Racers need to ask what the...
Racers need to ask what the track's insurance policy is and what it covers. Supplemental insurance is always a good idea.
As with most services, insurance costs are rising all the time. Even as race cars become safer, there are still injury accidents on the track, in the pits, and in the stands. Only now, each accident becomes more costly to the racer who can't work and to the insurance company who eventually returns that cost to the racetrack in the form of higher premiums. When that cost gets back to the track is it absorbed by the track operator? Hardly. It is returned to the racer in the form of increased gate fees.
How it all works Every week you trundle down to the pit gate, sign your name on the dotted line, and buy a pit pass. Unlike what you might have thought, the pit pass you are required to buy is not an insurance payment. Usually, the track has some form of blanket policy that covers everything inside the track property. The pit pass should be considered just that: The price of admission to the pit area.
So this is the way insurance works. The costs of any claims are spread around so everyone pays a little. As expected, everyone who handles the money gets to keep a little of it just like the grocery store that sells apples and makes a profit on each one.
Attorneys are part of this chain, too. Many jokes are made about the practitioners of the legal arts, yet, the truth is that each of us, finding ourselves in a predicament involving risk to our financial and personal well-being, will seek the services of a lawyer. In the real world, lawyers are a fact of life. We can cuss them, but we can't get along without them. When we need one we want the best we can find, thus the price goes up.
Insurance companies collect "premiums" or payments from the track operator, money that came from you. The company pays back a portion of this money when there is a claim of injury. Sounds fair and it is. Everyone involved makes a living.
But is it really that simple? No. The insurance company/agent has little control over the insurance coverage at any given racetrack. The agent sells insurance to the track much like that grocery store sells apples: You can buy red ones, green ones, large or small. Each track operator buys the coverage he wants.
There are many insurance "apples" to choose from. One category is ambulance coverage. This will pay the cost of an ambulance ride to the hospital, which can be $1,500 or more. Some tracks have this coverage, some don't. Don't forget there may be large deductibles in each category. Accidental death and dismemberment coverage may be as little as $5,000. This coverage pays its set claim amount should you be killed or lose an arm or leg. Check the price of a casket or prosthesis in your area and compare it with the coverage you race under.
Liability coverage is the area where high-dollar claims are filed. This, too, can be confusing. One track operator said he had $1 million worth of liability insurance, and upon checking the validity of that claim, I found out he wasn't lying. The $1 million policy was to protect him and the track in case of an accident. I found he had only a small amount covering the racers on the track. In fact, it would have barely covered the cost of a trip to the emergency room. That meant if you had a claim, you would have to get a lawyer and sue the track operator. Thus, the racer who asked only a simple question might still be misled. I found out because I called the insurance company.
Liability insurance coverage sometimes pays out huge sums for medical treatment. Therefore, the company bases its rates for track owners on how much it pays out. With this being the high-dollar part of racing insurance, many involved seek to lower the costs. With everyone seeking a part of the dollar this is hard to do. One of the ways this is accomplished is with secondary insurance.