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Insurance Coverage Questions Surround Emerging NIL Industry

The name, image and likeness environment in college sports is compared to the wild, Wild West, and this includes the insurance aspect.
  • Anthony Bellano
  • August 2022

In the world of big college sports, things don't always play out the way they're supposed to. The star pitcher for your university's baseball team can lock up a name, image and likeness (NIL) deal, and is suddenly benched after a few bad outings. “How do you insure that?” Stephens Insurance Senior Vice President and General Counsel Patrick McAlpine asked. The answer is different depending on the state, and it's part of what former University of Kansas football player Pat Brown describes as “the wild, Wild West.”

The rules are the result of O'Bannon v. NCAA, a 2009 lawsuit brought against the National Collegiate Athletic Association by former UCLA basketball player Ed O'Bannon, who sought compensation over the use of his NIL in a video game. His victory opened the door for other athletes to be compensated, and the NIL world exploded in 2021 with the emergence of collectives, groups of alumni and boosters who are not associated with the university who arrange NIL deals with athletes.

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“These bunch of individuals or these bunch of entities are just collectively working together, and there's no real governing structure,” McAlpine said. “That makes it really hard to insure anything if there's not an entity, a corporation, an LLC or something like that because underwriters are immediately going to have problems with an unincorporated group of people, especially doing something novel like this.”

Brown, director of risk management & insurance and an investment adviser for Edmonds Duncan, said athletes have to be concerned about getting injured, and they also have to be aware that they may now be a target because of the money they make. “If an athlete gets into a scenario where he or she signs a contract, but then they don't fulfill the obligation, is that company going to come after that athlete?” Brown said. “In this litigious society that we are in, I can certainly see something like that happening.”

Another question concerns the issue of catastrophic injury coverage for athletes. The NCAA, which oversees the governance of college sports, has disability insurance in place for “exceptional student athletes” playing at member institutions who obtain pre-approved financing, according to the NCAA's website. It protects them against future loss as a professional athlete, and is administered by three subsidiaries of Tokio Marine, HCC.

Brown said he wonders if the emergence of NIL money will impact scholarship and Pell Grant money to the point where the student-athlete will be on their own to get insurance.

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Sean Clifford, a current Penn State University football player who founded Limitless NIL to help student athletes navigate their way through this new frontier, said there is currently no issue with the NCAA program. He can see the potential issues.

In January, Stephens Insurance announced that it had reached an NIL deal with University of Arkansas linebacker Bumper Pool. “In Arkansas, our NIL law says that we actually have to continue payments for the contracted period, even if they don't play, they get hurt or they leave the team,” McAlpine said. “You have to structure your contract to take into account for that, at some cost.”

Anthony Bellano is an associate editor. He can be reached at

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