When talented college athletes get ready to consider entering professional sports leagues, their most valuable asset is often their own body. Just as celebrities like Jennifer Lopez insure their valuable physical assets, athletes often insure themselves against injury as well.
A recent New York Times article highlights the limitations and pitfalls that can be associated with loss of value insurance policies for college athletes. These policies are designed to pay likely future earnings that are lost after a player is injured and then falls significantly in their draft position due to that injury.
What Is Loss Of Value Insurance?
Loss-of-value insurance is not a new concept; these policies have been available to college athletes, but the athletes generally paid the premiums themselves. A new trend has emerged where colleges pay the premiums for their star athletes out of student assistance funds to keep them playing on their college teams even if they become eligible for professional play. Loss-of-value insurance is created specifically to protect elite athletes from lost wages, and is purchased as a rider to total disability insurance. The premiums can be quite substantial considering the potential earnings that are at stake are in the millions of dollars. Earlier this year, the NCAA instituted a new rule permitting student athletes to take out loans collateralized by their future earnings in order to purchase loss-of-value insurance.
What If An Athlete Gets Injured?
If a college athlete is eligible to leave early and move on to professional sports and big money, but they decide to stay in college anyway, loss-of-value insurance should protect against losses from an extra year out of professional sports. However, if the insured is injured during his college career, that would seemingly decrease his potential future professional sports earnings.
Like many other types of insurance, the devil is in the details. If a player’s “value” declines because of poor performance, a player is not protected by their policy. And even if the player’s draft position falls due to an injury, the change in draft position typically must be precipitous before the loss-of-value policy will be triggered. Even more troubling is the fact that no college player is yet known to have recovered under this type of policy. Student athletes need to be informed about what could really happen to them if they choose to stay in school over going pro.
Raizner Slania Insurance Lawyers
With athletic or celebrity loss of value insurance claims, the pivotal determination is how much loss of income is due to the injury and how much might be due to other factors – like poor performance – that are not part of the coverage.
If you are delayed, denied, or underpaid on a loss of value insurance policy, you can call upon the significant experience of Raizner Slania for assistance. We have experience working with college athletes in a variety of legal matters, including college sports concussion litigation, and we are able to review your insurance issues free of charge.