NFL Teams Losing Millions in Cap Space by Skipping Insurance on Star Quarterbacks

When Aaron Rodgers tore his Achilles just four snaps into his first game with the New York Jets, the team faced more than just the loss of their star quarterback. It was soon revealed that the Jets had chosen not to purchase an insurance policy on Rodgers’ contract, a decision that left them unable to recover a portion of the $37 million in guaranteed money owed to him. By forgoing insurance, the Jets missed out on not only up to $22 million in insurance proceeds but also a valuable salary cap benefit that could have provided cap relief in the following season. Under the NFL’s collective bargaining agreement (CBA), insurance proceeds are considered a "refund from the player" and can be credited back to the team’s salary cap in future years, creating additional financial flexibility.

The Jets’ situation brought attention to a little-known strategy used by NFL teams: buying insurance on high-value contracts to protect against player injuries. Insurance on player contracts allows teams to offset the financial burden of injuries and can even free up salary cap space for future seasons. However, despite these benefits, many NFL teams still avoid purchasing insurance, viewing the premiums—ranging from $1 to $4 million per year for high-value contracts—as too expensive. This reluctance cost the Jets, as well as other teams like the Colts and Bears, who have historically opted against insuring key players.

In contrast, teams like the Philadelphia Eagles have embraced insurance as a vital part of their financial strategy. The Eagles lead the NFL in the number of insured contracts, covering not only their star players but also mid-level contracts, thereby spreading their financial risk. This strategy has allowed the Eagles to safeguard against injury costs and maintain cap flexibility, a method that many other clubs are now starting to adopt as guaranteed contracts and high-profile injuries rise across the league.

The rise in quarterback injuries, with seven starting QBs sidelined in 2023 alone, has heightened awareness around this financial tool. High-profile players like Joe Burrow, Tua Tagovailoa, and Dak Prescott have insurance clauses in their contracts, allowing their teams to recoup significant sums in case of long-term injuries. With more teams starting to realize the advantages of contract insurance, industry experts predict that premiums will continue to rise. However, this practice may come under scrutiny, with some suggesting that the NFL Management Council could push to eliminate the cap relief tied to insurance payouts. While the future of this salary cap loophole is uncertain, the Jets’ costly decision not to insure Rodgers underscores the financial risks teams face when they choose not to protect their high-stakes contracts.