High Risk Behavior: Are You Covered?

Written by Andrew Freiburghouse on February 3, 2010 & Posted in Insurance

You like to have fun. Maybe too much fun. Your favorite weekend activities include racing your Lotus at the local track, bungee jumping off the Highway 18 Bridge, and doing back flips on the trampoline nestled in the corner of your backyard.

During the week, the insurance companies love you. You work a nine-to-five, walk to the office, and eat three balanced meals a day. Yet on the weekends, if they actually knew what you, Larry, and Curly were up to, they'd wish you didn't even exist. They would tremble at the thought of your car blowing a tire, your bungee chord snapping, or a wayward bounce on the trampoline sending you head-over-heels into the neighbor's barbed-wire fence. Of course, you'd assure them that you're a beacon of safety and that nothing would ever, ever happen. But what if something did?

Are you covered?

Auto Insurance and Car Racing
Car racing on the streets is unsafe, even if you live in rural Montana. And if you live in a populous area such as Los Angeles, California, racing down Rodeo Drive endangers other people. Not to mention the damage it can do to your auto insurance premiums if you get caught speeding.

But what if you take your speedster to a racetrack? For many years, insurance companies would cover motorists under their normal policies if the policyholder attended a "track day" or a high-performance driving school. Here motorists could participate in such events without the fear of wrecking their cars and taking a serious hit to the pocketbook. The caveat: no competition. Any "timed" event or contest between two or more individuals excluded motorists from standard coverage. In essence, they couldn't "race."

In recent years, however, some auto insurance companies have redefined what they call racing. Slowly but surely, policies started to exclude damage that occurred at any location that even hosted racing, whether an event was timed, competitive, or none of the above. According to Jerry Kunzman, executive director of the National Auto Sport Association, participation at his track events increased 500 percent from 2003 to 2008, although many drivers had no idea that they actually weren't covered.

Long story short: if you're not absolutely, 100 percent certain that you and your car are covered on the track--ask! If it turns out that you're not covered, some insurance companies still offer high performance driving school and track day insurance--for a small price.

Life Insurance and Extreme Sports
Diving off a bridge with a rope wrapped around your ankles may be exciting, but is it safe? Sure you've taken all of the necessary precautions and hired an expert to help you. Or maybe you're an expert yourself. Nevertheless, like the weekend warrior who takes his '68 Camaro to track day every other Saturday, is your "leap of faith" covered by your insurance company?

If you're just bungee jumping once on a lark, your term life insurance provider would probably cover a freak accident. But for you, who makes this a habit, do you tell your insurance company and pay the extra fee, or do you risk voiding your policy if something happens?

Well, if you'd like to leave your risk taking on the bridge, cliff, or rock face from which you customarily leap, ask your insurance provider about a rated policy. Many insurance companies offer rated premium insurance to individuals who they consider at greater risk of filing a claim. While extreme sports enthusiasts fall into this category, so do senior citizens over sixty-seven, smokers, past and present alcohol abusers, and those with current or potential health problems such as high blood pressure or obesity. Yes, a rated policy may cost you a little more than a standard one, but if your bungee chord gives way or your parachute fails to open, at least you'll know that financial security lies ahead--for your beneficiaries at least.

Look Before You Leap
Jeez, what a buzz kill, right? But thinking about whether or not your weekend fun is covered by your insurance policies is not nearly as much of a buzz kill as not being covered at all. In other words, be careful, and look before you leap.

Sources
Adhikari, Deepak. "Bungee Jumping Lures Adventurers to Rugged Nepal." April 27, 2008. Pittsburgh Post-Gazette.
"Insurance Companies Dropping Race Track Coverage," U.S. News and World Report, Oct 21, 2008.
Insurance Information Institute
Solomon, Chris. "It Pays to Avoid a Speeding Ticket -- Or Fight One." MSN Money.
"Q&A: Rated Premium Insurance," InsuranceNewsNet

About the Author

Andrew Freiburghouse is a writer and businessman. As a partner at Los Angeles tax preparation firm Pronto Income Tax of California, Inc., Andrew has served thousands of clients both face to face and over the telephone. Currently, Andrew lives in Brooklyn, NY, and is in the process of starting up his own tax practice.

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