With the rise of name, image, and likeness (NIL) opportunities, student-athletes are entering a new era of financial potential. However, these compensation contracts come with added risk – for athletes, donors, and your institution.
NIL contract protection can help protect your revenue sharing and agreements in the event your student-athlete is unable to participate due to an accidental injury. Understanding eligibility, underwriting criteria, premium calculations, and benefit payments is essential for institutions offering this specialized coverage.
Who is Eligible for NIL Contract Protection?
NIL contract protection is designed for student-athletes who participate in intercollegiate sports and have a contract with their institution to receive compensation tied to their NIL activities.
Underwriting: What You Need to Provide
Underwriting for NIL insurance requires detailed documentation, including:
- A completed application
- The student-athlete’s most recent pre-participation physical report
- Notes on the student-athlete from the institution’s sports medicine team
- Copies of contracts detailing payments
It’s important to note that underwriters reserve the right to decline to quote coverage for any student-athlete.
How Premiums are Determined
Premiums for NIL coverage are calculated based on the insurable value of a student-athlete’s contract, up to 75% of the contract value. Key factors include the student-athlete’s sport and position, medical history, and the full value of their contract.
Typically, premiums range from approximately 6% to 12% of the contract value, depending on the risk profile determined by the underwriter. Premiums are not discounted based on the size of the covered group and are fully earned upon the effective date, requiring full payment of the annual premium.
Understanding Benefit Payments
NIL contract protection benefits are triggered if an injury prevents a student-athlete from participating in games. Payouts are structured as follows:
- 25% of the benefit if 50% of the season is missed
- 50% of the benefit if 65% of the season is missed
- 75% of the benefit if 80% or more of the season is missed
Benefit payments are not offset by the amount of contract value already paid to the athlete. Institutions and underwriters can explore customized solutions, such as adjusting the percentage of benefits paid to manage premiums.
Protect Your Student-Athletes – and Your Institution
As NIL opportunities continue to grow, so does the importance of proper risk management. Institutions that proactively address insurance needs can help safeguard their athletes’ financial interests while mitigating exposure.
CBIZ Sports can help protect your programs and student-athletes with specialized insurance solutions designed specifically for intercollegiate athletics. Connect with our team today for a no-obligation consultation and risk assessment.
This article may contain scenarios that are provided as examples only. Coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.
