Loss of Value Insurance and Your Division I Athletes: What Colleges and Universities Need to Know
Loss of Value (LOV) insurance is a little-known type of disability insurance designed to protect the future of elite, first-, second- or third-round draft picks. LOV specifically covers a student-athlete’s anticipated rookie contract value. Universities can arrange for the player or his family to purchase LOV insurance policies, which may kick in to supplement that athlete’s loss of total contract value.
LOV insurance is not designed to protect athletes from permanent total disabilities but is purchased as a rider along with permanent total disability coverage. It generally benefits athletes who are projected as top round picks that fall in the draft due to accident or injury.
If you, your family, or the college/university has received a quote for drop in draft protection, contact America’s top long-term disability law firm. Our nationally recognized, award-winning long-term disability lawyers and LOV attorneys at DarrasLaw have more than 100 years of combined insurance and litigation experience in the field of disability law. We can review your offers for coverage and the specific insuring provisions and language along with quoted premium pricing to help you, the family, or the university make the very best decision. Call us today to schedule your free long-term disability consultation at (800) 458-4577 or contact us online.
Three Situations Involving Loss of Value Insurance
The following three examples can help illustrate the types of college athletes who could benefit from LOV insurance:
Example 1: John is a Division I football player eligible for next year’s draft. He expects an NFL team to take him in the first round. If so, he could receive an offer of $30 million for three years. Two months before the draft, however, John breaks his ankle. He can’t play for about six months, and he’ll need time to get back into shape after that. He may miss the combine, minicamp, or even training camp. Because John is an exceptionally good athlete, teams are still willing to draft him, but not so early in the draft. After all, what if his ankle doesn’t heal? Instead of getting a $30 million contract, John gets an $11 million contract. In this case, his LOV insurance would kick in because John has lost more than 50 percent of his original contract’s anticipated value. His LOV insurer would then pay him the difference between his current contract for $11 million and half of his anticipated $30 million contract—$15 million—meaning John would get $4 million from his LOV policy.
Example 2: Danielle is a Division I basketball player expected to go in the first round of the WNBA draft, but not as one of the first 10 picks. Her LOV insurer anticipated she’d get a $4 million rookie contract. Right before the draft, Danielle contracts severe pneumonia. Because she’ll recover in a few months, she gets a $3 million contract. Because she received a contract worth 75 percent of its anticipated value, she’ll get nothing from her LOV insurer.
Example 3: Robert is a Division I pitcher who expects a Major League team to draft him later than the first 10 rounds. Before the draft, a car accident permanently damages his pitching shoulder, ending his career. Robert may have trouble claiming LOV benefits because he will have to prove his worth without a contract to back up his LOV claims. Furthermore, even had a Major League team drafted him, Robert may never have left the minor league Single A division. Robert should probably pursue permanent total disability insurance as opposed to LOV insurance. Robert should collect permanent total disability for his cancer-ending injury but not for any drop in slot/loss of value.
Loss of Value Insurance Exceptions and Exclusions to Coverage
The many exceptions and exclusions to LOV insurance coverage may include:
- Pre-existing injuries or illness—for example, if you broke a bone before your eligibility period started
- Degenerative conditions
- Cumulative injuries
- Alcohol and drug use, which can either contribute to an injury or illness, reduce your value as an athlete, or make you too high-risk
- Mental illnesses, such as depression or psychosis
- Off-field behavior, including criminal acts or team conduct violations
- Reduction in your on-court/on-field time
- Poor on-field/on-court performance before the draft or at pre-draft events unrelated to sickness or injury
- An increase in the value of your competition at combines or a glut of exceptional athletes at your position.
If you or your student athlete claims LOV insurance benefits, proving value can create significant challenges. Sometimes you can estimate your pre-injury or pre-illness value by looking at comparable contracts. If any of the above factors contributed to your injury, illness, or poor performance, your LOV insurer may try to deny your benefits altogether.
Long-Term Total Disability Insurance/Permanent Total Disability Coverage
Some college and athletic organizations are opting to purchase permanent total disability insurance as a recruiting perk or to bring back eligible players for a run at a national championship without risking a career-ending injury. These policies are designed to protect college athletes whose permanent disabilities prevent them from competing professionally. Because these policies can result in years of payments to disabled college athletes, you’ll have to fight hard to win coverage—which DarrasLaw excels at.
For example, if you’re a great college football player but suffer from a career-ending traumatic brain injury during your freshman year at a Division I university, proving your future worth as a professional NFL player to your disability insurer can present a significant challenge.
You’ll need to take your level of talent, find comparable talent resulting in professional contracts, and show that your lifestyle was not likely to result in a premature end to your college or professional carrier. For this, you’ll typically need expert witness testimony and the help of a top-rated college-athlete disability attorney or LOV lawyer from DarrasLaw.
Schedule Your Free Drop in Slot or Career-Ending Disability Athletic Insurance Analysis at DarrasLaw Today
Whether you’re considering your disability insurance options, looking to make a long-term disability insurance claim, or you experience a wrongful delay or denial of LOV or permanent total disability insurance, we know how to help athletes at DarrasLaw. Frank N. Darras and his disability insurance litigation firms recovered nearly $1 billion in wrongfully denied, delayed, and terminated insurance benefits. We provide free policy analysis and free claim consultations for all 271 current Division I schools, universities, and players. Call us today to schedule your free consultation at (800) 458-4577 or contact us online.