Attaining professional sports status is a tremendous—and rare—achievement. In fact, a male high school basketball player has only a 0.03 percent chance of winning an NBA career, while a female player’s shot is even slimmer, at just 0.02 percent. 1
Given the great odds an athlete has to overcome to reach such elevated status, it’s going to get even worse if that hard-earned career suddenly comes crashing down due to a lack of adequate or proper insurance coverage.
The reason: Hidden behind the raw talent and skill, the fame and fortune, the endorsements and luxurious living lurks the unpleasant reality of risk exposure.
A professional athlete’s unique position merits special insurance protection to avoid his (or her) falling victim to a litany of risks. Extremely high earnings and abundant assets mean there’s a great deal at stake and much on the line to lose. So the last thing an athlete in his or her prime (or a successful executive enjoying a path of upward momentum) wants to consider is that it could all disappear.
This is precisely why athletes of this caliber must prioritize insurance as much as their training and ranking.
Professional athletes’ high earnings and contracts from endorsements lead to a unique lifestyle, full of exciting high-end assets (overseas homes, private jets, luxury cars) that demand ample protection. Added to that is the complexity of their celebrity status, which puts them in a vulnerable position of being sued over frivolous matters. As a result, they face many risks, and many general insurance programs do not adequately protect their unique needs against these vulnerabilities. It’s essential, then, that professional athletes across the spectrum of sports meet with an insurance broker to carefully assess all necessary protection.
Extensive personal insurance
The amount of personal insurance an athlete or high-profile individual needs hinges on a variety of factors that commonly link to income and total assets. All of the following must be considered: luxury and secondary homes; rental homes; automobile and classic/sports cars; private planes; motorcycles; boats; all-terrain vehicles; fine art and collectibles; cyber usage; and the need for umbrella and life insurance.
Speaking of cyber usage, umbrella insurance may prove particularly beneficial in an age when disparaging information is regularly disseminated through social media.
It’s never been easier for celebrities, including athletes endorsing major brands, to unintentionally disgrace themselves and those they represent. With the right umbrella policy, however, athletes can feel better protected against the possible ramifications resulting from a social media slip.
Potential risks resulting from overlapping roles
Additionally, because the private, professional and business lives of athletes of this caliber are often blended together, it’s important to consider that basic personal insurance policies aren’t equipped to handle the risks that can result from this unique mix.
For optimal protection, athletes should discuss with a broker the many legal entities that may be formed to shelter their assets, and the potential risks implied. Included in the discussion should be consideration of insurance for the following circumstances:
• If a charitable fund or entity is formed as a means of giving back to the community and assets are then run through the entity, make sure there’s a clear policy in place to handle the assets and/or activities. For example, if a spectator is hit with a golf ball at a tournament and then sues the athlete’s sponsoring foundation, all of its assets, not to mention the athlete’s reputation, will be on the line.
• If a property is purchased and the legal owner is the foundation, the athlete must make sure the appropriate insured name is listed.
• If an athlete appears in an automobile dealership commercial and is paid, not with cash but with the use of a car for, say, a year, he or she is required to carry the insurance even though the dealer retains the title.
• Many insurance companies won’t cover jewelry that is lost unless it’s taken from the body of a client, so athletes should be aware that if jewelry is stolen from a hotel room, a policy’s “mysterious disappearance clause” would be eliminated.
• Athletes must be mindful of the fact that while their team is responsible for their actions on the field or in the arena, it’s the responsibility of an agent to make certain that all other aspects of their high-profile lifestyle are covered.
Certainly, it would seem that success comes at a price, but the importance of choosing the right insurance protection outweighs the potential damage that could come from dismissing such coverage.
If professional athletes and other prominent sports industry individuals want to enjoy the fruits of their labor, they would be wise to prioritize a comprehensive consultation with an insurance broker.