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!

Crew Chief Brad: [00:00:00] Grand Touring Motorsports started as a social group of car enthusiasts, but we’ve expanded into all sorts of motorsports disciplines, and we want to share our stories with you. Years of racing, wrenching, and motorsports experience brings together a top notch collection of knowledge and information through our podcast, Brake Fix.

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 this viewpoint.

Crew Chief Eric: 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.[00:01:00]

And in the world of motorsports, especially high performance driver’s education, HPDE, there are a few companies out there that may offer track insurance. But on this episode, we’re going to focus on one specific company. HPDE. 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.

Crew Chief Brad: And as always, I’m your host Brad and

Crew Chief Eric: I’m Eric.

Crew Chief Brad: So let’s roll

Crew Chief Eric: welcome to break fix ryan.

Ryan Staub: Thanks guys. Glad to be here

Crew Chief Eric: Let’s talk about how you’re involved in motorsports What’s your background is and kind of lay it out for folks if we get to know you a little bit better

Ryan Staub: 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 Castro was 22 years old got my first car First, uh, I’d say kind [00:02:00] of real performance car at E36 M3. Uh, that would have been 2002, you know, when my young kids stumbled into a, uh, BMW car club gathering at my, uh, kind of in my area and Kansas city and a whole bunch of these guys started talking about these HPDE 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 really get engaged and involved in it. So it was a slippery slope from that point. I think I did my first, yeah, I did my first HPDE event before I did any autocross the first couple of years. Well, 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 of years I was doing [00:03:00] eight, nine, 10 events a year and, uh, about 2005 started instructing. About two years after that, still relatively young, 28 years old at that point, and the local 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 BMW club, uh, right around that time, started club racing.

And since that point, I’ve continued to race, continued to act as chief instructor for my local BMW club, and also do quite a bit of instructing with other organizations, whether it’s. You know, PCA, Audi club, NASA, so on,

Crew Chief Eric: right? So let me ask you this question, because we’ve all heard the jokes. We’ve all seen the movies and the sitcoms, you know, the, the insurance adjuster.

It’s not the most exciting personality in the world. It’s not the most exciting job in the world. So how do you go from tried and true petrol head to working for an insurance company?

Ryan Staub: [00:04:00] Yeah. So kind of in that progression. Around 2005, I want to say 2006, uh, you know, I had friends that had had on track incidents prior to that, but no one really ever had any issues with claims.

They’re, you know, you always heard the stories of the, the people that, The claim to their insurance company and insurance company basically gave them, you know, no hard time about covering the claim since it was an educational events 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, you know, 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.

That would never,

Crew Chief Eric: that would never happen. [00:05:00] Never, never, never.

Ryan Staub: It’s also great that

Crew Chief Brad: they do it two miles from the track too.

Ryan Staub: Yeah, exactly. So, so about, I want to say 2005 2006, I had my first couple of friends that all 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.

So, you know, really, uh, a and an opportunity, but be an industry that really needed an insurance solution to, to really be sustainable because, uh, I think to Brad’s point earlier. So a lot of folks that have cars that, you know, frankly, they can’t afford to write off should the worst happen 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 locked in. So locked in where 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 locked in. You know, build a [00:06:00] business and whatever sorts of industries they want.

Motorsports, obviously being my passion, I, you know, found a way to do that. So I got their approval to do it and it went out to the market and I heard a whole, whole lot of no’s from various different insurance companies that we tried to engage, to provide this sort of solution. Eventually, you know, found an insurer that was willing to listen to us, uh, to actually go to an event and see the structure and a typical HPDE event with classroom and in car instructors, you know, designated passing zones, so on, so forth.

And I really launched the, the first viable insurance program to cover participants in HPDE events at that point.

Crew Chief Brad: So how does someone sign up for track insurance? What are the costs, the plans? Are there different packages?

Ryan Staub: 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 [00:07:00] customers go to locked in motorsports. com click on each PDE track, the insurance from that point, they’ll put in details of the event that they’re going to. So, event organizer name, 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 shared, 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 want to buy it, they put in, you know, details of payment information and a policy sent to them. But then. Okay. You know, a handful of minutes following that. So today we only offer single event policies.

Previously, we had done multi event policies. Be honest, the way that it was structured with insurance companies, uh, we, we had six, nine, 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 [00:08:00] 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 to events, whatever the situation might be.

We had quite a 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.

Crew Chief Eric: Single event, multi event versus what we’re used to with our actual automobile policies where we’re paying by the year or paying by the half year or monthly or whatever it might be. Why not move to a structure like that?

Ryan Staub: 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 HPDE track day insurance world where there’s just a, You know, use your typical street insurance policy as an example, where, you [00:09:00] 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 and how many miles you do a year. Some of them will actually audit you based on that mileage, but instant frequency rates. When it comes to street insurance, it’s easier for those insurers as they have this massive scale of individuals they’re insuring to spread that risk 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 HPDE 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 [00:10:00] 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 really practical

Crew Chief Eric: to a point, right?

Because say I have an annual policy and my car 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, if the policy is 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 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’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?

Ryan Staub: You know, essentially what the policy covers [00:11:00] 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 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 hailstorm comes through while your car is parked in the paddock, if a low speed collision occurs in the paddock, you know, five, ten mile an hour, but not Actually on the track surface itself, something like that would be covered 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 racetrack facility, and it is unlike street insurance [00:12:00] 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 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 insurance practices in place 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 you’re doing is waiving your rights 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 VIR and, uh, someone totally missed the [00:13:00] brake zone, slams into you right as you’re turning in your policy that you bought still covers that.

Crew Chief Brad: I was going to ask about the declared value since you touched on it a little bit. So for example, I’ve got a 2003 GTI with a little bit of money put into it, but Do you have safeguards in place that prevent me from saying that my car is worth 75, 000, you know, for example?

Ryan Staub: Brad, you’re a smart guy. I wish I met you a lot of years ago.

But for the longest time, we had a set up 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 coilovers, these wheels, this intake, blah, blah, blah. And, you know, basically the base value of the car plus all the modifications was your agreed value.

And for 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 [00:14:00] 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 situation, but be still make 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 list of modifications would take me 30 minutes to input on our old website versus now I can just list a value.

I’ve [00:15:00] got all the documentation on the modifications to it that I can provide should I have a claim.

Crew Chief Eric: 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 Hagerty or something like that, not to call them out, but they have their specialty as well.

You had to get an appraisal. So, yeah. Yeah. 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, etc. 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? And it’s kind of weird, and it’s just how it is. But in this case, and this is a, this is really a reach back 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 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 BBS rims and you’re [00:16:00] getting those Bilstein coilovers. That’s all there. And it’s like now I could turn that over to locked in 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 that’s also the sticky situation you get into with all this is depreciation.

Well, those shocks have 10, 000 track miles on them, 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 agree with Brad. I don’t think it’s, 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?

Ryan Staub: 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, you know, try to [00:17:00] 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 going to find, well, it’d be very difficult to find. You know, those PBS wheels, those NCS dampers or Bilstein, I think you said, you know, are you going to 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.

Crew Chief Eric: Well, it’s time to upgrade to Olin’s at that point, right? Yeah. That’s the way

Ryan Staub: you think.

Crew Chief Eric: If you’re going to 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 the 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 [00:18:00] 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 going to unpack that as we continue the conversation, but let’s focus a little bit on the driver.

Does the driver play into this equation at all?

Ryan Staub: 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. While the typical HPDE 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, again, unpack that a little bit, but again, your typical HPDE insurance policy is just covering the vehicle itself. Not the, not the driver.

Crew Chief Eric: All right. So let’s talk a little bit more about the car and I’m going to, I’m going to 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 [00:19:00] car to the track, crossing the gate and 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 quadruple 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?

Ryan Staub: Technically, if the car is on the trailer and insured for the event, once you cross those gates, your HPDE 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. For a Non licensed vehicle.

This is essentially insurance that covers the car anytime that it’s [00:20:00] not on the racetrack and not being driven the exception to that. We’ve got a carve out on our policy while the car is being driven on and off a trailer. It’s actually covered. 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 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 HPD events. And you can also cover any tools and spares that are special, you know, kind of specialized to, uh, your motor sports type activity. So the, you know, the intent of it is to [00:21:00] be.

Your one specialty policy that covers the vehicle and all your race related equipment everywhere except for when the car is being driven or driven on the track.

Crew Chief Eric: So parked in my 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.

Ryan Staub: Interesting.

Crew Chief Eric: That’s also in transit to the event or not?

Ryan Staub: Correct. Yeah, the vast majority, and 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 HPD insurance type policy. So the rates are very low. 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

Crew Chief Eric: I want to put a little asterisk there. We’re still talking about [00:22:00] covering the car though, because I’ve heard stories of guys, man, I was trailing out the road, Atlanta, and my wheel passed me at 60 mile an hour.

And it came off the trailer, right. Went across the median. Like you hear those stories. Next thing you know, the thing’s dragging across the 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?

Ryan Staub: Yeah, it covers the car for sure because 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’ve 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 and tire. were to, say, you know, cross into oncoming traffic and hit another vehicle, your tow vehicle insurance provides a [00:23:00] 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.

Going back to one thing, it gets a little bit complicated with street license cars, not street license cars. So, so in your situation of towing the car to the track, if you’ve got a street insurance policy for a licensed vehicle, and you’re towing it to the track, your street insurance still should cover the car in transport, and then your HPD insurance policy wants to enter the grounds of the racetrack, that’s when that would kick in.

Crew Chief Eric: 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 trailer and cars with tags on to the track. And then there’s those of us that have unlicensed cars that are going to the track or rather untagged cars going to the track,

Ryan Staub: you know, 1 of the.

People really never ask about and they, I hope most people [00:24:00] understand this, but, you know, as far as what the policy covers, uh, any auto related policy is going to have something called a mechanical breakdown exclusion. So this 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 HPDE as I was, you know, driving my car fast around the track. You don’t expect You know, the quote damage or the wear 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 want to make sure people understand if you money shift your car for those with manual transmission cars, you’re doing a four to five up shift and you accidentally go four to three and zing the motor.

It’s done. It’s dead. Our insurance policy [00:25:00] would not cover something like that, but let’s use a situation where. You money shift the car back in checks up real bad as you’re going into the corner, you spin off the track and hit the wall. Any resulting damage from a mechanical breakdown, whether that’s, you know, grenading 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 claims adjuster tried to fight a claim saying, Oh, we think this control arm broke before it hit the wall.

So we’re not going to cover that control arm that, you know, that, that type of thing I’ve never encountered [00:26:00] and, you know, to be honest, we’ve never encountered an issue over, What’s it been 12, 13 years of there ever being a question of did the engine get damaged after the incident or before the incident?

But technically, if the, you know, by the way, most insurance policies are written, if the damage occurred prior to the instance, and it was a mechanical breakdown type of situation, it would not be covered.

Crew Chief Brad: So I’ve got two things here. One. So this past weekend I was at V. I. R. and I had a wheel hub failure and you put you’re saying essentially is had my wheel come off and all kinds of damage would have been caused to the car from being dragged across the ground across the track.

Then you’re saying that would be covered.

Ryan Staub: Yeah. So all the resulting damage and, you know, by the letter of the policy, uh, 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 [00:27:00] uh, whatever, 150, 200 blocks, you’d be, you’d have that part of it not covered, everything else would be covered.

Crew Chief Eric: That’s only if he made contact though, right?

Ryan Staub: No, no. Uh, well, I mean, he’s going to make contact with the ground after he loses a wheel. Uh, you know, that that is contact any other damage that would occur associated with it would be covered whether it hits something or not.

Crew Chief Brad: So, with modifications, you can either install them yourself, or you can go to a mechanic to have them installed.

Is there anything in the policy, any provisions against the shade tree mechanic and the people that are doing their own DIY? Is the policy say anything about that

Ryan Staub: says absolutely nothing about that. So that type of situation, you know, 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 vehicle and then adding the invoice for not just the parts [00:28:00] that they put on the car, but also the labor associated with it. So, you know, I do think we get some people that underinsure that, uh, you know, no sense of how to modify the car themselves and, you know, to 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’s, um, you know, that’s, 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 as the adjuster, you know, as they’re adjudicating the claim, kind of going through the process of handling the claim, they’re going to come up with a higher repair cost [00:29:00] because they’re always going to use a repair facility to come up with the 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 gets to the point where it makes more sense to total the vehicle

Crew Chief Brad: 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. Is that the similar process or the same process through the track insurance?

Ryan Staub: 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, uh, you know, as a result, I think a lot of clients end up coming out pretty [00:30:00] 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 get at auction, that dollar amount is offered to you should you not take it, you get your it out.

Agreed limit of insurance minus deductible. Should you decide to keep the salvage, you get the agreed value minus deductible minus salvage value and you retain the vehicle and if you’re 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 by buying it back. You can sidetrack having that salvage title. That’s going to live with the car forever.

Crew Chief Eric: That’s okay. 90 percent of all Miatas already have salvage titles.

Ryan Staub: Good point. Very true.

Crew Chief Eric: So that leads me into the next question, actually, since we’re still on this big topic about [00:31:00] 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 streetcars. Does this 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 we’re multi disciplined, right? And we’re going to, I’m going to get into that in a minute as well. So it’s important to, I think, step back and define what’s a vehicle.

Ryan Staub: Yeah, so so one thing that we skip 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, uh, Approving or underwriting drivers, in other [00:32:00] words, you know, you go through a process of buying a policy from us.

We never asked for your driver’s license number. We’re not checking on your driving history. Honestly, we feel that the group that you’re going to their event and he’s running the event as the passing rules as the instruction has the classroom instruction, so on so forth is far more important in evaluating the risk than uh, If you’ve had two DUIs 10 years ago, because at the end of the day, you’re, you know, if you’re a beginner novice level driver, you’re going to 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, yeah. We only cover HPD 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 kind of looked at the market, I’ve found that the majority [00:33:00] of motorcycle track day type guys that I’ve talked to, Are not really that concerned about the financial loss, but they feel like if they lay over the bike, and yeah, I’ll answer your question in a moment. But the feedback I’ve gotten is if they lay over their bike, you know, most of the stuff’s relatively small.

The big 1 is, you know, you’ve been a fork and all of a sudden it’s totaled or, or very, very expensive. But honestly, just kind of the feedback that we got was there’s not enough. Interest or demand on that side to offer it. I want to answer your question, but to answer the prior part of the question, you know, production based vehicle.

No problem. Production based vehicle turned into a track car. No problem. Production car turned into a full race car. Not licensed. No problem. Purpose built type race car or vehicle used in HPD and track day events. No problem. Whether it’s, you know, uh, something like a spec race or Ford, uh, [00:34:00] Formula car.

Yeah, we both have the same thought there. Um, so, so any of that stuff, uh, no problem at all. Uh, snowmobiles, no, uh, because we don’t approve any HPD organizers that allow snowmobiles, but so, so essentially any vehicle that the event organizers allow, and I’d say, you know, there’s probably less than five percent of event organizers that we’ve reviewed that we haven’t approved.

Crew Chief Eric: 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 HPDE specifically. And so I’ve been thinking about this, and I think HPDE 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 D E. If I go to do a lead following formula cars, right? For training, I’m in a D E there’s [00:35:00] many ways to define D E. 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 aspects to off roading, there’s educational aspects to rally cross, there’s educational aspects to auto cross. So you could say that all of those are high performance. Driver’s education, because none of it relates to the street. It’s all high performance driving. So how do you guys deal with that?

Ryan Staub: 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 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, it 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.

Yes. Yep. That’s kind of a non traditional one. You know, the O’Neill’s [00:36:00] of the world or Dirt Fish is an example in the Northwest, a rally school. Those, for the most part, the vast majority of the activity that occurs there is in their own vehicles. They’ve got kind of their own self insured programs that they utilize to, you know, Cover those.

I’d say that’s something that we could do. It’s just not really an opportunity that’s presented itself

Crew Chief Eric: as an asterisk. Their Audi club back the old days when it was the quattro club and based out of like, Minnesota and stuff like that, they would do, they would do ice racing like with it. People would bring their cars like they’re going to the track and they would go race in the snow and on a frozen lake somewhere.

So again, and I know that’s still very popular in North Central, you know, we’ll call it Southern Canada, uh, to do that type of racing. Right. So again, to me, it’s, it seems like there’s more. To what D E is, then what we just know on circuit racing.

Ryan Staub: 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 [00:37:00] offer autocross insurance. It’s actually sold as kind of a. A bolt on 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 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. It’s counter to what I shared with you about. Why don’t we just do the unlimited annual policy on 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 you know Kind of unforeseen catastrophic failure that sent you to a curb.

But, you know, the damage that we’ve seen occur in autocross is from all the kind of intelligence that we’ve gathered of autocross incidents tells us that the frequency is extremely, extremely low. And my personal experience has that as well. RallyCross is an interesting one. [00:38:00] RallyCross 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 will say 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 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 rallycross buddies are, you know, very much guys that would never buy an insurance policy. We’re just going to roll up our sleeves and fix it.

Crew Chief Eric: We call that the send it mentality.

Ryan Staub: Yeah, exactly.

Crew Chief Brad: 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 because there are a lot of 60, 70, 80, 000 jeeps and off road rigs out there that break all the time.

Crew Chief Eric: Well, look at Roush Creek. I mean, they have a whole educational program behind off roading. It’s a cross [00:39:00] between track DE and autocross because they got to 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 on all under the guise of education.

And, you know, I think Again, when programs were built, let’s say 20 years ago, there was D. E. and not a whole lot of anything else. 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 WDCR CCA 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, 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. [00:40:00] And, you know, what can I cover? How could it be covered?

Does locked in cover me? You know, these are the questions you should be asking yourself as we have multidiscipline listeners out there.

Ryan Staub: It’s a great point. You got me thinking a lot. And I think rally crosses, uh, is one that, that we need to take a harder look at.

Crew Chief Eric: 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?

Ryan Staub: 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 kind of acts like a police report does for your accident on the street, just as confirmation to the insurance company [00:41:00] that here’s what happened. And from our perspective, it’s that this incident did occur on the track. And we tried to collect some good and helpful details of.

Gosh, we’re having a whole lot of claims that, uh, whatever uphill us is to add V. I. R. Um, is there, you know, we’ve seen a big wave of them recently that 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, 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 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 [00:42:00] 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. A jester comes out pretty quickly at that point to 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 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 and check the repair facility and check to make sure that they’re not. 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 repair invoice [00:43:00] approved and moving forward with that, you know, as it approaches and it depends on the cars, it approaches 60, 70, 80, 90 percent of the value of the vehicle to repair it. That’s when they 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 salvage costs are going to exceed the value of the vehicle?

Crew Chief Eric: The question about the adjusters, are they just, you know, regular old adjuster? Are these handpicked people that know cars and know race cars a little bit better that you can actually have a conversation with?

I think some of our listeners would be at ease to know that, hey, The guy that’s going to come out, if I tell them 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?

Ryan Staub: 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 [00:44:00] the claim. And 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 Has a number of adjusters that they work with given, you know The you know wide geographies the whole united states 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. It’s not always going to be someone who knows the cars 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 they’ve got a good [00:45:00] familiarity. Are Going to be as knowledgeable about your car as you are.

No, but, but they can kind of speak the same language.

Crew Chief Eric: 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, it’s probably pretty common. So let’s just use Brad’s car. As an example, we got this GTI 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. Autobody shop goes, that’s a 2, 000 GTI from 20 years ago. Total it be done with it. Right. I’m not, it’s not even worth straightening out right there. You have the 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 going to get another donor [00:46:00] 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?

Ryan Staub: I’d like that, but unfortunately, no, um, you you’re going to have to total off, let’s say Brad insured it for 15 grand. Uh, you mentioned that number earlier, so I’m just going to use that number.

Uh, you insured it for 15 grand. They look at it. No way. We’re going to be able to salvage this thing Your buyback on that thing is probably going to be like 500 or a thousand bucks So you’re going to take 15 000 minus deductible minus 500 bucks You’re going to buy it back. The only expense that you’re going to take on is once you get the car script You’re going to have to tow it to the scrapyard or pay someone to pick it up to take to the scrapyard And you know what?

You’ll get a little bit of money back when you take it to the scrapyard for the, for the, for the, you know, metal scrap value. So

Crew Chief Eric: that’s true. So you mentioned guys anyway, so you’ve brought up this infamous term deductible. So how high are the deductibles on these policies?

Ryan Staub: So we offer a [00:47:00] 10 percent deductible and a 15 percent deductible option to be clear.

Most people get this, but, but I would like to specify that deductible is based on the value of the vehicle, not the value, not the amount of damage that you have. Scenario would be 30, 000 car, 10 percent 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 want to say the 10%. It says on our website, so I’m going to put the disclaimer that what our website says is right. I want to say it’s 2, 000 minimum and there is no maximum. So. So if it’s 10

Crew Chief Eric: percent on a 2, 000 minimum, you’re at least insuring the car for 20 grand.

Ryan Staub: Yeah, um, you theoretically can insure the vehicle for 15, 000 and you will pay a lower rate but your deductible is still going to be 2, 000.

Crew Chief Eric: Okay, interesting.

Ryan Staub: So if you’ve got a car where it’s in that [00:48:00] 15, 000 to 20, 000 range and you’re questioning whether you should insure all your modifications. Probably worthwhile to kind of think through that cost benefit analysis of well, I’m still going to play it, pay the 2, 000 deductible, but the difference in premium is X something to think about.

Crew Chief Eric: So let’s flip the coin the other way now, because I mean, I, I get, 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 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 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 [00:49:00] standard insurance policy and the work gets done in 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, wherever you haven’t reported it to them, which you shouldn’t because you’re filing it through track insurance. But what happens in that process? Does the auto body shop, you know, some of them are required to let’s say updated car facts.

Now, all of a sudden your car is reported to being an accident. Your standard insurance company might go back and look at that and see that 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 with tags on them.

Ryan Staub: You know, first things first, I’m not going to say there is never any possibility of this, but I’ve yet to experience and 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 a somehow hit their driving record because it wouldn’t be a, [00:50:00] 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 it, uh, one and then two, the, uh, I’ve yet to encounter a situation and I’m sure I would have 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 fall 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 do think the majority of them, uh, with the tracking systems that they utilize, [00:51:00] you know, report to some standard databases.

So I don’t think you’re going to sidetrack the Carfaxman, you know, showing the damage that occurred to the vehicle.

Crew Chief Eric: feel worse if they didn’t report it because now you have an unreported accident on the vehicle, right? And then the next owner, let’s say you turn it in, you trade it into the dealer, car max, 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. Zero fault accidents. Let’s say 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 out of 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 it, but you were hit by another vehicle. So in the standard Insurance world. It’s an accident like any other accident. Didn’t matter where it occurred. So somewhere [00:52:00] 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. So how does that all play out? Or it just maybe it does. Maybe it doesn’t.

Ryan Staub: So, so I’d say the, 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 the focus on the track insurance world, and I can speak to the approach that we’ve taken.

It’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, it used to always be, you had a claim, you see, you know, a 10, 15, 20 percent increase at your next renewal, that was pretty much kind of standard fare.

We’ve taken the approach really since the beginning that you have that first incident, just to be 100 percent clear, no rate increase, no change in eligibility, you can still buy policies that cost you the same as everyone else. No hoops to jump through. It’s just, it is what it was [00:53:00] 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 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 one claim, essentially two claims or more because of a situation like you mentioned, where.

You know, they, they were at, uh, involved in an incident where they were not at fault, something along those lines. So we’d essentially, we handled those on a case by case basis. But if we run into a serial incident, have her, um, in that situation, you know, they just become ineligible if they’ve had two claims in three years.

Once that three years is up, good to go again.

Crew Chief Brad: Does your system [00:54:00] 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 Hagerty or OpenTrack. We’re going or some of these other companies, do you all share information among the other insurance companies?

Ryan Staub: There’s nothing today. I, you know, I’m not going to say it’s never going to happen, but it’s, it’s never a conversation that’s occurred to my knowledge.

Crew Chief Eric: 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 VIR is a high area for wrecks? 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, [00:55:00] what are you seeing out there? Um, are there certain cars that are maybe more prone to having claims than others? Is it high horsepower? Is it, is it Miata’s? What are we talking about?

Ryan Staub: I’ve seen more of a trend over the last 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, E36, M3s, 944s, 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 HPDE event at CODA, Circuit of the Americas in Austin, the instructor group is typically comprised of, you know, 60, 70, [00:56:00] 80%, you know, 9, GT3s, Cayman GT4s, so on and 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 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 in this, you know, fortunately, we haven’t had to make 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 voodoo in that car.

And the number of sensors behind the bumper, you know, I think we had had a [00:57:00] claim when I say five, six, seven 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, 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 have shown something like that to me, I would have said, eh, two grand, three grand bumper cover paint done. Not anymore. There’s so much more, especially, you know, the more exotic ends. Uh, a lot more carbon fiber, even in the not so exotic end, 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 the hits are sometimes harder because when you go faster and you have a mistake and have an incident, you hit the wall harder. Uh, so you’ve got that A and then B, it’s just more expensive to fix newer cars.

Crew Chief Eric: Well, isn’t that the joke? Horsepower is how fast you hit the wall.

Torque is how far you push it. [00:58:00]

Ryan Staub: I like that one. Yep. Yep.

Crew Chief Eric: 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 touched that little red button that all of a sudden put it in air incentive 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 D E

Ryan Staub: I totally understand. Um, you know, that’s, that’s a balance I’d say if the insurance company.

So I think I’d. 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, AIX, a division of Hanover, 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 because you know what you’re doing. But they will review the results [00:59:00] of the insurance program and the profitability of it is, you know, are we losing money? And some years they do lose money. Some years they make money, you know, left to their own devices. Sure. They would put stipulations that you had to have all nannies on, uh, so on and so forth.

That’s kind of part of what we being on the consumer side of, of Protecting our clients and looking out for their best interest fight. Same time. I’ve had that exact thought across my mind a number of times, and a lot of it’s through direct interaction with students that inevitably, uh, you know, that first time or second timer out on track really, really wants to turn the nannies off and I’ll go ahead and give it to them 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 percent of the time they spin it as soon as they, uh, you know, uh, get it, get on the gas. So I, you know, I do think the higher horsepower cars, I’d really encourage outside of insurance just for, [01:00:00] you know, learning and developing and, you know, your safety I’d recommend until you’re a high level, intermediate, close to advanced driver, leaving that those nannies on 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.

Crew Chief Brad: 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’ve had, you have to have this nanny on or this, then you’ve got to 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. We’ll take care of it. Whatever happens, happens.

Ryan Staub: Yeah. Yeah. We’ve very much taken that approach. I mean, uh, you know, the reality of this type of insurance program in the world in which I operate, never dreamed I’d end up in insurance, but at least I get to [01:01:00] do it with motor sports.

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 so forth, you know, we sell 500, 600 policies to some higher value cars, but we saw a lot of. 200 policies. And frankly, if we didn’t take the keep it simple approach from an administrative perspective and controls and underwriting perspective, frankly, we wouldn’t be in this business because we’d be losing money.

So, so we, we’ve got to find efficient ways with proper controls in place to prevent fraud claims as an example.

Crew Chief Eric: So Ryan, this has been great up until now. So what we’ve done is we actually polled our membership and a lot of our VIPs and people on our mailing list. So say, Hey, right into the show and ask your questions about track insurance.

We’re going to have locked in on here and now’s your chance to get all those questions answered. So we’re going to kick off this Q and a session, and I’m going to start off with an actual locked in customer who has gone through this whole process. We wrote an article about him and his better half.

We’ll call her [01:02:00] that where they’d had an incident and they walked us through the whole process. It’s on our website. If anybody wants to look that up, go to gt motorsports. org and search track insurance. But John asks as a clarifying question. What drivers 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.

Ryan Staub: So, technically, as the policy is written, the policy covers the car. We used to require individuals to list any drivers that we’re going to drive the car. As I mentioned, we changed our website, our application process a while ago. To where the person buying the policy is obviously listing themselves as a driver.

And we do not require you to list any other drivers that are going to drive the car. I think that answers the question. Again, it covers the car.

Crew Chief Brad: Alright, so we’ve got a [01:03:00] question from 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 connection with the collision.

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

Those things as an example, we from the outset, 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 you. 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 [01:04:00] of triggering event like a collision.

Actually had two Lotus Elise’s that are, uh, pretty well known for having fuel related issues that can cause fire suddenly and, you know, can very quickly toast one of those cars where it’s no longer usable. No collision involved work up or no issues there.

Crew Chief Eric: 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 a 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, getting 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.

Ryan Staub: Yeah. Well, while it’s at the track. Yep. Absolutely. If you bought a HPDE track [01:05:00] 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.

Crew Chief Eric: So Anthony also expanded his question and he asks, if a car has a declared value that is higher than Kelley 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 costs, modifications, et cetera.

Ryan Staub: So it’s going to be the full declared value subject to some documentation being provided on the value. I’ve always used this as it’s one that Kelly blue book does a terrible job with e30 M threes.

So. You know, your late eighties, early nineties and threes 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, auto trader, [01:06:00] 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 kind of covered the modifications, if it’s less than 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.

Crew Chief Brad: So Mike asks how much personal liability insurance is provided when track insurance for the vehicle is purchased.

Ryan Staub: There is 0 of liability coverage provided under our policy, and I’m not aware of the of a traditional HPD insurance policy that does.

I’ve seen some supplemental liability policies that I’ve seen out there that I’d encourage people to really read the fine print 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 do a good job of not just protecting [01:07:00] 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 can extend to participants should they be named in some liability suit.

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’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 participants accident insurance, and it’s essentially like a benefit that applies to any participants in the event where it can kick [01:08:00] in to cover medical expenses.

Or should there be accidental death or dismemberment? There’s a schedule will pay out for individuals that are harmed at an event.

Crew Chief Eric: So this is a really great topic, even though we kind of knew the answer going into that was going to 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. 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 cling 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’s covered, it’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 [01:09:00] 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?

Ryan Staub: So this 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 want to make sure they’re protected too. I will say this, you know, we probably. And sure, 60 to 70 percent of HPD 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 HPD ease 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 [01:10:00] because, you know, what most underwriters think of when they think of quote motorsports, they think oval track racing, You know, John bumping into Jim and getting into each other and, you know, trying to spin them, you know, before the finish to win the race.

Well, our 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 HPD 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’s also a driver at the event.

Being sued [01:11:00] 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 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.

Crew Chief Eric: You have to be very careful of that in states like California, because being an employee, right, it gets really, really dark and dirty and very muddy at that point. So I, you know, verbiage wise, you guys have got it all figured out. But that that makes my ears perk up right in your particular use case. 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 true. But there’s one more. There’s one more thing here. I’m in the right seat, two cars collide, they’re covering track insurance, whatever. Let’s say the guy hits my [01:12:00] 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 out of work for a while.

I got to do all these other kinds of things. I got medical bills. I wasn’t expecting. Yeah. My medical insurance is going to 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?

Ryan Staub: 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 and so on.

There’s some disability income as well. It’s very small in that type of situation. Thank you. That’s one end of the spectrum. The other end of [01:13:00] 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 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 know and understand that.

And it might change who you’re willing to coach or instruct for.

Crew Chief Eric: So that participant insurance does that also cover 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? 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 [01:14:00] family in case of death or anything like that?

Ryan Staub: So in that participant accident policy, there is a accidental death and dismemberment portion of it, which, you know, basically any one who’s 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 the group is and what, what insurance they’ve opted to buy.

Crew Chief Brad: And just for the, for the listeners, I know there are some organizations that we run with. SCCA 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 in an event [01:15:00] or if you’re in another organizers event, ask them about it and make sure you understand the policy because you need to protect yourself.

Crew Chief Eric: Absolutely. And you need to know. And that’s where we’re bringing this up because A lot of people might not know 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 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 where we were going. And Brett and Anthony asked, does track insurance cover the driver’s liability for damage done to the track? And 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 VIR, 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 do we handle this [01:16:00] situation?

Ryan Staub: There’s a multiple kind of considerations here. Um, I guess 1st things 1st, I’m kind of disappointed with the way things went in this area.

I think for the longest time. It was considered standard operating procedure if you owned a track, that if there was oil spilled, you’re going to have to put oil dry down. If there was armco damage, you’re going to have to, you know, repair armco. If a tire wall gets destroyed, you’re going to have to restack it.

There was a shift, I’d say about, 10 or 12 years ago, and I’m not going to pick on the track, but maybe a track in the southeast that has immaculate grounds 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 incident would be covered.

Granted, it’s going to be subject to the deductible. So if you just blow your oil pan off and dump eight quarts, you know, [01:17:00] 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 costs associated with that didn’t exceed your deductible.

It’s not going to kick in. We do not, and I’m not aware of anyone under HPD insurance policy, provide coverage for other damage to the track. 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 going to be covered.

You’re, you’re on your own on that side.

Crew Chief Brad: I would owe people a lot of money for going off track. If that was the case,

Crew Chief Eric: landscaping as a side business.

Crew Chief Brad: The next question comes from Brett, and he he’s asking about competitive events like time trials, club racing, things like that, which [01:18:00] are often held. DE events or in conjunction with DE events, you know, and we talk about SCCA and NASA events.

They’re often combined de and some sort of competitive aspect.

Ryan Staub: So, uh, time trial 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 HPDE insurance policy. You fill out the same application. There’s just a button, 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 not a requirement. 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 that’s definitely available.

It’s easy to get corporate side of things. Um, we, we made an attempt to do that, uh, probably 3 or 4 years ago and, you know, frankly, just did not get enough interest from the [01:19:00] 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 amounts of money.

And so that deal kind of fell apart. I’d like to believe we could do it again down the road. The challenge that we run into there is in the HPD insurance world, you get a lot of beginners, people that are getting into this sport and 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 wreck, wreck it, uh, if it gets destroyed, I got to fix it. And I’m on the hook for it. And you know, you throw it through a dollar amount out there. You stick a thousand dollar policy in front of them and it’s thousand dollars for insurance versus.

1, 000 to upgrade this part of the car. That makes me go faster and make me win more plastic trophies. The plastic [01:20:00] trophies tends to win.

Crew Chief Eric: 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 exploring. it. But I want to give yo between you and some of t there that brad talked ab open track, we won’t list what makes locked in diff

Ryan Staub: Yeah, I appreciate that. Um, you know, I’d say probably more than anything is, you know, involvement in the sports. 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 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 the sport.

So, I think we’ve played [01:21:00] a pretty important role for the industry. And, you know, I think, The other big aspect that I’d, I’d mentioned is through the involvement, I’ve got a high level of ownership and kind 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 motorsports practice, this division within Lockton 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 other components, and we, I think, largely touched on this. is event organizer insurance. I think I mentioned we cover probably 60, 70 percent of HPD or track day events out there, you know, [01:22:00] 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 are 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 an HPD event compared to that oval track race, compared to that drag strip race, so on, 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 costs, which helps them fill events, which helps them be more profitable. And it’s this big circle. And, you know, again, like insurance is, is a topic most people don’t want to talk about or don’t like to think of as a good thing, but I think we’ve been very effective at positively influencing this industry on both sides [01:23:00] 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 guy that can try to help our industry. Be more successful and sustainable in the longterm.

Crew Chief Eric: So 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 fantastic.

So for all of our listeners out there. To learn more about Lockton’s track insurance program, be sure to visit www. LocktonMotorsports. com or reach out to Ryan at rstaub at LocktonAffinity. com. R S T A U B at LocktonAffinity. com. So Ryan, I cannot thank you enough for coming on the show. This has been absolutely [01:24:00] fantastic and uh, looking forward to seeing if you had a rally cross.

To the policy options there

Ryan Staub: Sounds great. Thank you guys. Appreciate it.

Crew Chief Eric: Pleasure

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