Preventing Rookie Mistakes: Developing A Pro-Level Insurance Program
Congratulations! After years of incredibly hard work, you got the offer, signed a contract and have been assigned a locker. Of course, as exciting as it is to reach this pinnacle, you also know that this is only the beginning. Succeeding at this next level means navigating decisions both on and off the field. To properly protect what you have worked so hard to attain, requires adding another discipline to your training routine— risk management. Our Sports & Entertainment practice has helped an arena full of professional athletes find insurance solutions that best serve their situation and lifestyle. And the long-term relationships we forge with our clients at the start of their career allow us to guide them from first contract to retirement and beyond. This brief guide lays out some important information for this unique early phase to help you and your advisors.
Understanding the Playing Field Insurance carriers classify all players in the first four years of their career as “rookies.” Following that, things shift: some carriers continue to call players rookies until their second contract is completed; others allow players to shed the rookie label as soon as their first contract ends, or if the athlete has begun to check off some major life milestones (e.g., marriage, homeownership, parenthood). Just like knowing your opponent on the field, it’s important to understand these distinctions as it allows you to prepare and train for the best possible outcome. Since historically, rookies are young adults navigating new wealth, increased exposures and a large public profile, some carriers may be more cautious to assume risk. That perception can make securing insurance tricky. As a best practice, we will help stitch together various policies from mid-market carriers into a comprehensive whole, finding one carrier for renters or homeowners insurance, another for auto, a third for injury. If necessary, we also engage surplus-lines carriers for additional policies, such as excess liability coverage. Only after you are seen to be more settled in your situation will carriers be more confident about assuming your risk. Once that happens, we will be able to streamline your program into one high net-worth carrier.
Best Practices Securing an appropriate insurance arrangement is a process, and just like conditioning your body, the more you prepare the better shape you will be in. Our decades of experience in counseling young athletes on their insurance portfolio have led us to recommend the following: Become an educated consumer. Young athletes—and their families—are often surprised by the cost of the policies that advisors recommend for them, and as a result, they may view that cost as an unnecessary expense. We promise it’s not. While incidents like an auto accident are common during the early part of an athlete’s career, they can cause disastrous financial and reputational consequences if adequate coverage is not in place. As such, the best advisors will strongly suggest you purchase the most liability coverage available to you.
Cover all your bases. Everyone’s insurance needs are unique. Typically, though, this is what we recommend for our rookie clients: • • • •
Renters or homeowners insurance, which covers possessions and confers personal liability at home or on the road. High-value auto insurance, which is essential for all drivers, but especially those finding themselves behind the wheel of a fast car for the first time. Collections or personal articles policy, which protects jewelry, artwork and other valuable possessions against damage and theft. Excess liability coverage, which offers protection beyond that granted by other policies in the event of a lawsuit.
Be careful. Simply put, the choices you make moment to moment matter. Drive safely. Drink responsibly. Avoid altercations. Lock up your valuables before you host a big party. A small dose of prevention can eliminate giant headaches. Use social media carefully. Social media is a great place to tell your story and share memories with your fans, but it’s important to carefully curate the story you tell. Be sure not to post anything that might be construed as libel or slander, and don’t upload photos that give away too much information about where you live or what you store in your house. Also, insurance carriers keep an eye on your social media presence; it helps them to understand your habits and assess your lifestyle. If your posts portray you as freewheeling or irresponsible, carriers might shy away from assuming your risk. Keep the conversation going. Insurance coverage is not a “set it and forget it” purchase. View your policies as dynamic and subject to change with your circumstances. Bought a diamond chain? Had a fender-bender? Your insurance program needs to stay up-to-date with it all. Consider your insurance professional a member of your advisory team, and stay in touch, especially following significant life changes. This is a thrilling moment in your life and career. Just like navigating the path from draft to training camp, with the right planning and advising, we can build a game plan that keeps you and your lifestyle safe and secure.
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