Racing Blues

I’m a racer, but I’m not a historic — or vintage — racer. My observations are definitely unscientific, but it does appear to me that historic racing has grown more crash-prone than before.

It seems that historic racers have grown more competitive, take more risks, and suffer greater damage to their and others’ cars than before.

We all know that European historic racers have always raced hard — with less regard for bringing straight sheet metal home. They have seemed more willing to accept body damage as the price they have to pay to race in these venues. American racers, however, have always seemed more, shall we say, respectful of the cars.

That may be changing.

If you are “old school” about this, and you do your best to keep your historic race car undamaged, but some modernist competitor causes you to incur unnecessary damage to your historic race car, what can be done about it?

In two words, not much.

Waivers

When you entered the race, you signed a very broad form of release that absolved the event organizers and your competitors of legal liability for whatever might happen on the track.

There are many court cases where such releases have been challenged, but there are very few instances where the challenges have been successful. Racing is an inherently dangerous activity, and releases are logical agreements for participants to make.

Consider the results if general principles of negligence applied to racing. You get overly optimistic about your car’s ability to make a turn, spin out from the resulting oversteer — and take out your closest competitor.

A more reasonable driver would have gone a little bit slower into that turn, so you’re negligent and on the hook for the damage. Perhaps you can defend on the basis that your spin was caused by low tire pressures that resulted from your crew’s failure to set pressures properly. Now you’re off the hook, but your crew is liable. We don’t have to go much further with this example to conclude that if negligence rules applied, no one in their right mind would ever race.

Absent some irregularity in the documentation, it’s highly unlikely that you will get a release invalidated.

However, the release does have its limits. Say your competitor gets angry because you passed him, and gets back at you by intentionally punting you into the wall. Intentional attacks of that sort are not usually covered by a release, and you may have a good legal claim. But, of course, your view of an intentional attack is likely to be characterized by your competitor as an unfortunate failure to see you, so proof problems can be substantial.

Assumption of risk

Invalidating the release may not be enough. You also have the legal principle of “assumption of risk.” In plain English, that is the legal system’s version of, “If you’re crazy enough to go do this sort of thing, don’t blame someone else when it goes wrong.”

Assumption of risk is a common law principle that varies from jurisdiction to jurisdiction. But, everywhere, there is enough there to make recovery unlikely.

Insurance

Part of the auto-racing creed is that no matter who is at fault, each driver bears the cost of fixing his own car. If you’re going to be on the hook for it, can you use your auto insurance policy to repair the damage?

The “no” answer seemed rather obvious, but it was worth the effort to check with an authoritative source: McKeel Hagerty of The Hagerty Group.

“Yup, it’s excluded,” was Hagerty’s quick and matter-of-fact reply. Collector car policies are no different than mainstream auto insurance policies. No coverage is afforded for anything that happens in a racing environment. In fact, they now typically exclude coverage for anything that happens on a racetrack or its “hot” areas.

There are, however, some insurance companies that do insure race teams. Unfortunately, their premiums are usually very substantial, their deductibles are usually very high, and their coverage can have severe limitations.

That said, you can check around and see if anything is available that works for you.

Should you?

The simple insurance coverage question surprisingly brought out the car guy in Hagerty.

“Really great cars get cracked up on a regular basis,” Hagerty said. “The current generation of owners seems to have a ‘use imperative’ — the cars have to be raced, no matter the cost. Sure, they can be repaired over and over again, but how long can we keep doing that? At some point, don’t you have a Ship of Theseus problem?”

If that story isn’t familiar to you, here’s an excerpt from an old “Legal Files” column (March 2012, p. 32):

Several thousand years ago, Theseus developed hero status as a Greek warrior. The Athenians decided to honor him by preserving his ship for all time. Unfortunately, the elements were not kind. As the ship’s planks decayed, the Athenians carefully and sensitively replaced them one by one, with perfectly crafted replacements. Eventually, none of the original planks remained. Plutarch then asked the philosophical question, “Was this still the ship of Theseus?”

Hagerty laments the loss of originality that inevitably follows the repetitious damage vintage race cars suffer. Every time a repair is made, the car becomes that much less “original.”

Hagerty spoke fondly of Steve Earle’s decisions when he first founded the Monterey Historic Races, instituting a rigid 13/13 rule. Under that rule, if you make contact with another car or some stationary object, no matter how or why, you are subjected to a 13-month probation. A second incident during that probation will result in a 13-month suspension, thereby forcing you to miss next year’s race. Earle was unyielding in the rule’s application, even enforcing it against Sir Stirling Moss.

Hagerty recalled looking into offering some sort of insurance coverage to racers at the time. The coverage would have been very limited, paying only a fraction of the loss after a sizable deductible, but “enough to take some of the sting out of it.”

Earle dissuaded him, however, by explaining that he didn’t like the idea of some drivers being insured and others not. He preferred having everyone on the same footing, believing that would increase the odds of keeping everyone in check.

Any tax angles?

So if there’s no other way to cushion the loss, can we find some sort of tax benefit to help? That is a challenge. If you are able to find a way to make your racing a business for tax purposes (see “Legal Files,” November 2016, p. 48), then the crash repairs should be deductible as repair expenses. Of course, they can be quite substantial in amount, which can increase your odds of audit. But without a racing business, there is probably no tax benefit. The repairs simply restore the car to its former condition, so they can’t be added to your basis (investment in the car) and reduce your ultimate gain when you sell it.

The paradox

If historic-race crashes are going to be contained, it’s probably the event organizers who will have to do it. They have more control than anyone else with their ability to dictate penalty policies, black flagging, regulations and so on.

But there are strong forces that work against that.

Many of the drivers oppose such restraints, as they detract from the racing element. Too harsh a set of rules, and the races become glorified track days. Sure, you can pass anywhere, but you can never go 10/10ths.

Similarly, spectators want to see “real racing,” not glorified track days. If everyone is just running laps, why pay money to watch?

The paradox takes us straight to the core of the question — just what is historic racing?

The cars were all the fastest of their time, expendable weapons to be used in combat by the likes of Fangio, Hill, McLaren and countless others.

These cars were meant to be raced, but that is why so few of them have survived. These were often very difficult (and dangerous) cars to drive at their limits. Most crashed, burned and were discarded. The cars we have today are the survivors. We need to preserve them as historic artifacts for future generations.

Should they really be put at risk a second time?

If being the best racer we can be is the object, it’s probably better to buy a Spec Racer Ford or Spec Miata and race in the most competitive and exhilarating classes around. If it has to be a faster car, try a Porsche GT3 Cup car. Either way, you can be all you can be, and your historic cars stay safe. ♦

JOHN DRANEAS is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.