Thursday, April 04, 2019

On Hoops and Value

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:

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.
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