Darren Rovell from ESPN has the news here:
It’s the most a college player has ever collected on a loss of value policy, which insures the player if he slips in the draft.
Olomu and the University of Oregon bought the loss of value policy for the first team All-America cornerback before his senior year. Olomu tore his ACL in practice two weeks before the college football semifinal playoff game at the Rose Bowl against Florida State.
At the time the policy was written, Olomu was projected to be picked among the top 12 in the first round. But he slipped to the seventh round and therefore was due the money because he lost at least 50 percent of his value. The Cleveland Browns took him 14 picks before the last player taken.
Olomu revealed soon after the draft that he had also dislocated his knee, and he likely will miss the entire 2015 season for the Browns, much to the chagrin of those who have the Browns in mind as their sports betting team.
Loss of value policies, which are attached to permanent disability policies, have been offered to college players for years, but they have picked up in the past two years as schools have found a way to pay for them.
A source said that Olomu paid for the majority of his premium but that Oregon did contribute. It is not clear how Oregon’s contribution will result in any loss of tax benefits. If the player pays the full premium, the money has been tax free. …
The rest of the story is also quite interesting, explaining how the payout is in part an effort by the insurance company to boost demand for this insurance.
This makes a nice contrast to Duck AAD Eric Roedl’s botched effort to buy insurance from Lloyds of London against the possibility that UO would have to pay bowl bonuses to the football coaches, as explained here. In a nutshell, Roedl spent $490K without reading the fine print. The case goes to the jury in February. Meanwhile Harrang Long is piling up the billable hours.