Insurance plays a crucial role in protecting professional athletes, teams, and sponsors from financial risks associated with injuries, contract disputes, and reputational concerns. Each league has its own structures and nuances, and understanding available coverage options is essential for advisors working with high-earning athletes. This blog explores key insurance solutions across the five major leagues - NBA, NFL, MLB, MLS, and NHL - along with best practices for structuring coverage, including disgrace insurance for players and sponsors.
National Basketball Association (NBA)
In the NBA, the primary insurance options include personal permanent total disability (PTD) coverage and endorsement protection. The NBA itself provides a league-sponsored disability plan covering approximately three to five players per team on a temporary total disability (TTD) basis, with a 21-game elimination period. This coverage is not typically supplemented by outside providers.
However, additional PTD coverage can be structured as a layered policy for clubs or as a key person policy, where the team is both the owner and beneficiary.
Another common coverage need in the NBA is endorsement protection. Many endorsement contracts, especially with brands like Nike, Adidas, and Under Armour, include "pay-for-play" clauses that allow clawbacks if a player misses significant time due to injury. For example, missing 50% of the season could reduce the endorsement payout to just 30% of the contracted amount. Policies can be tailored to align with these agreements, utilizing either TTD definitions of disability or non-appearance contingency policies.
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For personal PTD policies, a Critical Injury Rider can be added, providing a lump-sum benefit for a covered injury requiring surgery within 30 days.
National Football League (NFL)
NFL players and teams primarily utilize PTD insurance for personal financial planning and key person coverage for franchises.
The NFL has a league-sponsored disability plan which provides TTD coverage with a six-game franchise deductible - meaning benefits begin paying retroactively from game one once six games are missed. Given the market’s limited competition and historical loss ratios, few outside providers compete in this space.
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However, PTD coverage remains a key area of protection, particularly for players with non-guaranteed contracts or those approaching free agency. Critical Injury Riders are often included in these policies to provide additional security.
For teams, excess PTD coverage can be structured as a key person policy, particularly for quarterbacks, defensive ends, and other high-impact positions. Some franchises have explored disgrace insurance for star players though these policies have not yet been widely adopted.
Major League Baseball (MLB)
Baseball players can access similar coverage options, though the nature of the sport presents additional challenges - especially for pitchers, who are considered higher-risk.
The MLB has a league-wide TTD plan backed by Lloyd’s of London, which teams often utilize for short-term disability needs. However, PTD insurance remains a key consideration for individual players, particularly those looking for supplemental personal protection.
Best practices for structuring MLB coverage include:
Major League Soccer (MLS)
Unlike other major leagues, MLS does not have a standardized league-wide disability plan, making private coverage even more critical.
Many players secure PTD coverage for personal planning, while clubs have started purchasing TTD and PTD key person policies to protect investments in designated players. Over the past two years, there has been a notable increase in teams seeking TTD and PTD coverage for marquee players, especially to protect against guaranteed salaries and transfer fees.
Best practices for MLS coverage include:
National Hockey League (NHL)
The NHL is one of the most active buyers of insurance, with widespread use of PTD and off-ice disability policies.
A key concern in hockey is the ability for teams to void contracts if a player is injured off the ice. For example, if a player signs a five-year, $80 million contract but suffers a non-hockey-related injury (such as a boating accident), the team can cancel the contract. To mitigate this risk, many players secure off-ice PTD policies that align with their contract duration and decrease in value over time.
The NHL also has a league-sponsored disability plan similar to the NBA. However, additional PTD and off-ice coverage remains essential for long-term financial security.
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Best practices for structuring NHL coverage include:
Disgrace Insurance: Protecting Reputation-Based Earnings
Disgrace insurance is becoming increasingly relevant for both athletes and sponsors, particularly in cases where an athlete’s public image is directly tied to revenue. These policies are always third-party owned and beneficiary-driven, meaning they cannot be personally purchased by the athlete.
Common buyers include:
While disgrace insurance remains a niche product, its role in mitigating reputational risks continues to grow.
Conclusion
Insurance plays a critical role in protecting the financial interests of professional athletes, teams, and sponsors across all major sports leagues. While each league has its own structures and nuances, certain best practices remain consistent - personal PTD coverage for players, key person policies for teams, and endorsement or disgrace insurance for reputation-based earnings.
For insurance advisors working with high-net-worth athletes, understanding these specialized coverage options is essential to mitigating financial risks and ensuring long-term security. Whether structuring PTD coverage for an NBA star, designing key person protection for an NFL franchise, or crafting off-ice policies for NHL players, leveraging the expertise of a Lloyd’s of London Coverholder can provide tailored, high-limit solutions that address the unique needs of professional sports.
By staying informed on league-specific risks and insurance trends, advisors can better serve their clients, helping them safeguard contracts, sponsorship earnings, and career longevity in an unpredictable industry.
Reach out to us today to learn how you can protect your athlete clients.