Chad Reed's $4 Million Insurance Payout

How sweet it was to see Australia’s Chad Reed – the record-holder for the AMA SX series’ all-time starts and podiums – climb the podium at the Detroit Triple Crown round in late February. It was the 37-year-old Aussie’s first AMA SX podium for two long years, and gave long-time fans the hope that Reed and the JGR Suzuki team were on-track for more success. Sadly, just a few weeks later, Reed crashed shortly after the Main-event start at the Seattle round; an incident that left him with eight broken ribs, a busted scapula and collapsed lung, and will sideline him for the rest of the 2019 AMA SX season.
Listening to Reedy in the wake of the Seattle crash, he’s as philosophical as ever. He’s been around long enough to know that the sport inevitably bites, and that each race is a gamble at the elite level of the sport, where riders are all on a knife-edge.
That said, Reed is about as calculated a gambler as the sport has ever seen; a fact that reminded us of what was arguably Reed’s most astute gamble of all time – when he backed himself to win the 2009 AMA Pro Motocross Championship … and collected a $4 million insurance payout when he did!
Reedy’s recollection of that roll of the dice was first published as Ripping Yarn piece in June 2013 (Issue #32) of Transmoto Dirt Bike Magazine. Enjoy!

In late 2008, Chad Reed signed a Supercross-only deal with the Rockstar Makita Suzuki team and returned to Australia, where he dominated the inaugural Super X series. Reedy and James Stewart then traded haymakers for the entire 2009 AMASupercross series in what was as one of the most intense rivalries the sport has ever seen. Stewart narrowly beat Reed to the No.1 plate, but the Australian wasn’t ready to stop banging bars in early May when the AMASupercross series was done. Chad Reed takes up the intriguing story about the last-minute deal that allowed him to race the 2009 Outdoor series and, thanks to a now infamous insurance policy, the massive payday he scored for winning his first professional motocross title…

After not racing the Outdoors for two years, I really wanted that option written into my 2009 contract with Suzuki. But Roger De Coster knew the economy was bad and suggested we just get the contract done, and then deal with the Outdoors some other time. And that’s what happened. But after such a good supercross season, I was feeling great and loving the bike. Even though I had a supercross-only deal with both Suzuki and Parts Unlimited, I still really wanted to race the Outdoors. In the week leading up to the final supercross, Roger told me it just wasn’t going to happen; that Suzuki didn’t have the budget for bikes and parts that’d allow me to race the Outdoors. So Ellie and I went to Australia for a holiday. But I wanted to race so bad, so I called Roger and begged that he try again with Suzuki. Then I spoke to my agent, Steve Astephen, about it. He told me to jump on a plane back to the States so we could work something out.

That’s when we got creative about how we could make it happen, and we started looking at insurance policy options. As I couldn’t insure myself directly, I asked both Suzuki and Parts Unlimited to pay for ‘my’ policy, which they did with Lloyds of London. As far as I know, the policy cost them about $150,000 each, and it insured them against a $1.5 million bonus payout they’d each make if I won the 2009 Outdoor title. Part of the policy was that I’d also get a $200,000 bonus for each Overall win. Add that to the $3 million I stood to make for the Championship win, and the total payout would be by far the biggest the industry had ever seen. But all insurance policies are very structured and come with a bunch of stipulations. Mine said that I had to win a minimum of five Overalls to even be eligible for any of the bonus payouts. If I’d won the title, but only with four Overalls, I would have got nothing. I mean, obviously, it’s not like I wasn’t getting paid.

My deal with Parts Unlimited was over $1 million and my Suzuki deal was worth more than $2 million. So I was getting the best part of $4 million for racing only half of the year. But I was used to making bonuses, and I felt that, if I win, my sponsors win as well. As it turned out, I won five Overalls on the way to the ’09 Outdoor title win. Which means I got a $4 million payday. But that was really just the icing on the cake for me because I’d had so much fun racing all year. I loved working with Roger and Goose and all the Suzuki guys. Some people like to say that I’m single-handedly to blame for the cost of insurance skyrocketing. The $150,000 premium paid for these policies in 2009 has now grown to around $550,000.

I mean, we played the game and beat the system. But you’ve got to remember that I had never won a 450-class Overall before the 2009 season. I’d been in America since 2002 and never won an Outdoor title. I hadn’t raced the Outdoors for two years. Plus Villopoto had never lost an Outdoor championship at that point. All of which meant I wasn’t a very strong candidate to win the title. My agent did a good job of selling my case and playing the odds, and that’s why the policy was relatively cheap. The manufacturers – and other companies who offer big bonus payouts – all take out these policies. It’s not cheap to insure against win bonuses, but when companies are paying bonuses of between $35,000 and $100,000 per weekend, they can’t afford not to have the policies. Look at a guy like Villopoto, who’s already won eight supercross races this year. That’s the best part of a million bucks in payouts right there – and that’s on top of his bonus for the championship win, and the $3 million-plus for his contract. Aside from the fact that I won my first Outdoor title in 2009 and did well from the insurance payout, the funny thing is that I look back on that season as a time when I won over a lot of fans. There were a few dark years there where I thought the fans were really hating on me, but 2009 was the turning point when they started to see who I was and how much I genuinely love the sport.