‘A rabbit hole most people know nothing about’: How insurance

• Kalyn Kahler, ESPNSep 18, 2024, 06:00 AM ET

WHEN AARON RODGERS tore his Achilles after four snaps last season, NFL agents and club employees went straight to their laptops to confirm something they suspected: There was no insurance addendum in Rodgers’ contract.

The Jets renegotiated Rodgers’ contract after trading for him and didn’t buy an insurance policy to secure a portion of the $37 million in guaranteed money owed to the quarterback in 2023. Green Bay had a policy on Rodgers, but the Jets had no relationship with the broker who sold the Packers the policy. With the snap of Rodgers’ left Achilles tendon, that $37 million for a player who wouldn’t play could never be recovered.

“The Aaron Rodgers situation is a tragedy that should be understood,” said Richard Buffum, former manager of football administration for the 49ers and current director of salary cap and contracts for the agency Excel Sports Management.

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“When you trade for a 40-year-old quarterback, and you already have the policy in there, that’s an indefensible decision,” a former NFL club executive said. “Penny-wise, dollar foolish.”

Last October, Sportico first reported that the Jets declined to purchase insurance on Rodgers’ contract to protect the team if he missed games for injury or illness. The Jets missed out on recouping up to $22 million in insurance proceeds by not purchasing one of several policies ranging in price from $1 million to $4 million, per the report.

Not mentioned was the biggest loss the Jets suffered by forgoing insurance, the very reason that Buffum calls this a tragedy: the corresponding salary cap relief.

The CBA labels insurance proceeds as a “refund from the player,” which qualifies the amount as a cap credit for the club for the following season. In the simplest terms, if a player who eats up a significant portion of a club’s salary cap misses significant time with injury or illness, a club doesn’t have to take it as a total loss, but can recover space for the following year. Plus, insurance premium payments don’t count against the salary cap.

“That’s the crux of the loophole,” the former club executive said. “You effectively can use cash to create cap space from scratch. In a closed system, that is one of the few ways to buy cap space.”

It’s a benefit that is discussed in hushed tones within the front offices that utilize it, and rarely with outsiders, including the media. The CBA provision has existed since 2006, and since then, the clubs that have taken advantage of this cap hack flew mostly under the radar.

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“It’s kind of taboo to talk about insurance,” said an executive from a club that is a longtime insurance buyer.

“If I’m doing something that I think is benefiting my club, why would I want to broadcast it within an article?” an ex-cap executive said. (He declined to share information about how clubs he’d worked for handled insurance.)

And the insurance side — there are two main brokers who sell policies to teams — is just as buttoned up. With a fixed number of buyers, they have no incentive to promote their product.

But the Jets “tragedy” and an increase in guaranteed money and high-profile quarterback injuries have combined to raise awareness of this underground tactic. A cap executive who reviews every NFL contract said the number of contracts with insurance policies has doubled in the past five years, and two insurance industry sources said teams that had never bought insurance previously are now customers. The increased demand and an increase in claims paying out means that the cost of the premiums has gone up — a lot.

Last year, seven starting quarterbacks were lost for the season because of injury, and this year Jordan Love and Tua Tagovailoa have already gotten hurt. Unlike the Jets, the Packers and the Dolphins both have insurance policies on their quarterbacks, who got new contracts this offseason.

Injuries are an unavoidable reality, so finding a way to roll over cap money to a future year for the purposes of “creating cap space out of thin air,” the club executive for a longtime insurance buyer said, is one of the league’s best-kept secrets.

“This is a rabbit hole most people know nothing about,” the former NFL executive said.

The Jets surrendered $37 million with nothing to show for it when Aaron Rodgers was injured four snaps into 2023. Michael Owens/Getty Images

ROUGHLY HALF OF NFL clubs currently have an insurance policy on at least one player contract, and many clubs only insure one player, their most expensive contract. One insurance industry source estimated that around 75% of teams have purchased insurance policies in their history.

“It’s usually the teams that get absolutely steamrolled into overpaying a player [that buy insurance], and so it’s like [the front office’s] saving grace to try to present it to ownership,” an ex-cap executive said. “It’s like, ‘We’ll get your money back if he gets hurt.'”

In the quarterback-dominated NFL, it should be no surprise which position has been the most powerful magnet for policies. Thirteen of the top 14 quarterback deals in total value are insured for a portion of their contract value, with the Lions’ Jared Goff the lone exception in that group.

Cincinnati, a famously thrifty team that an insurance industry source said had never previously bought a policy, purchased one on Joe Burrow‘s contract extension in 2023. The deal included $146.5 million in guaranteed money, second highest behind Deshaun Watson‘s fully guaranteed contract. The Bengals did not respond to a request for confirmation that Burrow was their first policy.

Cowboys quarterback Dak Prescott signed the biggest quarterback deal yet earlier this month, and it included an insurance addendum, as his previous contract also did. In 2024, Prescott counts $44.6 million toward Dallas’ salary cap (17.2%), and in 2025, that number jumps to $89.8 million (30.1%).

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“If you lose a player like that, and it’s for longer than a season, are you able to be competitive?” an insurance industry source asked. “Because you now have 30% of your salary cap eaten up by one player.”

Tagovailoa, who left in the third quarter of Thursday’s game with a concussion, is covered by $167 million in injury guarantees per the language of his contract, if he is never cleared to return to play again. There are no waivers or exclusions for concussions. The Dolphins are also insured for up to $49.3 million of Tagovailoa’s contract.

But the playing contract and Miami’s insurance policy are two different things, and though the specifics of what the $49.3 million covers are not known, two insurance industry sources without direct knowledge of the Dolphins’ policy said that based on their experience working with insurance carriers, they’d expect that concussions would be excluded from Miami’s policy coverage on Tagovailoa. Carriers aren’t likely to take on the risk of insuring the team for concussions when the player had two highly publicized concussions that caused him to miss five games in 2022 and said he considered retirement following that season.

When Rodgers got hurt, an insurance industry source said the policies available to the Jets did not include any exclusions for an Achilles injury, so they would have collected on a per-game basis after they hit their deductible. But in Miami’s case, if concussions are excluded from the policy, the Dolphins won’t have a claim on the $49.3 million.

Through a team spokesperson, the Dolphins declined to comment.

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Goff was extended in May and given $113 million in fully guaranteed money and $53 million on average per year, which puts him in the top 10 of quarterback contracts in those categories. But his contract does not include an insurance addendum, and if the team purchased insurance outside of the contract, any claim would not count toward cap relief. Buffum works for the agency that represents Goff, and he said the Lions discussed insuring Goff’s extension during negotiations this spring.

Among the other uninsured quarterback contracts are all nine starters on rookie contracts (less likely to be insured because the deals are lower value), bridge quarterbacks on cheap contracts (Sam Darnold, Gardner Minshew), Russell Wilson making the veteran minimum in Pittsburgh (Denver insured his contract previously), and the remaining middle-of-the-market quarterback deals (Daniel Jones, Matthew Stafford, Derek Carr, Baker Mayfield, Geno Smith).

And then there’s Rodgers.

According to an insurance industry source, the Jets never returned calls from multiple insurance brokers, including the one who wrote and sold the Packers their policy on Rodgers. The Jets could have negotiated the existing Rodgers policy to insure a reduced portion of the signing bonus, but instead they let the policy go.

Joe Douglas was hired in 2019 as the Jets’ general manager from his role as vice president of player personnel for the Eagles, a team that deals in insurance policies more than any other club. But the insurance decision may not have been his to make.

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Former Jets general manager John Idzik, speaking generally about the five clubs he worked for in his NFL career, told ESPN that ownership approval and buy-in is necessary to purchase an insurance premium.

“At the ownership level, there’s a certain way of conducting business,” Idzik said. “Some clubs will be more apt to insure and they get used to that, and they see the benefits of it. Others are less apt.”

A club’s philosophy on insurance can be influenced by its salary cap staff’s analysis, but it’s ultimately determined by the owner, who has to be willing to spend their own money on the premium. The NFL doesn’t require clubs to purchase these temporary total disability policies on player contracts, so it’s up to each owner to value what Buffum calls, “a lose small, win big proposition.”

“It’s whether or not they’re believers in insurance, whether they want to spend the money on it or not,” an industry source said.

Sportico reported the Jets haven’t done a policy in at least 10 years. Idzik declined to say whether they’d purchased insurance in his two seasons (2013-14) as Jets GM. “It was under discussion anytime we had a big contract,” he said.

The Jets declined to comment through a team spokesperson.

Among the other teams that industry sources said don’t buy insurance, or have simply opted against it to date, are the Bears, Colts, Panthers and Steelers.

Spokespeople for the Bears and Colts confirmed they have not purchased policies up to this point, though both said their teams do assess the possibility of utilizing this tool. The Panthers confirmed they have not purchased a policy. The Steelers declined to comment.

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For the most part, owners who don’t buy insurance think the cost of the premium isn’t worth spending on a claim unlikely to fully pay out, according to a former cap executive. He said he had done due diligence on insurance policies and presented the information to three different owners for whom he worked, including one who was specifically interested after noticing Eagles owner Jeffrey Lurie buying a lot of insurance. But all three thought the premiums were too high.

One club executive estimated the cost of a premium has increased around 30% to 40% in the past five years. Per insurance industry sources, if a club wanted to insure $40 or $50 million of a contract, it would cost them somewhere between $1 or $2 million per year.

That club executive said his team is only buying insurance now because of the cap credit.

Under owner Jeffrey Lurie, left, and GM Howie Roseman, the Eagles have been major insurance believers. Photo by Terence Lewis/Icon Sportswire

THE EAGLES MUST lead the league in this advanced stat — Using insurance addendums as a guide, the club has insurance policies on at least 16 players for 2024. Philadelphia’s portfolio is the stuff of legend among salary cap staff and those in the insurance business because of the sheer number of policies it buys, and the range of contract values insured.

An industry source said the majority of teams set a threshold to determine the size of the contract they’ll insure, like $40 million guaranteed, and then buy insurance on any contract over that number. That is not what the Eagles do.

They’ve got the usual high rollers. Quarterback Jalen Hurts‘ contract is insured for $63.75 million for 2024 (out of the $110 million guaranteed in his deal), and receiver A.J. Brown‘s contract is insured for $29.8 million for 2024 (out of the $51 million guaranteed in his deal). But they also insure three players on rookie contracts for small sums between $750,000 and $2.5 million for 2024, one of whom, center Cam Jurgens, has $3.9 million in guaranteed money.

“I have no clue what the background is on why they do what they do,” said another insurance industry source familiar with the Eagles’ insurance-buying habits. He laughed, “I have no clue.”

Through an Eagles spokesperson, executive vice president and general manager Howie Roseman said he appreciated the interest in his strategy but declined to comment.

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One executive for another club described Philadelphia’s tendencies as spreading risk around by insuring a variety of players for a range of amounts. The amount a club insures a contract for has to be written into the player’s contract in order for the club to qualify for cap relief, so the Eagles’ portfolio is there for all the league to track.

Clubs aren’t required to file insurance policies to the league office or the NFLPA, so there’s no comprehensive database of each team’s policies, how much their premiums cost or how much they received in collections for the length of an injury. The existence of an insurance addendum in a player’s contract is the best way to track insurance usage, but it’s not foolproof. A team could add an insurance addendum to a contract and then decide to not purchase the policy, or to stop paying for the policy in a later year.

Buffum said when he worked for the 49ers from 2014 to 2022, the Niners discussed buying a policy for almost any non-minimum extension, and most of the time, the decision was yes.

The team insured three players who missed a significant amount of time due to injury in 2020: Jimmy Garoppolo (10 games), Dee Ford (15 games) and George Kittle (8 games). Garoppolo’s contract insurance language said the team insured up to $15 million, but it did not specify for which years (it was likely for less than that amount in 2020 because he was in Year 3 of his deal), and Ford’s playing contract specified up to $8 million of his regular-season salary for that year.

“It was just a windfall of insurance that year,” Buffum said.

Christian McCaffrey (23) and George Kittle (85) are among the players the 49ers have insured. Jeffrey Becker-USA TODAY Sports

Each policy is different based on the player’s position, age, injury history and career trajectory. Clubs can choose from a range of deductibles and wait time — some expensive policies start paying cash to clubs after just one game missed, other more affordable policies don’t pay until the eighth consecutive game missed.

The Niners declined to comment on the amount of insurance proceeds they received that season, but Roster Management System reports San Francisco earned $11.2 million in end-of-year cap adjustments, a sum that includes insurance credit, along with other forms of credit or expenses, such as unearned incentives. For the 2021 season, San Francisco’s adjustment was $5.5 million more than the second-place team. The cap decreased by $15.7 million that year because of the 2020 COVID season losses, and no team besides the 49ers was even close to making up that gap.

“The cap went down for the first time ever,” Buffum said. “And it aided our ability to keep our team intact.”

The Niners’ 10-year total in end-of-year adjustments is $54.3 million, double the second-place team’s total. This number isn’t only insurance credit, but representative of other savvy cap hacks that benefit teams when players get hurt, such as paying salary in the form of per-game roster bonuses. Philadelphia’s $19.1 million over 10 years is good for sixth.

This season, the 49ers have already put running back Christian McCaffrey on injured reserve, meaning he will miss at least five games. Per his playing contract, the team has insured McCaffrey for up to $15 million for 2024.

Just like with home and auto, NFL clubs can save money on premiums by bundling policies, so it can make sense financially to do a few at once. The Giants, who have insured very few players in the past, renegotiated the contracts of pass rushers Dexter Lawrence II and Brian Burns and left tackle Andrew Thomas this offseason to add insurance addendums for $10 million for the 2024 season.

“There are some teams that are doing more insurance than they’ve ever done before outside of quarterbacks,” a former NFL club executive said.

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And that reality, that more clubs are viewing insurance as a team-building advantage, is why the future of the loophole could be in jeopardy. Four sources, from the insurance industry, the NFLPA and NFL clubs, told ESPN that over the course of the past year, they’ve heard that the NFL Management Council, which runs point on salary cap and contract matters, has been discussing eliminating the cap relief benefit to teams. One insurance industry source said the reason the management council started talking about it is because they think it isn’t fair to small-market and family-owned teams that have less cash available to spend. A club executive said he thinks the league wants to have more control over it.

A league source said that the management council has not discussed a change to this rule with the NFLPA.

The NFL declined to comment.

To remove the cap relief for insurance claims would require a revision to the CBA, which would also require the NFLPA’s sign-off. This seems unlikely because that would eliminate money and cap room that goes directly to player salaries.

ESPN spoke to an NFL owner who regularly buys policies. This owner hadn’t heard that insurance cap relief could be at risk but said their team would have something to say about it. “If that’s true,” the owner said, “That would not be good. At all.”

OF THE SEVEN quarterbacks lost to season-ending injuries in 2023, at least four teams didn’t collect any insurance payout or cap relief because they didn’t insure the contract for 2023: Rodgers (16 games missed), Colts rookie Anthony Richardson (15 games), Jones (11 games) and Kirk Cousins (9 games — the Vikings previously insured his contract, but only through the end of the 2022 regular season).

The Browns (Deshaun Watson, 11 games missed), Bengals (Joe Burrow, 7 games) and Chargers (Justin Herbert, 4 games) each insured a portion of their quarterback’s contracts, and the NFLPA said both the Browns and Bengals received cap credit because of it.

Per Roster Management System, the Browns received $4.1 million in end-of-year cap adjustments for 2024, while the Bengals received $688,267. The NFLPA said the Cardinals also received insurance credit for Kyler Murray‘s ACL injury that kept him out for 15 games last season, and Arizona finished with $5 million in end-of-year cap adjustments.

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The first hold-your-breath-a-franchise-quarterback-is-hurt moment happened in Week 1, when Love was brought down by two Eagles defenders late in the game in São Paulo. He needed help to walk off the field.

It happened again in Week 2, when Tagovailoa left the game with a concussion. Tagovailoa will miss at least four games after being placed on injured reserve Tuesday.

The news for Love was better than expected. An MCL sprain, not an ACL tear. Green Bay hasn’t placed Love on injured reserve, but the team is prepared for the worst.

Green Bay is a longtime insurance customer. Love’s contract is covered for up to $74.8 million for 2024.

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