I know next to nothing about college basketball, and even less about March Madness, but I do know a little something about insurance. So when FoIB tsrblke tipped us to this story, my interest was piqued:
"Citing sources, Rovell tweeted that Duke paid for an $8 million policy for its star freshman, with the premium for such a policy typically costing around $50,000. Schools are allowed to pay for such a policy under NCAA rules."
Now, it's true that one trenchant Twitter commenter opined that "Health insurance is a totally different universe than Disability insurance," but neither of those is in play here. Rather, this falls under the category of 'special risk' cover, about which we've posted before. Here, for instance:
"Citing sources, Rovell tweeted that Duke paid for an $8 million policy for its star freshman, with the premium for such a policy typically costing around $50,000. Schools are allowed to pay for such a policy under NCAA rules."
Now, it's true that one trenchant Twitter commenter opined that "Health insurance is a totally different universe than Disability insurance," but neither of those is in play here. Rather, this falls under the category of 'special risk' cover, about which we've posted before. Here, for instance:
Which, as it happened ... happened, and the store owner's special risk policy paid out over $300,000. Smart buy, that.
The key here is that, unlike health or disability income insurance,. special risk plans fall under the category of Property/Casualty (not Life/Health). They're designed to cover a specific and identifiable circumstance or event, shifting the risk of that event or circumstance happening (or not happening) onto the insurer.
In fact, this "loss of value" plan is closer to diminished value coverage for your wrecked car than it is either DI or health. And at a very reasonable cost, as well.
Now, as to the propriety of such an arrangement? Well, as noted above, these plans are allowed under NCAA rules. But more specifically:
"According to the NCAA, loss of value insurance 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."
So there you have it: $50,000 against potential loss of $8,000,000. Quite the bargain.
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