Ferrari’s Michael Schumacher may have just won the first U.S. Formula 1 race to be held in 9 years, but that doesn’t mean his insurance premiums are going to be reduced.
According to Lloyd’s, policies covering race car drivers in Formula 1 and other auto racing events have been rising in recent years, even while the number of deaths and injuries to drivers has diminished.
Largely due to increased emphasis on driver safety, following Ayrton Senna’s fatal crash at Imola in 1994, race car drivers are safer than ever. There have been no driver deaths in Formula 1 over the last 3 years, including this season, and only three serious injuries, but the number of accidents has actually increased, primarily due to faster speeds. Over the last three years there’s been an accident for every 1383 kms. (830 miles) driven, the highest ever.
In addition, bigger prize money, and the value of a driver’s endorsements have made motor racing stars more valuable, which translates into higher policy limits. Indianapolis winner Schumacher carries an estimated $20 million in coverage, and his rivals, Mika Hakkinen, David Coulthard, Jacques Villeneuve and other first rank drivers have policies estimated at between $5.5 and $10 million.
The level of a driver’s skill or experience doesn’t seem to make a difference. Jonathan Price, a specialist underwriter at BF Caudle Agency told Lloyd’s, “Past experience has shown that the success of an individual racing driver has little bearing on the risk to an insurer. The tragic deaths of some of the greatest talents in the sport are proof of this.”
Lloyd’s covers Formula 1 cars too – while they’re in transit – and with races in Europe, Asia, Australia, North and South America they actually travel a lot farther off the track than on it. But once they arrive there’s no coverage. Any damages on the track are at the expense of the team, and, as each car costs a minimum of a few million to build and equip, they’re expensive.
Lloyd’s does, however, write policies covering the actual event, which protect against its cancellation or abandonment, or, if for some reason, there’s no TV coverage. This covers sponsors for lost income.
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