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Disability Insurance and Loss of Value Insurance in the COVID-19 Era

The COVID-19 pandemic has created new legal hurdles that are challenges for athletes. As college football begins to play, athletes are having to determine whether they will practice and compete with their teams and risk possible infection. Many are willing to take that risk, but the evidence of athletes experiencing myocarditis (an inflammation of the heart muscle that reduces the heart’s ability to pump and causing rapid or abnormal heart rhythms) as a result of contracting COVID-19 has raised unique questions and challenges. Certainly, damage to an athlete’s heart is scary and has the potential to cause lifelong damage.

Elite athletes often turn to disability insurance and, in some cases, loss of value insurance. Disability insurance protects an athlete in a circumstance where the athlete has an injury or illness during the policy period that requires the athlete to seek medical treatment and prevents the athlete from participating in his/her occupation (i.e., sport). This form of insurance usually requires a permanent disability, which is a policy defined term that is commonly defined as solely and directly occurring as a result of an injury or illness that permanently and continuously prevented the athlete from ever engaging in his/her sport. Loss of value insurance, on the other hand, permits an athlete to return to competition, but compensates the athlete for loss of compensation (generally either through free agency or loss of draft position) in a defined amount that is offset by compensation received when he/she suffers a loss solely and directly as a result of an injury or illness.

In the case of a COVID-19 related illness, it is important to make sure the policy definition of illness protects against losses resulting from COVID-19 and is not otherwise excluded. The policy definition of “illness” is usually similar to the following: an illness that manifests in the athlete during the policy period that requires medical treatment and has negatively affected the athlete’s skills in a manner that causes substantial and material deterioration in his/her ability to perform in his/her occupation (i.e., sport) or prevents the athlete from ever again participating in his/her occupation (i.e., sport). In the circumstance of permanent disability, the standards are fairly clear and, essentially, require a physician to opine that the athlete is no longer about to participate or compete in his/her sport. However, when an athlete returns to participation and competition, the athlete will have to establish a “substantial and material deterioration” of athletics ability. These are legal terms that require legal analysis.

It is important to consult an attorney with knowledge of disability and loss of value policies before filing a claim. Often times, the insurance company will require written statements and, possibly, oral statements in addition to medical records. Having an attorney represent athletes through this process is imperative.

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