5 Common Mistakes Drivers Make With Track Day Insurance
Track Day Insurance is sold and presented as coverage in case the unexpected happens while participating in a track event, which depending on the policy can include an HPDE (high performance driving education), “Track Day”, or even limited “Time Trial” events.
But one of the challenges we’ve seen with track day insurance is that it is sold very transactionally. This leads many people to make assumptions about what is covered, how things work and what to do if they need support with their policy.
In this blog post we’ll dive into 5 common mistakes drivers make with track day insurance.
Not sure what track day insurance is? It’s a supplemental policy to cover certain on track activities. Your regular car insurance. Even if it’s from an enthusiast friendly company like Hagerty, its highly unlikely you have coverage on track with your regular on street insurance policy.
So let’s get to it, here are some tips or tricks with track day insurance.
Attempt Make Last Minute Changes
One of the most common mistakes people make is waiting until the last minute to make changes to their track day insurance policy. And not just cancelations, which we will cover in another topic. Need to add a driver? Mechanical issue forcing you to bring a different car?
Unless you have an annual track day insurance policy where the additional driver or car is already covered on the same policy, you might be surprised to find out what’s the standard working day ends you can’t make changes. Most track day insurance customer support operates 9-5 and there is no meaningful way to make adjustments to your policy after hours.
Generally the only option available is to purchase a second, new policy with the changes, and then request a refund on the original policy at the next business day. However, with most track day insurance companies if there is a cancelation penalty, you’ll still be responsible for the cancelation fee.
Bottom line – don’t wait until the night before or morning of the track day to make changes. If you need to make changes to your policy, do everything you can to make them prior to the close of business the last business day before the track day.
Not Being Aware Of Cancelation Policies
Many people buy track day insurance at the same time they register for a track day. However, don’t assume that your track day insurance policy has the same refund or cancelation policy as your registration.
Most track day insurance can be rescheduled, generally up to 30 days with little to no penalty. However, if you have to truly cancel because rescheduling is not an option, be aware that some policies don’t allow cancelations. Others will allow you to cancel when rescheduling isn’t an option, but you generally will only be refunded a percentage, usually 90%, of the policy.
Also, you generally would not be able to cancel a multi-day policy where you used any portion of the policy, for example a weekend event where you drove on Saturday but Sunday was canceled.
Most annual track day insurance policies do not allow you to cancel early. Unlike your traditional on street insurance, where you generally can cancel or switch and be owed a pro-rated refund, annual track day insurance policies are generally fully earned at inception. This means canceling mid-term does not entitle you to a refund.
Of course, what the cancelation policy is varies by the company and policy type. Bottom line, check your cancelation policy before making a purchase. While this doesn’t necessarily mean you have to wait until the last minute, it will hopefully help you avoid buying a policy without considering avoidable issues, like weather or personal obligations.
Getting The Policy In The Name Of The Wrong Person
There are a number of situations where the driver, and therefore the person interested in buying track day insurance, should not buy the policy. In fact we’ve run across a number of situations where you should be VERY careful about who buys the policy. This also plays on the bring a friend topic above.
Every insurance policy requires the policy holder to have an “insurable interest” in the policy. While insurable interest can be a bit of a complex topic. It is subject to different states rules and even can vary by opinion of the legal department of the insurance company. For the sake of our discussion, it generally means you need to be the owner, lien holder, or spouse of the vehicle owner. As one underwriter put it, “think of it like this – whoever is named on the policy has to have the legal authority to sign over the title if needed”. While we all hope it never comes to that, it’s a simple way to think about why the insurable interest matters.
So what does it mean in a practical sense? Here are a number of scenarios we’ve come cross selling track day insurance where you may not have an insurable interest.
Driving Boyfriend/Girlfriends Car At The Track – in most cases if you are not legally married, any other relationship status does not qualify as an insurable interest. So if you are driving their car, they need to purchase the insurance and add you as a named driver. If your track day insurance company only allows the 2nd driver to be an instructor, get a different policy.
Friends Sharing A Car – The insurance needs to be in the name of whoever owns the car, with the friends being named as an additional driver. Yes, you need the friends permission.
Driving A Car Owned By A Trust Or LLC – if the vehicle you are tracking is owned by an LLC or trust, even if you insured it personally, you should make sure you have an insurable interest. While just because it’s owned by an LLC or trust doesn’t automatically mean you don’t have an insurable interest, there are a number of scenarios where you may not, like vehicles owned by a family business where you don’t have a named or sufficient ownership stake in the vehicle or company. Also, it’s important to note if you are using the vehicle for a commercial purpose, such as being a professional coach or offering the car for rent, you’ll likely need a different type of track day insurance policy all together.
Assume Damage To The Track Is Covered
Every track day or HPDE starts with a drivers meeting, and they all generally include the statement that if you damage the track they expect you to pay. Literally that day. Your private driving club membership contract probably includes similar language.
Damage to the track can easily run into the thousands or even 10s of thousands of dollars. And damages can come from parts of the track that may not be buildings or concrete walls. Run off areas and tire barriers that are damaged can still cost a lot of money to repair. We’ve even seen someone hit a safety truck, which totaled it.
Yet many people buy track day insurance expecting it to cover damage to the track. Most track day insurance policies include no liability coverage, which would cover damage to anything that is not the insured car.
In fact, there are only a few companies, like OpenTrack, that even offer liability as an option. So if you buy track day insurance expecting it to cover not just damage to your car, but to the track, be sure to find a policy that includes liability coverage.
They Expect Coverage For Mechanical Failure
A well known race car driver and TV personality recently shared a social media post from a track day enthusiasts who’s car went up in flames during a track day. The post went on to say an engine failure caused the car to catch fire. One immediate comment was “this should be an advertisement for track day insurance.”
In fact, at a recent track day we got asked this very question. If my car catches fire, is it covered?
Most track day insurance policies only cover damage during a covered collision. Which means any damaged caused by mechanical failure, including an engine failure that results in the entire car being totaled by fire, would not often be covered.
Its highly likely the car referenced in the above social media would not have been covered, as the failure could easily have been deemed mechanical.
Informational Purposes Only
Every insurance blog post, including ours, always has a disclaimer. Always read your policy carefully. Despite this warning, so many people fail to do this. Just like Software License Agreements and Terms of Service, people tend to breeze through these legal contracts with little regard for what’s included. It’s pretty typical, but the risk of doing so is more than just the possibility of disappointment, it could cost you money. Lots of money.
Of course, we have to say it – what is or what is not covered is defined by your policy, not by what you read on the internet, heard in the paddock or were told by a friend who tracks a lot. Our goal here isn’t to give you list of what is or isn’t excluded either, just to put these thoughts in your mind so you ask the question if you are unsure.
