Professional sports players earn millions of dollars and are worth even many more millions of dollars to teams. A college player who makes a big splash can make a franchise a lot of money over the course of a career. But what happens if a rising star suddenly crashes to earth due to a debilitating illness or injury before they can make it to the pros? That’s where “loss of value” insurance comes in. Collegiate athletes can buy loss of value insurance policies to protect themselves and their family if an untimely illness or injury impacts their draftability or draft placement. The NCAA even has their own program to help qualifying athletes get pre-financing for these policies.
These policies are a way for a young athlete to hedge their bets if they believe they have a shot at making it to the professional level. Take football for instance. A player could take a policy out on himself for several million dollars in preparation for the NFL draft. These policies have very high premiums depending on the policy, frequently reaching over $50,000 per year. If an injury or illness were to cause a player to become ineligible for the draft, or even to drop significantly in the rankings, the insurance policy would pay for that loss of value. However, if the player gets drafted and makes a lot of money that first year then the high premium can get paid off easily.
It is rare that insurance companies have to pay out on these policies, but it does happen. When it does, it is important for injury documentation to be reported right away. The payout is contingent upon whether or not the injury or illness directly caused the loss of value. Therefore, medical and other expert advice must be collected. Insurance companies aren’t keen on paying out such large sums, so strong evidence is needed so that they will honor the contract. An insurer may claim that a drop in draft placement is due to circumstances other than an illness or injury, such as a lackluster performance at a pro day or combine. As with any other type of insurance, your insurance company has a financial incentive to dispute and delay claims, so professional representation is critical for a collegiate athlete with a valid loss in value claim.
If you are in the process of becoming a professional athlete, getting loss of value insurance is still a very good idea. And if you are a former collegiate athlete and your draft position fell due to an injury or illness, Raizner Slania may be able to help with your claim and any resulting litigation. Don’t go pro without protection, and don’t try to take on the insurance industry without a strong legal offensive line.