Injuries are inevitable in a collision sport like soccer. As salaries continue to rise, NFL teams are increasingly looking to reduce this risk by adding insurance to NFL player contracts.
The 2006 NFL Collective Bargaining Agreement first introduced the concept of allowing teams to take salary cap credits to collect insurance benefits in the event a player is injured. The most important requirement is that the amount covered by insurance must be specified in the player’s contract. This credit goes toward the team’s salary cap for the following league year. Any salary cap relief provided is considered “player refund” under the CBA.
It took a while for teams to start taking advantage of this CBA provision. A clause in the six-year extension that Eli Manning, the NFL’s highest-paid player, signed in 2009 for an average of $16.25 million per year indicates that the New York Giants have an insured interest in him. There was a clause that allowed it. There was no mention of the insurance amount in the supplement.
The earliest example of a team qualifying for injury cap credits that I’ve found is the 55% that Aaron Rodgers received from the Green Bay Packers in 2013 to rise to the top of the league’s salary hierarchy. The contract was a one-year extension worth an average of $22 million per year. . The Packers guaranteed $20 million of Rodgers’ then-NFL record $35 million contract bonus.
After Matthew Stafford surpassed the $25 million annual salary mark in 2017, it became common to include appropriate language in player contracts. The Detroit Lions guaranteed Stafford a five-year contract extension worth $40 million and $135 million, averaging $27 million per year.
There are currently 13 players in the NFL with contracts averaging more than $45 million per year, all of whom are quarterbacks. The only contract without insurance is the four-year, $212 million extension that Jared Goff signed with the Lions in May, averaging $53 million per year. Teams typically insure a portion of the amount that is fully guaranteed at the time of contract. The previous highest price was one of the unprecedented, fully guaranteed, five-year, $230 million contract that Deshaun Watson received as part of his trade from the Houston Texans to the Cleveland Browns in March 2022. It is 11,999,994 dollars. Next are four contracts worth $87.1 million. Dak Prescott signed a one-year extension in September, becoming the NFL’s first player to earn $60 million a year. Prescott’s $240 million contract extension includes $129 million fully guaranteed.
Defensive tackle Chris Jones is the only exception among the five highest-paid non-quarterbacks in the league, as the Kansas City Chiefs had no guarantees in his contract. The Dallas Cowboys, Minnesota Vikings, San Francisco 49ers, and Philadelphia Eagles signed wide receiver CeeDee Lamb, wide receiver Justin Jefferson, edge rusher Nick Bosa, and wide receiver AJ Brown. The contracts were insured for $60 million, $40.8 million, $30 million, and $29,841,630, respectively. .
Insurance issues came into focus after Achilles Watson suffered a season-ending tear in his right arm in Week 7 against the Cincinnati Bengals. Watson has been a huge disappointment since being acquired.
The insurance language in Watson’s original Browns contract is consistent with other player contracts across the league and reads as follows:
The Club may, in its sole discretion, designate the Club as a beneficiary in the event of a Player’s incapacity to perform and receive certain types of insured salaries up to $111,999,994, as detailed below. shall have the right to purchase insurance. Services required by contract with NFL players resulting from NFL football-related or non-football-related injuries or deaths. As set forth in the terms and conditions of such policy. It is agreed and understood that such policies are available for review by the NFL and/or NFLPA upon request.
For injuries occurring between the date of signing the contract and the team’s first day of the official nine-week offseason workout program in 2023, or May 1, 2023, whichever occurs first ($111,999,994):
$19,175,003 of Player’s $45,000,000 2022 Signing Bonus $44,274,997 of Player’s $46,000,000 2023 Paragraph 5 $24,274,997 of Player’s $46,000,000 2024 Paragraph 5 $24,274,997 of Player’s $4 6,0 00,000 2025 Section 5
For injuries that occur from the earlier of the team’s first day of the 2023 9-week offseason official workout program or May 1, 2023, to the start of the team’s 2024 official 9-week official workout program – week Offseason Workout Program or May 1, 2024, whichever comes first ($82,451,463):
$13,901,469 of Player’s $46,000,000 2023 Paragraph 5 $44,274,997 of Player’s $46,000,000 2024 Paragraph 5 $24,274,997 of Player’s $46,000,000 2025 Paragraph 5
With respect to injuries that occur from the earlier of the team’s first day of the 2024 official nine-week off-season training program or May 1, 2024, to the start of the team’s first day of the team’s official nine-week 2025 – week. Offseason Workout Program or May 1, 2025, whichever comes first ($58,176,466):
Player’s $46,000,000 2024 Paragraph 5 of $13,901,469 Player’s $46,000,000 2025 Paragraph 5 of $44,274,997
Injuries that occur from the team’s first day of the 2025 nine-week official offseason training program or May 1, 2025, whichever occurs first, until January 15, 2026 or the end of the team’s last training program. Regarding. Official 2025 regular season games, whichever comes first ($33,901,469):
$33,901,469 of Player’s $46,000,000 2025 Paragraph 5
The Player shall cooperate with the Club in the application and underwriting of such insurance policies, including undergoing independent medical examinations as requested by the insurance company. The insurance company shall be selected by the Club and the Club shall have the right, in its sole discretion, to procure replacement or replacement insurance from time to time in the amounts stated above. The Club shall reimburse the Player for reasonable out-of-pocket costs associated with procuring insurance.
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The amount insured decreases as Watson’s policy progresses. The contract restructuring carried out in August to create a cap for 2024 did not change the remaining insured amount. The 2024 salary elements covered have changed. The current $13,901,469 consists of $12,691,469 of the $44.79 million in contract bonuses and Watson’s base salary of $1.21 million.
Watson’s injury led to speculation that the Browns would receive significant cap relief due to injury. The actual amount ultimately awarded will likely be disappointing to Browns fans.
Based on conversations with former front-office executives who managed the team’s salary cap, insurance contracts require players to miss a certain amount of games before being paid. Payment begins for each missed game after the game threshold or deductible is met. He noted that six games missed is the standard used in the policy.
Achilles injuries like Watson’s are not considered career-threatening. Running back Cam Akers tore his right Achilles tendon during a workout just before the Los Angeles Rams opened training camp in 2021. He returned to the field in the final game of the regular season, just over five months after his injury. Akers was the Rams’ primary ball carrier during their playoff run, which culminated in their Super Bowl LVI win.
Atlanta Falcons quarterback Kirk Cousins probably has a better idea of Watson’s recovery schedule. Cousins tore his right Achilles tendon in the Vikings’ Week 8 game last season. He was the starting quarterback for the Falcons in their opening game this season. Barring any rehab setbacks or surgical complications, Watson should be fully recovered in time for the start of the 2025 regular season next September. The Browns definitely won’t care if they err on the side of caution with Watson’s rehab schedule given his poor play.
Watson will be limited to six games in 2023 due to a glenoid fracture in his throwing (right) shoulder. According to NFLPA data, $13,901,469 of Watson’s 2023 compensation is guaranteed, which is the same amount in 2024, resulting in the Browns earning a $202,322 cap credit this year. Watson’s prorated bonus of $8,993,000 in 2024 was reduced to $8,790,678 from his original contract value of $44,965,000. Watson appeared in Cleveland’s first seven games this season before being injured. A similar amount of cap relief may be required given the expected rehabilitation schedule.
Another reference point is the $230.5 million five-year extension that Kyler Murray received from the Arizona Cardinals in July 2022 (worth up to $238 million through a salary escalator), averaging $46.1 million per year. Of those dollars, $80 million was originally insured. At the time of the contract, $103.3 million was fully guaranteed. Specifically, $24 million of Murray’s $29,035,000 contract bonus, $965,000 base salary in 2023, $36 million option bonus, $2 million base salary in 2023, and $37 million base salary in 2024. Of that amount, $17.035 million was insured due to injury before the start of 2023. Off-season training program.
Kyler Murray missed the final four games of the 2022 season and the first nine games of 2023 with a torn right ACL. Murray also missed two other games in 2022 due to a hamstring injury. The Cardinals received $2,288,823 in 2024 cap credits related to the 15 games Murray missed during the 2022-2023 season. Murray’s prorated 2024 signing bonus of $5,807,000 has been reduced to $3,518,177.
The Cincinnati Bengals received $163,870 in 2024 cap relief because Joe Burrow missed the final seven games of 2023 with a right wrist injury that required surgery. Burrow signed a five-year, $275 million extension in September of that year, of which $59.5 million was insured, making him the first player in the NFL to earn a $55 million annual salary. Of the $59.5 million, $14.875 million can be attributed to the 2023 salary component.
A prime example of saving the Caps from serious injury is former Washington Commanders quarterback Alex Smith. The commanders guaranteed $12 million of the $27 million Smith earned in a four-year, $92 million contract extension he received after being traded from the Chiefs in 2018. Unfortunately, Smith suffered a tragic fracture in his right foot in the 10th game of the 2018 season, which appeared to be the end of his career. Smith missed the entire 2019 season and was cleared to return to football after missing 22 games. Smith was inactive for the first four weeks of the 2020 season before being active in Washington’s Game 5.
Washington got a $4 million cap break due to Smith’s injury, as the signing bonus was prorated over the final four years of his contract (2019-2022). Perhaps if Smith’s contract had more insurance, the cap relief would have been even greater.
