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Taking your car on a racetrack? Yikes!

By September 12, 2017February 23rd, 2021Personal Auto Insurance, Personal Insurance

On YouTube, The Stradman is my favorite channel to watch. Since James was 13 years old he saved up his money to buy his dream car – a Lamborghini Gallardo.  His videos show him diving his car, talking about supercars, and traveling around the world showing off exotic cars of every stripe. 

In one of his recent adventures he participated in a road rally of exotic supercars that took him through different states. In one episode he drove his Lamborghini on a race track.  At a different stop on the road rally, the other participants were competing in a drag race on an official drag strip.

I found myself screaming “JAMES! NO!” Why did I have such a reaction to him?  Because embedded in every personal auto policy is an exclusion for driving a car on a race track.

The official “Racing Exclusion” in an ISO Personal Auto Policy reads as follows:

“Any vehicle, located inside a facility designed for racing, for the purpose of

1. Competing in; or

2. Practicing or preparing for; any prearranged or organized racing or speed contest.”

This exclusion can be bound under liability, medical payments, comprehensive, and collision coverage. The key to this ISO policy is that it only applies to vehicles “inside” a facility designed for racing.

To all my fellow NASCAR fans who take their RV or car to a race track and park on the infield to watch the race, I say to you do not worry. This exclusion does not apply to spectators watching a race.  It only applies to people participating in a race or practicing/preparing for a race or speed competition.

Some readers are probably wondering what an ISO Personal Auto Policy is. ISO stands for Insurance Service Office.  This is an organization that creates standard insurance forms that are used by a large majority of insurance carriers in the United States.

Pay close attention to the following: There are some insurance carriers that will take this ISO standard policy and modify it to suit their own purposes. I point this out because there are some insurance companies who will take this exclusion for racing and make it apply to any kind of race on public roads.

Should a person who is racing his car on a highway really be entitled to insurance proceeds? I’m going to say yes, because racing is a very broad term and there are races that are not based on speed but on time.

Many years ago my friend Jeff was telling me about a road rally that he participated in that included some on-road and off-road driving through the New Jersey Pine Barrens. The purpose of the race was to complete a pre-determined course and come in as close as possible to a set time.  The driver who was closest to the set time would be the winner.

This road rally did not require anyone to be driving at a high speed. In the race rules speeding was prohibited.  To an insurance carrier this would be considered a race.  If Jeff had insurance with a carrier that restricted racing anywhere he would have had no coverage for anything that happened in that race.  If Jeff had a standard ISO policy he would have had coverage.

If you are curious to know if your auto insurance policy has the more restrictive exclusion for racing, jump over to the exclusion section of your policy. Here is an example of some restrictive language that I found with a nationally known insurance company:

“We do not provide Liability Coverage and we have no duty to settle or defend any claim or lawsuit…For bodily injury or property damage arising out of the ownership or operation of any vehicle while it is being used in any {emphasis mine} racing, speed, or demolition event or contest or stunting activity or in preparation for such an event, contest, or activity.”

In this language you see that there is no restriction as to where the race is taking place. Also, there is no restriction as to the type of race.  Any kind of race happening anywhere is excluded.

Some would try to see if they could get away with racing and not tell the insurance company what they were doing. A man named Robert Atlas tried to do this very thing.  He told his insurance carrier that he crashed his 2012 Corvette Stingray while exiting a freeway.  When his insurance carrier did an investigation they found a video of the accident that someone posted on YouTube.  The video showed the accident occurred on a drag racing strip, not an exit ramp. Check out the video below.

The $61,465 that was paid by the insurance carrier to him had to be returned, and he was sentenced to two years supervised probation in addition to paying $1,560 in court costs.

Here’s the rub

If you like to race your car or participate in road rallies you need to look over your insurance policy first to see what your insurance carrier will do. In some instances you may have to buy a separate insurance policy to provide coverage for you to participate or practice for a particular race.  There are some insurance companies that provide coverage, but it’s not inexpensive.

Scott Harrigan

About Scott Harrigan

Scott started his career in insurance in 1988 and joined Rue Insurance in 2004 as a Marketing Specialist focusing on creating effective risk financing and risk transfer programs for companies and non-profit organizations. In addition to this he is a member of the Rue Insurance educational team that provides ongoing professional development in critical insurance concepts and programs to Rue employees. About Scott | More Posts by Scott