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Loss-of-value FAQs

What is loss-of-value coverage?

Loss of value (LoV) coverage is insurance that protects a student-athlete’s future contract value from decreasing below a predetermined amount due to a significant injury or illness suffered during the policy’s designated coverage period. It is typically purchased for the year leading up to the athlete’s draft eligibility. It requires medical underwriting, and may include exclusions for specific pre-existing injuries or illnesses.

How does loss-of-value coverage work?

Insurance underwriters will first determine an athlete’s eligibility based on their draft position. If they are projected to be selected early in the draft, underwriters could offer coverage limit that typically falls between $1 million and $10 million, based on the projected draft position. The underwriters will then set a loss-of-value threshold that is typically 50 to 60 percent of the athlete’s projected rookie contract. If the contract an athlete signs falls below that threshold as a direct result of an injury or illness suffered during the coverage period, the insurance would pay them the difference between the actual contract’s value and the policy’s predetermined value.

Why doesn’t the NCAA offer loss-of-value coverage?

The NCAA provides permanent total disability (PTD) coverage, which protects athletes who suffer an injury or illness that prevents them from ever competing as a professional athlete. But the NCAA does not offer LoV insurance at this time because the coverage has not been shown to consistently benefit student-athletes who file a claim. Only one former student-athlete is known to have benefitted from LoV coverage out of the hundreds who are believed to have purchased the coverage.

Who should purchase loss-of-value coverage?

If an athlete chooses to purchase LoV coverage, the NCAA recommends they only do so if they are projected to be selected among the top 10 picks in their respective draft. Athletes projected to be selected outside of that range may have challenges proving their projected value when they file a claim.

How can coverage be paid for?

Subject to conference policies and procedures, schools may permit student-athletes to use the NCAA Student Assistance Fund to purchase either PTD or LoV policies.  Student-athletes may also take out loans against their future earnings to pay these premiums.  Please note, premiums paid using Student Assistance funds may be considered a taxable benefit to student-athletes and may affect their eligibility for financial aid.

What factors can affect a payout?

 

It’s important to understand that simply suffering an injury or illness and then being selected with a later draft pick than anticipated does not guarantee a claim will be paid. Proving an injury or illness was the sole and direct reason for the decrease in value can be difficult, and many factors can be used to void a claim. In fact, policies include standard exclusions for pre-existing injuries or illnesses, osteoarthritis or degenerative conditions, drug and alcohol use, criminal acts and mental, nervous or psychological disorders. But other factors that can adversely affect a claim include: off-field issues; poor performance during the season; poor performance at pre-draft events; a rise in the draft value of other athletes due to superior performances; changes in professional teams’ needs. 

What should i consider if i purchase loss-of-value coverage?

There are several best practices you can follow. First, be sure you know what coverage you are buying and get multiple quotes from multiple underwriters. Make sure you understand the terms and conditions of the policy before making a purchase, and don’t be afraid to ask a lot of questions. Ask if some of the exclusions can be removed, or if the definitions can be reworded. Watch for exclusions that pertain to previous medical treatments or recommendations, or those that omit coverage for cumulative injuries, osteoarthritis or other degenerative processes of the bones, tendons or ligaments. Also, be as thorough as possible on the application – it’s best to err on the side of being over-inclusive when disclosing a medical history.