Drew, I understand, but that is the case with most insurance. The premium far exceeds any actual payout.
The point is you are trying to avoid a single catastrophic loss with no coverage that bankrupts you. That is the risk avoidance that you are paying for.
For example, take a look at the SCCA's books. They could not handle a $1 MUSD uninsured cash payout, much less a $10 MUSD one.
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Joe, the court file you sent me on that showed some stupid stuff on SCCA's part, that is for sure.
Still, different from a catastrophic personal injury -- pure business losses that are hard to insure against anyway.
But could have been entirely avoided if they had just been fair to the Fran Am guys.
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Andy is right.
Also, the umbrella portion of the insurance is probably very cheap. The real risk to the insurer is the first $1 MUSD, not the last $14 MUSD.
Will the SCCA give you a break down of how the premiums break down?
Then, as Andy says, what you really need to do here to see if there is an issue is see if (a) the amount of insurance we are carrying is too high given our risk (I suspect not, as one single wrongful death claim can approach our coverage limits) and ( whether the premiums we are paying are too.
Point ( is really a question to be determined by looking at what other insurers, IF ANY, are offering for this type of risk. That's really what you guys need to be doing. Ask NASA or PCA or BMW CCA how much insurance they carry, and at what cost and then compare it to the SCCA.
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Let me add, that while I would have never headed doen the path of building spec cars from a non-profit. The fact is we did. We sold 800+ cars under a stable rules set and have a very competitive group of cars attending every race they can. SRF has the highest participation numbers over the laast 7 years (all I can count) We made a promise to the guys that bought them to maintian stable rules and cost controls on the class and we need to honor that until the cars are not a viable option. Like all things SCCA i believe enterprises suffered from piss poor managment in the past and that was the biggest issue with it turning good numbers. I believe the current manager has the best interest of turning a profit while maintianing the cost effective nature of these cars. I have no propblem with the choice to service our customers as we should. That said other business practices of the past and current are the real issues this club faces.The funny thing is it looks to me that the SCCA (and Enterprises) could have BENEFITTED from Fran Am by adopting their car and selling it at a slight markup. I don't know all the ins and outs though, just what I got from the Court papers Joe sent.
What disturbed me in those was the decision by the SCCA NOT TO CLASS THE FRAN AM cars. That was just wrong and silly and righfully led to a lawsuit.
Bill, Pete Lyon is SCCA General Counsel and also the broker for the insurance company thorugh which the SCCA buys insurance. While it looks bad, it may not be if the premium is reasonable, etc. Also, Lyon may play no role in selecting the insurance. We'd have to look at BoD minutes to see who voted on this and approved it.
That said, I woudln't have set it up that way just to avoid any appearance of impropriety.
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I agree with your protection of the Enterprises commitment, Joe. But the did the same on the Shelby CanAm, didn't they? As far as price protection, the original Spec Racer sold for a little over $10 grand, but after Renault and the SCCA had a "divorce", and the Roush/Ford drivetrain came on board, the transition amounted to another $10,000 to purchase in kit or to transform. Then, the SCCA dumped totally on the Renualt powered cars and refused to allow them to race in any form of SCCA event.
But, say we protect the SRF's and their racers...what caused the FE formula cars and the sports racers? Did we, as a club, need another spec class that was sold by us to be raced by us? Did Mazda, as some have suggested, lay an abnormally large quantity of bucks in the back pockets of some to get such a class created?
Cheese, when F500 was created as F440, we promised to keep the rules and the engines solid, but once they went national, the chassis were rendered illegal. Shortly there after, the engine supplier went away, only to be replace by another, and then replaced by an even different one. Where was the stability in that?
Even Formula Atlantic has gotten lost in the rules changes. Gone are the Ford BDA's, replaced by the Toyotas, and now booted by the Mazdas.
No wonder the production guys P&M! Their's is a nightmare of confused rules.
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