Insurance Blunder Costs Newest Philadelphia Eagles’ QB $11.5 Million
Quarterback Matt Barkley was selected by the Philadelphia Eagles with the 98th pick in the 2013 NFL draft. He was the fourth quarterback selected and was the first selection in the fourth round. History suggests that he will sign a four-year contract with the Eagles worth about $2.5 million. Sure, that’s a lot of dough, but not nearly what Barkley would have earned had he foregone his senior season at USC and entered the NFL draft in 2012. As a projected top-10 pick last year, Barkley would have made a minimum of $12 million guaranteed. His only guaranteed pay this year could be a signing bonus in the $500,000 range. Interesting reading, for some, but why does Professional Liability Matters care? Because Barkley could have purchased “draft insurance” last year which could have saved him millions.
ESPN reports that Barkley returned for his senior season at USC without insurance. Many players purchase disability insurance, meaning that they may recover in the event of a career-ending injury. However, a lesser-known insurance product accounts for loss of value when dropping in the draft.
Senior vice president of sports and entertainment for Hanleigh Insurance, one of the few underwriters that offers loss of value insurance to athletes in drafts, says that if Barkley asked for loss of value insurance at this time last year, it would have cost him a premium of $52,000 for a total disability policy that included the stipulation that he would collect if he fell far enough in the draft. Hanleigh Insurance would have assigned Barkley at the No. 4 pick overall selection in the 2012 draft. At that pick, Barkley would have received about $20 million in guaranteed money. Loss of value kicks in once an insured player enters the draft and loses at least 40 percent of the original projected value. So Barkley would have collected once he fell to a pick with a contract worth at least $12 million in value. Most loss of value contracts are worth a maximum of $5 million, which Barkley would have fully collected on if he had that kind of policy due to his big fall off the draft boards this year.
Query whether Barkley considers a claim against his insurance broker or agent. Did Barkley ask the right questions when considering his options in 2012?
Whether you are a projected first-round quarterback, a hair-dresser, or a CPA, all professionals must be aware of available insurance products to protect their assets and reduce risk. Consult with your insurance professional to obtain the precise product to suit your needs.