questions you should be asking yourself as we have multi-discipline listeners out there. That’s a great point. You got me thinking a lot. I think Rally [00:40:00] Cross is, uh, There’s one that, that we need to take a harder look at. All right, let’s move forward a little bit and let’s talk about after the oops moment after you’ve thrown the flag, you’ve had your code brown.

How does this whole claims process work? Yeah, unfortunately, you, uh, one need to go to our website. You fill out an incident report form, kind of, uh, going through the painful details of what happened, so on and so forth. The only kind of additional required documentation needed at claim time is a report from the event organizer that the.

You know about the incident and, and this is purely, you know, it kinda acts like a police report does for your accident on the street, just as confirmation to the insurance company that here’s what happened. And from our perspective, it’s that this incident did occur on the tracks and we tried to collect some good and helpful details of, gosh, we’re having a whole lot of claims that, uh, [00:41:00] whatever uphill S is through at v i r.

Um, is there, you know, we’ve seen a big wave of ’em recently is there’s some sort of pavement issue that, you know, should be addressed with track management. Um, I’m just making up something there, but the, you know, a number of different things. But main thing is that it’s confirming the incident occurred at the event that you said that you were at past that.

You take the, the vehicle to, or have the vehicle towed to the, to the shop of your choice? We do not take the typical Geico, progressive State Farm, whatever giant insurance company name you want to use, where there are particular approved repair facilities. We find that, you know, most track guys have a certain shop that they’re comfortable with or they know who they want to take their vehicle to and honestly they probably have a better idea of who’s more familiar with their car in their area than we do.

So, uh, you take the car to shop of your choice adjuster comes out pretty quickly at that point to. [00:42:00] Do an inspection of the vehicle and their real job there at that point is to just get like a real baseline on, you know, what parts of the car are damaged. You know, just trying to get the very basics together of what parts would, you know, most likely be needed, what sort of labor would most likely be needed.

Then they work with the body shop to, you know, essentially come up with the estimate. The adjuster is, you know, their information that they’re collecting is really just to keep the body shop in, check the repair facility in check to make sure that they’re not overstating the damage to the vehicle. You know, at that point, the insurance adjuster is then in touch with you, the person that got in the accident to, you know, talk about where you move forward.

If it’s a smaller dollar claim, pretty straightforward. It’s getting the, the, the repair invoice approved and moving forward with that. You know, as it approaches, and it depends on the cars, it approaches 60, 70, 80, 90% of the value of the vehicle to repair it. That’s when they [00:43:00] start looking at, Hey, what’s the salvage value of this thing?

Does it make more financial sense to total the car if essentially repair costs Plus, Uh, salvage costs are gonna exceed the value of the vehicle. Question about the adjusters. Are they just, you know, the regular or old adjuster? Are these handpicked people that know cars and know race cars a little bit better that you could actually have a conversation with?

I think some of our listeners would be at ease to know that, hey, The guy that’s gonna come out, if I tell ’em it’s got this, this, and this, or it’s built like that, or, you know, whatever was done, they might actually understand what was going on. Right. Yeah. So, so there’s, there’s kind of two sides of this.

One is the primary adjuster that’s, that’s, you know, really technically titled the claim representative, which everyone calls everyone adjusters that’s involved with the claim. So the claim representative. Deals with track guys all day, every day. Uh, that’s, that’s the claims that they have, uh, that the claim representative team [00:44:00] has a number of adjusters that they work with given, you know, the, you know, wide geographies, the whole United States that, that we provide insurance for.

There are, you know, different adjusters in different regions of the country. We have found and developed some that are, you know, more familiar with race cars over time. But I’ll be honest with you, you know, there are certain segments and parts of the country or John, who’s our normal guy in Florida, is on vacation.

And it’s not always gonna be someone who knows the cars in, in and out, but the key is the claim representative who is really the guy that makes the ultimate call on. The repair invoice being approved, all the ins and outs of actually processing the claim. Those guys actually deal with track guys all day every day.

So, so they’ve got a good familiarity. Are they gonna be as knowledgeable about your car as you are? No, but, but they can kind of speak the same language. So, so let me throw a use case out there and it’s, I think it’s, it’s not a special one in the sense, but I think it’s one [00:45:00] that’s probably pretty common.

So let’s just use Brad’s car as an example. We got this gti. It really isn’t worth a whole lot because you can buy one off the street for two grand, right? So his value is all in the parts, it’s all in the labor, it’s all in the setup. So say he hits a wall, bends the frame, auto body shop goes, that’s a $2,000 g t i from 20 years ago.

That it total it be done with it, right? I’m, it’s not even worth straightening out. Right there. You have this split second where you go, well, let’s just say it hit, but really didn’t break major components. Trans is good. Motor’s good suspension’s, good wheels are good. Yeah. Or maybe it made a side impact with another car or something like that where you can still salvage a majority of it, but I don’t want the chassis.

Right. So can I go in and say, let me strip it. Because I’m gonna get another donor for two grand on my own after the payout. You take the carcass, I keep my parts. Is that a scenario, a real scenario that could play out? I’d like that, but unfortunately no. Um, you, you’re gonna have [00:46:00] to, so total off, let’s say Brad insured it for 15 grand.

Uh, you mentioned that number earlier, so I’m just gonna use that number. Uh, you intru it for 15 grand. They look at it, no way we’re gonna be able to salvage this thing. Your buyback on that thing is probably gonna be like 500 or a thousand bucks. So you’re gonna take 15,000 minus deductible, minus 500 bucks.

You’re gonna buy it back. The only expense that you’re gonna take on is once you get the car script, you’re gonna have to tow it for the scrapyard or pay someone to pick it up, to take it to the scrapyard. And you know what, you’ll get a little bit of money back when you take it for the scrapyard, for the, for the, for the, you know, metal scrap value.

So that’s true. So you mentioned some guys anyway. True. So you’ve brought up this infamous term deductible. So how high are the deductibles on these policies? So we offer a 10% deductible and a 15% deductible option. To be clear, most people get this, but, but I would like to specify the deductible is based on the value of the vehicle, not the value, not the amount of damage [00:47:00] that you had.

Scenario would be $30,000 car, 10% deductible selected, $3,000 deductible applies not if you had a $10,000 claim. It’s a $1,000 deductible. Uh, there is a minimum that applies, and I wanna say the 10% it says on our website. So I’m gonna put the disclaimer that what our website says is, is right. I wanna say it’s $2,000 minimum, and there is no maximum.

So, so if it’s 10% on a $2,000 minimum, you’re at least ensuring the car for 20 grand. Yeah. Um, you theoretically can ensure the vehicle from $15,000 and you will pay a lower rate, but your deductible’s still gonna be $2,000. Okay, interesting. So if, if you’ve got a car where it’s in that 15 to $20,000 range and you’re questioning whether you should ensure all your modifications, probably worthwhile to kind of think through that cost benefit analysis of, well, I’m still gonna play, pay the $2,000 deductible, but the difference in [00:48:00] premium is X.

Something to think about. So let’s flip the coin the other way now because I mean, I, I got, I get hyper focused on. You know, untagged cars that you can walk away from as, as Brad talked about in the intro, because I haven’t driven a tagged car on track for many, many years and, and much because A, I’ve grown out of it.

And b I was convinced that that wasn’t the way to go. You know, if you have a car that Brad said in the intro, if you’re that attached to it, it’s that expensive. It’s, maybe it’s not the car to go to the track with. And one of our members always says, if I can’t walk up and put a boot in your door, you’ve brought the wrong car to the track.

Right? But all kidding aside, let’s flip the coin and talk about a car that was on the street. Now, from what you described, it sounds like once everything is said and done, you know, determining the claims process, the adjuster comes out, that all sounds very normal. Like a, like a standard insurance policy and the work gets done at a body shop or whoever you take it to.

However, your standard automobile insurance policy is still kind of sitting in the background. And if you’ve got Geico or Allstate or Progressive, [00:49:00] whoever, you haven’t reported it to them, which you shouldn’t cuz you’re filing it through track insurance. But what happens in that process? Does the autobody shop, you know, some of them are required to, let’s say, update a Carfax.

Now all of a sudden your car is reported to being in an accident. Your standard insurance company might go back and look at that and see that and, and things don’t line up. It gets really crazy. It would be good to talk about that for the listeners out there that still have cars or tags on them. You know, first things first.

I’m not gonna say there is never any possibility of this, but I’ve yet to experience when we’ve had. Thousands of claims over the years. We have never had a situation where person that was driving a street license vehicle had a claim and it either aids somehow hit their driving record because it wouldn’t be a, you know, unlawful type situation that’s on private property.

You wrecked your car. It’s not like, uh, you get a ticket from the police that would hit your driving record. So I think that one’s kind of obvious, but I’ve been asked that, uh, one and then [00:50:00] two, the, uh, I’ve yet to encounter a situation, and I’m sure I would’ve heard of it, where it was reported or caught by any personal insurers to hurt you on your insurance rates, on your personal auto policy.

In other words that you had a claim under our policy and then somehow it. Hit whatever system that Geico and Progressive and all the, the big street auto insurers pull from. And then you pay the consequence on that side from their perspective. Think about it. This is not something that affected them. So, you know, why, why would they look to increase your rates on the Carfax side?

You know, it all depends on what the body shop does. I, I do think the majority of them, uh, with the tracking systems that they utilize, you know, report to some standard databases. So I don’t think you’re gonna sidetrack the Carfax being, you know, showing the, the damage that occurred to the vehicle. Yeah. I, I would feel worse if they didn’t report it, because now you [00:51:00] have an unreported accident on the vehicle.

Right. And then the next owner, let’s say you turn it in, you trade into the dealer CarMax, or some guy buys it privately, the car’s been in a wreck and he has no records of it. Right. But it also makes me wonder, because the insurance, the major insurance companies do keep track of, you know, zero fault accidents.

Let’s say you, you skid off the road and hit a tree or you know, whatever. But let’s say it was an incident on track where two newbies hit each other. You know, some guy ran outta brakes plowed into the back of you and rear ended the car. I mean, that’s. The guy that hit you is at fault. Let’s just say in the normal world, he would be at fault.

Your car, you didn’t do it, but you were hit by another vehicle. So in the standard insurance world, it’s an accident. Like any other accident, it didn’t matter where it occurred. So somewhere along the line that has to get filed away. You can’t just kind of dismiss it and say, well, you know, Geico doesn’t care about it.

Yeah. So h how does that all play out? Or, or it just, I, maybe it does, maybe it doesn’t. So, so I’d say the, [00:52:00] the track insurance world and the street insurance world are just so far separated. I don’t see any ways that they interact. So, but to focus on the track insurance world, and I can speak to the approach that we’ve taken that’s different than the traditional auto insurance market where.

You have that one claim nowadays, you’ve got certain companies that advertise different, but you know, used to always be you had a claim. You see, you know, a 10, 15, 20% increase at your next renewal. Uh, that was pretty much kind of standard fair. We’ve taken the approach really since the beginning that you have that first incident just to be a hundred percent clear.

No rate increase, no change in eligibility. You can still buy policies. It costs you the same as everyone else. No hoops to jump through. It’s just, it is what it was before. If you have a second claim within a three year period, technically you’re not eligible for our insurance. You have to commit insurance fraud.

To do that, we have a question that we ask that says, have you had more than [00:53:00] one claim in three years with us? So if you lie on that, you could buy a policy, but it would probably catch up with you. We have had to make, I think only two. Exceptions over the years to, you know, provide documentation to someone that they can answer that question.

That they haven’t had more than, uh, one claim, essentially two claims or more because of a situation like you mentioned, where, you know, they, they were at a, involved in an instant where they were not at fault. Something along those lines. So we essentially, we handle those on a case by case basis, but if we run into a serial incident haver, um, in that situation, yeah, they just become ineligible.

If they’ve had two claims in three years. Once that three years is up, good to go again. Does your system talk to some of your competitors to where they can see if somebody’s had a couple claims with you all in three years and they can’t get insurance through you, but maybe they can go to one of the competitors like [00:54:00] Haggerty or Open Track.

Or going, or some of these other companies. Do you all share information among the other insurance companies? There’s nothing today. I, you know, I’m not gonna say it’s never going to happen, but it, it’s, it’s never a conversation that’s occurred to my knowledge. You know, I think what we’re seeing here is like, we’re talking about maybe some trends too, right?

You were talking about drivers having repeat offenses and you’re, you’re building patterns that’s also part of insurance, like you mentioned. Does it seem to be that turn five at v i R is a high area for Rex? Maybe that’s a problem with the track. It’s not a problem with the drivers, right? There’s a lot of things you can do from an analytics perspective to really see what’s going on there.

So there’s a lot of number crunching going on, not just, you know, Hey, I had a wreck and please, Cut me a check. So let’s talk about trending in the de world. What are you, what are you seeing out there? Uh, are there certain cars that are maybe more prone to having claims than others? Is it high horsepower?

Is it, is it yaras? What, what are we talking about? I’ve seen more of a trend over the last [00:55:00] handful of years toward more newer, more higher horsepower vehicles. For the longest time, it seemed like the instructor and advanced drivers, at almost any event that I’d go to anywhere across the country, Guys used to always drive, you know, E 36, M three s, 9 44 is Miatas, you know, it was like the 10, 15, 20 year old cars and you know, they very much viewed them as not disposable, but to your earlier point, you know, cars, that they wouldn’t be too worried about damage.

And gosh, you know, if I go to an h HP d e event at Coda, ed Americas in Austin, the instructor group is typically comprised of 60, 70, 80%, you know, 9, 9, 7, 9, 9, 1, GT three cma, GT four, and so on, so forth. And, and it’s not everywhere in the country, but it’s a lot of parts of the country seems to be going more that [00:56:00] direction.

You know, I’d say with higher horsepower, I’ve had a lot of concern that instant frequency would go up. As you know, there, there are more. High horsepower, faster cars out there that people would get over their head, over their skis and more likely to have incidents. I’d say instant frequency. I haven’t seen that big of a change.

The biggest trend that I’ve seen, uh, in this, you know, fortunately we haven’t had to make, uh, read adjustments for a while, but I’m concerned that we might have to sometime down the road, the cost of repair vehicles is going up and up and up with these newer cars. First kind of examples of that that I saw Nissan GTRs with all the electronical, uh, voodoo in that car and the number of sensors behind the bumper.

You know, I think we had had a claim, when I say 5, 6, 7 years ago, I’m probably off on that, where a GTR had a light front end tap into a tire wall, didn’t look like that much damage, but all the sensors that they, you know, [00:57:00] damaged on the front of the car made it like a $25,000 loss. Uh, you know, something that.

10 years ago, if you would’ve shown something like that to me, I would’ve said, eh, two grand, three grand bumper cover paint. Done. Not anymore. There’s so much more, especially, you know, in the more exotic end, uh, a lot more carbon fiber, even in the not so exotic end, uh, a lot more aluminum, a lot more airbag sensors, other sensors that can get damaged, that can really drive up the cost of claims.

So I’d say the biggest thing that I’m seeing is, uh, the, the hits are sometimes harder cuz when you go faster and you have a mistake and have an instant, you hit the wall harder. Uh, so, so you’ve got that A and then B, it’s just, it’s more expensive to fix newer cars. Well, isn’t that the Joe horsepower is how fast you hit the wall.

Torque is how far you push it. I like that one. Yep, yep. Is there anything in the policy, talking about newer cars, newer cars are just laden with nannies. Is there anything to say that, well, you’re at a de and you shouldn’t have [00:58:00] touched that little red button that all of a sudden put it in e and center mode and that’s the reason you wrecked.

So is there anything there that, that would mitigate the coverage to say, well, you did something you weren’t supposed to because you shouldn’t be in full on track mode if you’re at a de I totally understand. Um, you know, that’s, that’s a balance. I, I’d say if the insurance company, so I, I think I kind of alluded to this, but just to be clear, we are the insurance broker and program administrator, so basically, The insurance company that we work with, ais, a division of Hanover, says, Hey, you guys know what you’re doing in this space.

You administer the program, we’ll have a third party that would, you know, adjust the claims. But essentially day-to-day operation of the insurance program, you guys run it cuz you know what you’re doing. But they will review the results of the insurance program and the profitability of it is, you know, are we losing money?

In some years they do lose money. Some years they make money get, you know, luck to their own devices. Sure they would put stipulations that you had to have all [00:59:00] nannies on, uh, so on and so forth. That’s kind of part of what we’ve, being on the consumer side of, of protecting our clients and, and looking out for their best interest fight.

Same time, I’ve had that exact thought cross my mind a number of times, and a lot of it’s through direct interaction with students that inevitably, uh, you know, that first timer, second timer out on track really, really wants to turn the NAS off. And I’ll go ahead and give it to ’em at the slowest corner where there’s nothing to hit off track and tell them I’m going to turn it off at that corner and the first time.

80% of the time, they spin it as soon as they, uh, you know, uh, get, get on the gas. So I, you know, I do think the higher horsepower cars I’d really encourage outside of insurance just for, you know, learning and developing and, you know, your safety I’d recommend. And so you’re a high level intermediate, close to advanced driver leaving that those nannies on [01:00:00] use the lights that flash up on, on the dash as an indicator that you’ve.

Exceeded some limits in some ways, and slowly over time start turning some of those off. It seems to me like you guys are adhering to the principle of keeping it simple, because the more you start getting into adding writers about, or disclaimers about you had, you have to have this nanny on or this, then you gotta take into account the driver’s experience and then you’re underwriting the driver as well as the car.

And I think your approach works best for, I guess, this situation. Declare your value, you know, we’ll trust you to a certain extent and then. We’ll take care of you, whatever happens, happens. Yeah. Yeah. We’ve very much taken that approach. I mean the, you know, the reality of this type of insurance program and the world in which I operate, never dreamed I’d end up in insurance, but at least I get to do it with motorsport.

So it’s kind of fun, you know, the amount of red tape that there is in the insurance world, compliance that we have to deal with, so on and so forth. Uh, you know, we sell 500, $600 policies to some higher value [01:01:00] cars, but we sell a lot of $200 policies. And frankly, if we didn’t take the keep it simpler approach from an administrative perspective and controls and the underwriting perspective, frankly we wouldn’t be in this business cuz we’d be losing money.

So, so we, we’ve gotta find efficient ways with proper controls in place to, you know, prevent fraud claims as an example. So, Ryan, this has been great up until now. So what we’ve done is we actually pulled our membership and a lot of our VIPs and people on our mailing list to say, Hey, write in to the show and ask your questions about track insurance.

We’re gonna have Lockton on here, and now’s your chance to get all those questions answered. So we’re gonna kick off this q and a session, and I’m gonna start off with an actual Lockton customer who has gone through this whole process. We wrote an article about him and his better half, we’ll call her that, where they’d had an incident and they walked us through the whole process.

It’s on our website. If anybody wants to, uh, look that up, go to gt motorsports.org and search track insurance. But John asks, as a clarifying question, what drivers [01:02:00] are covered under the policy? When I’ve called, I’ve been told that anyone that drives the car is covered. But when registering an event in the policy on the website, I must list drivers.

And I can only add two. So technically as the policy is written, the policy covers the car. We used to require individuals to list any drivers that were gonna drive the car. As I mentioned, we changed our website, our application process a while ago to where the person buying the policy is obvi, obviously listing themselves a as a driver.

And we do not require you to list any other drivers that are, are going to drive the car. I think that answers the question. Again, it covers the car. All right, so we’ve got a question from our, our member Anthony. It’s about fire damage, and Anthony asks, When is fire damage covered by track insurance? He’s heard that a car that catches fire is only covered if the fire happens in [01:03:00] connection with a collision.

So I’m gonna try not to get insurance nerdy on you on different types of policy forms. I guess this would be like talking LS engines versus coyote or whatever. So traditional auto insurance policy. For a collision type of claim to kick in the, there, there has to be a collision to cover, like a fire damage situation.

As an, as an example, we, from the outset, I’m, I wouldn’t say we’re the only ones that do it this way, but I think there are some others out there that my answer is not going to apply to. So whatever provider you’re working with, I’d make sure you understand their stance. Ours is, you know, a policy that covers, you know, various different perils.

Perils being things that cause losses. Such as fire, regardless of a triggering event, like a collision actually had two lotus leases that are, um, pretty well known for having fuel related issues that can cause fire suddenly, [01:04:00] and, you know, can very quickly toast one of those cars where it’s no longer usable, no collision involved, work covered, no issues there.

Andrew Bank, if you’re listening, that’s an important thing to remember. So track insurance on your lease. All right, but expanding that, so in the case of fire, flood, act of God, natural disaster, et cetera. On any of the cars, but specifically cars that are non tagged because they’re not covered by standard automobile insurance policy, they would be covered on the trailer like we talked about earlier.

So all those conditions, let’s say you live in Louisiana and we get another Katrina, your car’s on the trailer get ready to go to nola, it should be covered by the track insurance policy. As long as, as long as you bought it for that particular time period or whatever. Yeah, well, well it’s at the track.

Yep. Absolutely. If you bought a H HP d e track day insurance policy, if you bought the off track insurance, the, you know, trailer car, so on coverage, it’d be covered in that situation away from the track as well. So Anthony also [01:05:00] expanded his question and he asks if a car has a declared value that is higher than Kelly Blue Book and it is totaled, what is the maximum payout?

Would it be the full declared value? Or the Kelly Blue Book value plus the value of the replacement cost modifications, et cetera. So it’s, it’s gonna be the full declared value subject to some documentation being provided on the value. I’ve always used this as, as it’s one that Kelly Blue Book does a terrible job with E 30 M three s.

So, you know, your late eighties, early nineties M three s are pretty notorious for being pretty drastically undervalued by Kelly Blue Book and others out there. There’s a ton of information that you can provide. Uh, if, if Kelly Blue Book is way off on determining the base value of the vehicle, multiple different ads, whether it’s cars.com, Autotrader, whatever it might be, even though they’re not even sold cars, they’re just list prices, you can use documentation like that to account for the base value of the car.

You know, as far as we, we kind of covered the modifications. If it’s less than [01:06:00] $10,000 in modifications, you don’t have to provide any documentation if it’s greater than 10,000. You need to provide some receipts and documentation on that. So Mike asks how much personal liability insurance is provided when track insurance for the vehicle is purchased.

There is $0 of liability coverage provided under our policy, and I’m not aware of, of a traditional H P D insurance policy that does. I’ve seen some supplemental liability policies that seen out there that I encourage people to really read the fine prints and really truly understand what it is that they’re doing.

You know, I’ll tell you, a lot of organizers out there, Have pretty broad policies that that do a good job of not just protecting themselves, but they often extend coverage to any participants, workers, officials, registrars, so on so forth, to where their liability policy as you sign up for their event, [01:07:00] can extend to participants should they be named in some liability suits.

And a lot of the reason behind that is, you know, they’ve got overall control and structure of the event. They’re the ones that are having you sign those waivers. They’ve got all the risk management procedures in place and, you know, they, they’re incented to protect individuals from suing each other for what might occur.

So, I mean, there’s everything from their liability coverage in place, which is typically anywhere between 5 million and 10 million per event in liability coverage. And that’s usually dictated and required by the track. And, uh, you know, from there they typically also have something referred to as participant accident insurance.

And it’s essentially like a benefit that applies to any participants in the event. Where it can kick in to cover medical expenses or should there be accidental death or dismemberment. Uh, there’s a scheduled payout for individuals that are harmed at an event. So this is a really great topic, even though [01:08:00] we kind of knew the answer going into that was gonna be zero.

It is an important thing to unpack because there’s always one extra variable in this that we kind of brought up early on, but we don’t ever address. And all three of us on this particular call are coaches, right? Or instructors, depending on your vernacular. And the coach is always innocent bystander in the right seat.

They’re not covered by anything, right? We’re at a huge risk. We’re at a huge disadvantage, and we kind of go, I always joke that we go into it like, you know, the clinging on battle cry. Like, today’s a good day to die, right? But in reality, there’s really nothing covering the instructor. So if something happens, the car’s covered, you know, the guy is covered, that’s driving, you know, the whole liability thing with the track and the waiver, it all applies to the driver.

Or the car, but never the coach. Right? And the coach is the odd, is the odd man out here. So say you got two cars with track insurance, one hits the other, they’re taking care of each other. But that door just came into my side of the car as a coach trying to tell this guy, you know what to do, where do we go from here?

So this [01:09:00] is something I’ve been really involved with, personal interest as a instructor coach, and you know, I’ve got a lot of friends that do the same thing and I wanna make sure they’re protected. So I will say this, you know, we probably ensure 60 to 70% of H P D E or track day events put on by event organizers throughout the country.

And every client that we work with, we’ve tailored the policy for HPDs or track days, whatever. Whatever term you want to use. And the big thing that we’ve had to change is the motorsport. Insurers that operate in the world typically have something referred to as a driver to driver exclusion. It makes sense why they have it.

The driver to driver exclusion is put in place because you know what most underwriters think of when they think of quote motor sports? They think oval track racing. You know, John bumping into Jim and getting into each other and you know, trying to spin ’em, you know, [01:10:00] before the finish to win the race.

Well, our H HPDs don’t look like that at all. And the reason that they do those driver to driver exclusions is. When John hits Jim, they don’t want the, you know, uh, Jim to be able to file a claim against the event organizer to say, Hey, this happened under your watch, therefore your liability policy should pay for damage to my car and my injury, and so on and so forth.

So what we’ve done for the H P D E world is eliminate that driver to driver exclusion. The key important aspect to that is if the driver to driver exclusion were in place, and you really have any incident involving the instructor being blamed for something where he is a quote driver, he’s an instructor, but he is also a driver at the event being sued by another driver.

Then it wouldn’t be covered. So striking that is critical and it makes, uh, that combined with, we write the policies in a way to where instructors are considered event [01:11:00] officials, and event officials are treated just like an employee would. Like, you know, if you’re operating in your capacity as an employee for your employer, should you do something wrong, the liability policy of your employer kicks in to, you know, cover that off.

So you have to be very careful of that in states like California, because being an employee, right, um, it, it gets really, really dark and dirty and, and, and very muddy at that point. So I, I, you know, ver verbiage wise, you guys got it all figured out, but that, that makes my ears perk up, right. In your particular use case, and this is really important and it hits close to home for a lot of the people that are listening to this on the other side.

Is that what you described is, is true, but there’s one more. There’s one more thing here, right? I’m in the right seat. Two cars collide, they’re covered, track insurance, whatever. Let’s say the guy hits my side of the car hard enough, buckles the B pillar, and now all of a sudden I’m being medevaced out. I need a new hip and now I’m out on pt.

And yeah, granted my disability will cover it and all that kind of stuff, but I’m outta work for a [01:12:00] while. I gotta do all these other kinds of things. I got medical bills I wasn’t expecting. Yeah, my medical insurance is gonna go so far, but I’m still the odd man out and the guy driving the car just went home with a new Corvette or a new Porsche because track insurance covered it for him.

So I hate to say at the end of the deal, the coaches are getting the raw end of this. So how, how do we fix this? Yeah, so, so that participant accident insurance I referenced earlier, applies to instructors just like it does. Any other participant, you know, I’ll tell you. There are some of these accident policies where, you know, they’re, they’re doing the very bare minimum amount.

They’ve got $10,000 in participant accident insurance that’s available to help cover medical expenses. So on. There’s some disability income as well. It’s very small in that type of situation. So that’s one end of the spectrum. The other end of the spectrum is there’s event organizers that carry a million dollars of participant accident insurance.

That in that exact situation that you described, the medevac bill, the hospital bills, there’s some [01:13:00] disability income included in there as well. All of those could kick in. So, you know, it’s not something comfortable to ask, uh, your event organizer, but. At the same time, if you’re volunteering your time to, you know, instruct with this particular group, I think it’s valid to bring that up to them, ask them what their participant accident insurance is, and make sure that you no one understand that and it might change who you’re willing to coach or instruct for.

So that participant insurance. Does that also cover in, in the unfortunate incident, we’ve seen this, and it’s less and less over the years, but it still happens periodically where we lose a coach, right? We, it was some of these events that are a little less organized than others where we’ve lost a coach.

Do those participant policies cover the family, you know, in case of death or anything like that? So in that participant accident policy, there is a accidental death and dismemberment portion of it, which, you know, basically anyone who’s [01:14:00] eligible, which would be instructors, coaches, participants, event officials, corner workers, so on and so forth, they are all covered and the accidental death benefit would be paid out in the event that they make that claim.

Again, I’ll say wide range here. Uh, you’ll find everything from $10,000 of accidental death coverage to a million dollars of accidental death coverage. So it really, really depends on who, who the group is and what, what insurance they’ve opted to buy. Right. And just for the, for the listeners, I know there are some organizations that we run with, S C C A is one in particular where they post.

Their insurance binder at the event. So you can go through and you can read at least a summarized version of it. I highly recommend that you read that next time you’re at an S C C A event or if you’re at a another organizer’s event, ask them about it and make sure you understand the policy because you need to protect yourself.

Absolutely. And you need to know, and that’s where we’re bringing this up, because a lot of people might not know [01:15:00] in the case of an extreme accident or just, you know, a fender bender on the track, whatever, that all of these things exist. People go there and they’re, they’re, they’re kind of unaware. So it’s really good that we’re talking about this, but you know, let’s get kind of back on track, for lack of a better pun.

And I think this dovetails right back into what, where we were going, and Brett and Anthony asked, does track insurance cover the driver’s liability for damage done to the track? The example is, will Lockton pay for a tire barrier or wall repairs, or any sort of track cleanup, which as we know, a lot of tracks have started doing.

I’ve seen it at v i r, I’ve seen it at Watkins Glen. You know, some of the big name tracks and there’s big bills. It’s the most expensive kitty litter I’ve ever seen. Right. Or some of the stories I’ve been told. So how, how do we handle this situation there? There’s, uh, multiple kind of considerations here.

Um, I guess first things first, I, I’m kind of disappointed with the, the way things have went in this area, I think for the longest time. It was [01:16:00] considered standard operating procedure if you owned a track. But if there was oil spilled, you’re gonna have to put a oil dry down. If there was armco damage, you’re gonna have to, you know, repair armco.

If, uh, the tire wall gets destroyed, you’re gonna have to retack it. Uh, there was a shift, I’d say about 10 or 12 years ago, and I, I’m not gonna take on the track, but maybe a track in the southeast that has immaculate grounds that, that kind of started a trend that a lot of other tracks picked up on. Our policy does include pollutant cleanup and removal.

Uh, there’s a carve out for it and, you know, the oil dry, you know, anything associated with a cleanup following an instant would be covered. Granted, it’s gonna be subject to the deductible, so if you just blew your oil pan off and dump it quarts, you know, right on the track and they send you a bill for that, but you didn’t hit anything.

And it didn’t, you know, the total damages, the kitty litter and the cost associated with that didn’t exceed your deductible. It’s not gonna kick in. [01:17:00] We do not, and I’m not aware of anyone under a h HP d e insurance policy provide coverage for other damage to the track. So if you damage arm code, get a bill for it.

If you, I’ve heard of maybe a track that will send people side bills if they go off sideways and uh, uh, you know, really hurt the grass, uh, you know, through their four wheel slide off track, that’s not gonna be covered. You’re, you’re on your own on that side. I would owe people a lot of money for going off track if that was the case.

He’s a, he’s a land, he’s landscaping as a side business. The next question comes from Brett and he, he’s asking about competitive events, like time trials, club racing, uh, things like that, which are often held at de events or in conjunction with DE events, you know, and we talk about S C C A and NASA events.

They’re often combined de and some sort of competitive aspect. So, uh, time trial [01:18:00] insurance. We were the first ones to do that. Gosh, I wanna say we did it three, four years ago. Um, it’s basically. You go to the same spot to buy an H P D E insurance policy, you fill out the same application. There’s just a button, uh, a question that’s required for you to answer.

Will you be participating in any time trial sessions? If you click yes, you have coverage, it’s noted on your policy. If you click no, you’re not covered, you don’t have coverage for it. It is an upcharge for time trial, as you probably would expect. It’s competition in nature. So, so that’s definitely available.

It’s easy to get club race side of things. Um, we, we made an attempt to do that, uh, probably three or four years ago. And, you know, frankly, just did not get enough interest from the market. A and B had some pretty high dollar claims that made it not very appealing for the insurer to continue to do. They tend to not like getting very little money and having to pay out big, substantial [01:19:00] amounts of money.

And so that, that deal kind of fell apart. I’d, I’d like to believe we could do it again down the road. The challenge that we run into there is in the h HPD insurance world, you get a lot of, you know, beginners, people that are getting into this sport. And h HPD insurance has been around for a while, uh, and before that street insurance policies used to cover you on track.

So different world versus in the race world. You know, most people that have been racing for a while, they’ve come to terms with the fact that if I rec wreck it, uh, if it gets destroyed, I gotta fix it and I’m on the hook for it. And, you know, you throw, throw a dollar amount out there, you stick a thousand dollars policy in front of them and it’s a thousand dollars for insurance versus.

Thousand dollars to upgrade this part of the car that makes me go faster and make me win more plastic trophies. The plastic trophies tends to win. All right. Well, you know, that kind of wraps up our q and a. A lot of the other questions that were provided to us by our members were actually covered in the talk track that we had earlier in this episode.

So I think we’ve done a really good job of [01:20:00] exploring all this and unpacking it. But I wanna give you an opportunity to also talk about organizer insurance and some key differentiators between you and some of the competitors out there that Brad talked about, like Haggerty and Open Track, et cetera. We won’t list all of them, but what makes Lockton different?

Why choose Lockton? Yeah. Uh, I appreciate that. Um, you know, I’d say probably more than anything is, you know, involvement in the sport. You know, I touched on it at the very beginning. Uh, this is something I’ve done for a very, very long time. I think. Uh, we really revolutionized the h HPD insurance offering and, you know, in a large part, you know, kind of played a role in the sustainability of this industry.

Uh, there’s a lot of people that, without an insurance option, I don’t think would ever participate in this sport. So I think we’ve played a, a pretty important role for the industry. And, you know, I, I think the other big aspect that I, I’d mentioned is through the involvement. I’ve got a high level of ownership and kind [01:21:00] of protection for, you know, my, my brothers and sisters that participate in the sport.

Um, I can’t tell you how many times there’s been a little claim issue here or maybe even a big claim issue where there was a little bit of a dispute where. You know, I’m leading our motor sports practice, this division within Lockton that, that I’ve built over the last 12 years where, you know, I’ll throw our weight around with the insurance company and make sure that our clients come away, uh, with, you know, what they expect, what’s fair, what’s right, so on and so forth.

So I’d say that for, for kind of the why Lockton side, the, the other components and, and we, I think largely touched on this, is event organizer insurance. I think I mentioned we cover probably say, 60, 70% of h hp d e or track a events out there. You know, it there, there’s two sides of this equation to the sport doing well.

It’s one on the participant side, having participants that do events and I think insurance plays a role on that. The other side is event organizers that, that are [01:22:00] needed to put on events and making sure that they’re properly insured, that we’re negotiating with insurers that really recognize how much lower the risk is in the, in an H P D E event compared to that.

Oval track race compared to that drag strip race, so on and so forth, that as we can have influence and help them get the right insurance package at a lower cost, it decreases their operating cost. Helping them drive down participant cost, which helps them fill events, which helps them be more profitable.

You know, it’s this big circle and you know, again, I think insurance is, is a topic most people don’t want to talk about or don’t like to think of it as a good thing. But I think we’ve been very effective at positively influencing this industry on both sides of the equation to, to help it succeed. And you know, at the end of the day, I don’t want to be a guy that sells insurance, but I sure like being a, a guy that can try to help our industry.

Be more successful and sustainable in the long term. So [01:23:00] Ryan, I think this has been an awesome conversation. I have a whole new perspective on track insurance, you know, and like you said, nobody’s a fan of insurance. You know, like nobody’s the fan of the Spanish Inquisition. But I think in this case, for all of us that are in this particular sport, this is more of a need to have than a nice to have.

And it makes complete sense and I think the package that you guys are offering is, is fantastic. So for all of our listeners out there, to learn more about Lockton’s Track Insurance program, be sure to visit www.locktonmotorsports.comorreachouttoryanatourstopatlocktonaffinity.com. Rst a u b lockton affinity.com.

So Ryan, I cannot thank you enough for coming on the show. This has been absolutely fantastic and, uh, looking forward to seeing if you add Rally Cross to the policy options there. Sounds great. Thank you guys. Appreciate it. Pleasure.[01:24:00]

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