For a college football player who hopes to protect his eventual ability to play for money while playing for the wholesale cost of an education (plus snacks!), the insurance industry provides two types of products. First, the player can buy a total disability policy, which pays benefits in the event of a career-ending injury. Second, the player can purchase a loss-of-value policy, which pays benefits when an injury suffered in college causes the player’s draft stock to drop.
The problem with both types of products is that: (1) insurance companies love to collect premiums; and (2) insurance companies hate to pay benefits.
For total disability policies, the process is fairly simple. A career-ending injury results in the payment of benefits. For loss-of-value policies, the insurance company will try to force the player to prove that the drop in draft stock happened due to something other than the injury.
Which is why, according to Darren Rovell of ESPN.com, Jaguars receiver Marqise Lee has sued Lloyd’s of London after the company denied a claim for benefits under a loss-of-value policy. In 2013, Lee paid $94,600 while at USC for protection against an injury that resulted in Lee getting an NFL contract worth less than $9.6 million. He later suffered a knee injury, fell to the second round, and signed a contract worth $5.17 million.
After Lee slid through the first round in May 2014, reports circulated that the drop resulted from his knee. Eventually, Lee may be able to prove that in a court of law. At a minimum, Lloyd’s is going to force him to do so because: (1) insurance companies love to collect premiums; and (2) insurance companies hate to pay benefits.
The message for anyone thinking about buying a loss-of-value policy is clear. They’ll gladly take your $94,600. But good luck getting anything back from them, unless you’re prepared to fight it out in court.
