Monday, February 09, 2009

Cornrich weighs in on college athletes' disability coverage

Athletes protect earnings

February 7, 2009

By Bill Lubinger

One grotesque play in the 2003 Fiesta Bowl lit up phones and e-mail in-boxes of insurance brokers who deal in broken athletes.

Maybe you remember it: Miami running back Willis McGahee slices down the right sideline. Ohio State defender crashes into left knee, folding it backward, ripping tendons from bone. A sure NFL top 10 draft pick's career - and multimillion-dollar payday - are suddenly in doubt.

Many top college athletes saw McGahee's injury, gulped hard and got price quotes on disability insurance - just in case.

With high-stakes contracts and signing bonuses on the line with every snap, athlete disability insurance has become big business. Most projected high NFL draft choices and other elite college athletes at least consider buying disability coverage. That's especially true for prospects choosing to temporarily bypass potential NFL riches for another season as a Big Man on Campus.

Heisman Trophy winner Sam Bradford and his family are among those now weighing whether to buy coverage. The Oklahoma quarterback chose to return to the Sooners for his junior year rather than enter the NFL draft as a coveted talent.

Riches await, but he hasn't bought disability coverage yet.

"I'll have to see the contract itself and what actually triggers a claim," said Kent Bradford, Sam's father and an Oklahoma City insurance agent. "With medical technology, there aren't that many career-ending injuries anymore."

The Bradfords are wise to investigate first.

As popular as such policies have become, coverage is expensive and offers limited protection. Most are written so that an athlete must suffer a career-ending injury to collect a dime. The football star usually has no claim for an insurance payout if he slips in draft value because of an ailment that slows his gait but doesn't lay him out permanently.

Even McGahee, who had bought $2.5 million in disability coverage just hours before the Fiesta Bowl, never saw a penny from the policy. Remarkably, he didn't need it. He was still drafted in the first round, worked his knee back to health and has rushed for more than 5,000 yards in the NFL - first with Buffalo and now the Baltimore Ravens.

"I thought he was done," said Keith Lerner, the Gainesville, Fla., insurance broker who has written disability policies for more than 20 first-round draft picks in the past 10 years, including McGahee and another former Miami Hurricane, Santana Moss, now with the Washington Redskins.

There wasn't much demand for disability coverage just 20 years ago. But with today's expensive rookie contracts on the line, most of the players taken in the NFL Draft on April 25-26 will be insured, Lerner said. Among Lerner's promising clients entering this year's draft are quarterback Matt Stafford and running back Knowshon Moreno, two Georgia juniors who decided to go pro. A third, Florida State safety Myron Rolle, chose to delay his NFL career for a Rhodes Scholarship, but took out an insurance policy as a precaution. All three bought coverage just before the start of 2008 spring practice.

Athletes are covered whether the career-ending injury occurs on or off the field. So, let's say, a top tight end wrecks his body doing motorcycle tricks in a parking lot. If a doctor determines he can no longer take the field, the player is covered.

Policies aren't cheap, however, with premiums costing usually 1 percent to 1.5 percent of coverage. A $1 million policy, typical for college players, costs $10,000 to $15,000.

Most players must take out bank loans to pay for it, and repayment is required whether the athlete scores a big contract or not.

"It's big money when you don't have the money," said Beachwood sports agent Neil Cornrich.

Players such as Bradford, who decide to forgo the NFL draft and return to college next fall, may have the most at risk. By most draft evaluations, he could have been financially set for life.

"If they didn't have the insurance," Lerner said, "then I think most of these high-profile guys would leave."

Providing juniors incentive to stay put was at least partly why the NCAA began selling disability insurance to elite football and basketball players in 1990. The other reason was to ward off agents from violating NCAA rules by buying coverage for players they hoped to represent.

The program has since expanded to other sports, but at least three-fourths of the 100 to 120 policies the NCAA handles each year are bought by football players.

NCAA policies range in coverage from $500,000 to $5 million, recently increased from $3 million to keep pace with swelling pro contracts. Premiums range from $5,000 to $30,000, due when the athlete has signed a pro contract, exhausted his or her eligibility or been ruled medically unable to play again.

"Our whole goal is to give them the option [of staying]," said Juanita Sheely, who manages the NCAA's insurance programs.

Ohio State senior linebacker Marcus Freeman said he and his father discussed whether to take out coverage after he decided to return to the Buckeyes for the 2008 season. They considered not buying a policy because of the expense, but felt the risk was too great.

"I was very close to not doing it," said Freeman, who took out a $1 million policy through the NCAA for close to $10,000. "I wondered, 'Is it something we should do to cover ourselves?' - and he agreed. You never know what's going to happen."

But collecting on an insurance claim is rare. The NCAA's Sheely estimated that fewer than a dozen college athletes have cashed in on claims. That's on about 100 policies a year for 19 years.

Lerner, the private insurance broker in Florida, has sold hundreds of policies. He's had to pay just two claims: One was to a Russian pro hockey player; the other was to Ed Chester, a former University of Miami player who collected $1 million when a knee injury sidelined him for good.

A cool million isn't first-round draft choice money. But it's a whole lot better than nothing.

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