Anyone who has watched a championship stock-car race–and there are plenty of you out there, given the fact that it's reportedly the fastest-growing U.S. spectator sport–realize at a glance that this is a risky business. But while you don't see insurance underwriters, agents or adjusters among the frantic pit crews, their contributions to risk management, coverage and claims make them as critical a part of the team as the most dedicated grease monkey, players in this niche market contend.

With racers, support personnel and spectators exposed to vehicles weighing 3,400 pounds, going as fast as 200 miles-per-hour on tracks of various sizes and shapes every weekend for most of the year, there are plenty of exposures facing this action-packed industry–on and off the track.

Taking on these risks are a group of highly experienced risk managers, insurance brokers, underwriters and claims representatives. They provide constantly improving safety standards for the drivers and team members, as well as measures to protect participants and fans.

The insurance companies involved run the gamut of the marketplace, including property-casualty as well as life and health carriers. The coverage provided includes property, workers' compensation, automobile, employers' liability, excess liability, crime, directors and officers, media liability, life insurance, and disability.

In case the worst happens, there are claims representatives on site at each event to deal with potential incidents.

Thomas Martin, a senior vice president at Brown & Brown Inc., Daytona Beach, Fla., is the primary broker for International Speedway Corp. (which owns 12 tracks, including the flagship for the industry in Daytona Beach) as well as for NASCAR–the National Association for Stock Car Auto Racing.

NASCAR and ISC are closely related firms founded by the France family of Daytona Beach. NASCAR is privately held and completely owned by the France family, while ISC is publicly traded but substantially owned by the France family.

NASCAR sanctions the races, establishes the rules for the road as well as specifications for the cars, and provides officials for the events. NASCAR also manages the marketing of the sport.

When Mr. Martin joined Brown & Brown in 1988, the brokerage firm only provided property coverage for ISC and nothing for NASCAR. He was given the opportunity to expand the two accounts, and he developed both of them into the current broad-based programs during the 1990s.

NASCAR has a contract with ISC to provide event liability insurance for the 12 tracks that ISC owns. The same contract is required of other track owners, who are called promoters that sanction NASCAR events.

The promoters purchase liability coverage that also provides participant liability coverage, with language that must be approved by NASCAR, Mr. Martin explained.

NASCAR, its officials, all car owners, all drivers and all sponsors of the event are additionally insured under the promoter's liability policy for each event. NASCAR requires the promoters to provide a minimum liability limit of $50 million per event–although most tracks carry excess limits higher than that.

Mr. Martin is one of several brokers and company personnel in the insurance industry that interface with David Holcombe, risk manager for both ISC and NASCAR.

A media liability policy covers NASCAR and its subsidiary, NASCAR Images–the division that provides many television broadcast programs of the sport, in addition to those produced by the major networks. NASCAR owns the broadcast rights for the races, which include the Nextel Series, the highest; then the Busch series; then the Craftsman truck series.

“The media policy is important. It covers the broadcasting and marketing part of the business,” noted Mr. Martin. “Any company that produces media and publishes it in written print, movies, radio or television needs to protect itself against the possibility of intellectual property infringement claims by third parties.”

Adding to the complexity of coverage of the teams is the fact that many car sponsors operate their own airplanes, which whisk the drivers to and from the tracks.

Another unique insurance risk is posed by the long-haul trucks that bring two race cars and support equipment to each of the races for each weekend during most of the year.

Several insurers cover this niche market. Among them, the liability carriers used for the ISC and NASCAR casualty placements include AIG, ACE/Westchester, Everest National, Great American, Philadephia Insurance and Zurich.

According to Mr. Holcombe, the race teams each buy what are called “owner/driver liability policies,” which are brokered by specialists in the field. The policy–specific to each racing team–provides coverage in excess to whatever the track provides for a claim.

Different companies handle the various risks for ISC and NASCAR, with at least five companies comprising the liability program. Most of the insurance is written domestically, both Mr. Holcombe and Mr. Martin said.

Coverage is first-dollar liability for non-racing claims–for example, sending a show car to some parking lot for display, Mr. Holcombe noted. Other exposures arise because teams will open their shops for people to visit, he added.

Unlike the property-casualty coverage, most of the life, health and disability insurance is written on “London paper” by Lloyd's syndicates, according to Mr. Holcombe.

It takes about $20 million to field a team, according to Mr. Martin, who said as many as a dozen cars are needed–at a cost of about $125,000 per car–along with about four long-haul trucks to ensure participation of a team in the Nextel Cup series.

Another unique component of ISC/NASCAR policies is the fact that tracks are physically different, with lengths varying from half-a-mile to two-and-a-half miles. Some are oval, one might be a triangle, another could be shaped like a cereal bowl, and yet another like a paper clip, according to Mr. Martin, who said each track calls for a different racing configuration for the cars and variable racing strategies.

Comprehensive medical facilities are required by NASCAR at each event, noted Mr. Holcombe–including a fully staffed trauma center with doctors, nurses, equipment and transport capacity.

Securing liability waivers are another critical component of the sport's coverage, according to Mr. Holcombe, although he noted that “liability waivers are not unique to the industries within the recreation area, where there is a higher degree of risk of injury.”

He said that he and his staff are “extremely precise” in getting waiver releases from people who have access to restricted areas, “where John Q. Public is not typically admitted.” These would include media people, such as reporters, television camera operators and photojournalists, or others with a reason to be in the restricted area.

Mr. Holcombe oversees the liability waiver system–including the language and applicability of each waiver. Among those who must sign waiver agreements are firefighters and emergency medical personnel, pit-stop workers and garage workers.

Mr. Holcombe said these agreements, which have been ruled legally viable, limit liability but don't provide blanket exemptions. “It doesn't stop someone from suing, but it does shorten the legal process,” he said.

One other unique exposure the race car industry has to account for is that the tracks have the responsibility for disposing of unused gasoline, oil and lubricants, according to Mr. Holcombe.

ISC has a contract with a national recycling company which has facilities on site during an event, including tanks used to take these fluids away and have them recycled, he noted.

Special Reports /

Action-Packed Stock-Car Races Pose Big-Time Risks, On & Off The Track

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