Lloyd’s of London claim denial based on applicant’s failure to disclose
A former University of California football player’s landmark lawsuit against Lloyd’s of London is putting almost as much attention on sports disability insurance as the upcoming2015 NFL draft. The suit was filed by Marqise Lee, a former Trojan receiver who alleges Lloyd’s denied the $4.5 million disability insurance claim filed.
In 2013, potential first-round draft prospect Lee chose to sit out the NFL draft and remain playing for USC for one more year. He purchased loss of value and permanent disability insurance from Lloyd’s that would ensure him the difference between his rookie contract and a baseline of $9.6 million. Lee paid the $94,600 premium using funds from an NCAA-compliant loan taken out specifically for that purpose.
Lee was injured later that season, and was forced to sit out several games and play with injuries the rest of the season. With his draft prospects greatly diminished, he was a second-round pick in 2014 and signed a four-year $5.1 million contract, resulting in the $4.5 million difference he filed for in his claim.
Lloyd’s says Lee misrepresented his injury history by failing to disclose health-related information when he applied for the policy. Lee claims Lloyd’s breached the policy and made the denial in bad faith.
As with any insurance policy, all questions on applications must be completed fully and truthfully. Otherwise, the door is open for the insurance carrier to deny a claim based on fraud in the application. The basis for such denials is that the carrier would have rejected the application or charged a much higher premium had full information been disclosed in response to the question. When gray areas arise when answering application questions, a professional insurance agent can be an invaluable resource to help guide the applicant through this sometimes difficult maze.