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Retirees' hot golf carts mean higher golf cart insurance

Brian O’Connell has 15 years of experience covering business news and trends, particularly in the financial, health care and career management sectors. He has written 14 books and appeared on CNN, Fox News, CNBC, C-Span, Bloomberg, CBS Radio and other media outlets and in such publications as The Wall Street Journal and The Street.com. He is a former Wall Street bond trader.

NEW YORK (MainStreet) — In warm, sunny, retirement landscapes from Phoenix to Fort Myers, retirees are putting the pedal to the medal on so-called “low-speed vehicles” — more formally known as golf carts.

But these aren’t your grandfather’s golf carts. The new breed of retirement community roadster can go up to 25 miles per hour, and owners are as likely to use them to hit Target or Denny’s as they are to ride the local links.

READ: Five big retirement myths

These souped-up golf carts aren’t cheap. According to the Orlando Sentinel , they can go for as high as $9,000, and new regulations on low-speed vehicles have insurance rates are climbing to about $600 per year.

So what’s a white-haired road warrior with a need for speed to do about rising golf cart costs, especially those exorbitant insurance rates?

We tapped a few financial experts to examine the landscape and offer some tips on what retirees can do about the financial management side of the go-go golf cart equation.

First up, Howard Mills, director and chief adviser of the Insurance Industry Group of Deloitte, who says golf cart owners need to do some due diligence.

“As with any insurance policy, read the contract,” he says. “Know your needs and work with your insurance professional to make sure you have the proper coverage.”

Mills adds that owners should know the rules of the road before they buy a golf cart.

“The standard homeowners policy covers golf carts that have not been modified to go faster than 25 miles per hour in certain circumstances,” he says. “The carts need to be parked and used on a golf course (or crossing the road to park or while playing golf) or at home, including private residential communities, for coverage to be in effect.”

There are different ways to insure a golf cart. “One of the most convenient may be to add a rider to the homeowners policy in states where this is available. Another option is to get a dedicated golf cart insurance policy,” he says.

READ: How to teach your child to save and budget

Whatever you do, don’t take the golf cart and the insurance issue lightly.

“Whatever you do, be sure to be properly insured. Just last October, Florida Sen. Marc Rubio’s daughter was in a golf cart accident and had to be airlifted to the hospital with a head injury,” Mills says. “The U.S. Consumer Product Safety Commission says there are more than 13,000 golf cart accidents each year requiring emergency room visits. When you need coverage is not the time to find out you don’t have it.”

Dan Weedin, a Seattle-based insurance consultant says, that, basically, insuring golf carts should be easy, painless, and cheap — that is, until you turn them into “hot rods.”

“I had a client who put flames on his golf cart and drove it like one once off the course and heading home, Weedin says. “The problem is that when seniors go back to their youth and treat their golf carts like muscle cars, then they drive them that way, too.”

That leads to more accidents and more claims.

“In areas like Florida and Arizona that can cater to year-round golf and a large population of golfers, they are bound to have more claims,” he says. “That gets passed on to the insurance buyers. If you ‘trick out’ their golf carts, it adds to the exposure. The only things that will raise rates on anything — car or golf cart — are the experience rating in an area, potential for claims, and claims themselves. Most underwriters want to see photos of golf carts and will underwrite severely any trends for frequency or severity of golf cart performance.”

Weedin’s advice is pretty simple.

“Get a good golf cart, treat it like what it is, don’t trick it out and drive it safely, he adds. “Your rates will be judged somewhat from your location, but overall you will pay less if you follow that advice.”

READ: When to lower your collision and comprehensive insurance

Holly Long, a risk management adviser with San Mateo, Calif.’s ABD Insurance and Financial Services, says safety is a big issue for owners and insurers.

“While golf carts play an important part of enhancing ones golfing experience, they are motorized vehicles and therefore are inherently hazardous,” she explains.  “The vast majority of golf carts do not offer seat belts or other restraint systems and are commonly driven on potentially dangerous terrain. Taking the time to understand the unique aspects of your golf cart exposure is a key step to ensuring that you would be adequately protected at time of a loss.”

Some states require golf cart insurance, and some don’t. So job one is to figure out where you stand, based on where you live.

“Prior to purchasing coverage for your golf cart, you first need to determine whether or not it is subject to motor vehicle registration,” Long says. “If the golf cart is in fact subject to motor vehicle registration, then the golf cart must be covered on an auto policy written in the state in which the vehicle is registered.  If the golf cart is not subject to motor vehicle registration, a select few insurance carriers afford physical damage and liability coverage on a homeowners policy at no additional premium.”

Long adds that any claims against your homeowner’s policy will likely further add to higher surcharges, and ultimately, higher premiums. But if you shop around, you can cut a better deal.

READ: How your Facebook 'likes' can reveal too much information

“For example, Ace Private Risk Services offers their “Special Golf Coverage Endorsement,” which lowers the deductible for golf cart-related losses to only $250,” Long says. “The annual cost to endorse this coverage is only $25 annually and also provides enhanced coverage and lowers the deductibles on other golf-centered losses. This coverage is a great option if you own a golf cart, live on or near a golf course or are a member of a golf country club.”

The bottom line? Don’t tread lightly when it comes to insuring so-called “hot road” golf carts. Pay attention to the rules, slow down and shop around.

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