The New York Yankees signing of Roger Clemens to a prorated contract that will pay out $18.5 million and change has brought another aspect of player contracts these days: Insuring the player in case of injury.
With guaranteed contracts, clubs may wish to investigate the use of disability insurance for players to cover the losses they may incur, should a player have a debilitating injury that would end a season or career for the player.
The problem is, the rates to insure a player can be extremely high, and thus, clubs have to weigh taking the gamble of going it without insurance, or paying the premiums.
As an example, the Giants have not taken out a policy on Barry Bonds after the recent signing, and it’s possible that the Yankees would be unable to find a way to insure Roger Clemens, a player that has had injuries in the past. As reported by Richard Sandomir of the NY Times:
Randy Hendricks, Clemens’s agent, said in an e-mail message that “not nearly as many players or contracts are insured as they used to be” because of high premiums and exclusions from coverage.
Individual teams pay for insurance; there is no leaguewide policy.
If Clemens sustains an injury that prevents him from pitching at some point after he joins the major league roster at the end of the month, he will collect all of his guaranteed pro-rated salary, about $18 million. That salary will not be in effect when he is pitching in the minors.
Cashman said that he did not anticipate that Clemens’s history of groin and hamstring injuries would be regarded as pre-existing conditions that would be excluded from coverage.
Comments by a spokesman for HCC Specialty Underwriters, one of the major insurers of professional athletes, goes on to say that it would be difficult for an insurer to take on the risk of Clemens due to the amount of salary involved and his age. A recent case that have touched on insuring players was the Astros suing the insurer for Jeff Bagwell who would not pay off their $15.6 million claim on his salary.