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Oregon used insurance to cover bonuses for Chip Kelly's staff


Oregon has settled a legal dispute with its insurer over bonuses paid to Chip Kelly's staff which, while noteworthy in itself, underscores the main bullet point from this story: Oregon took out an insurance policy to cover bonuses offered to its coaching staff.

As detailed by the Eugene Register-Guard, the Ducks paid a $490,000 premium in 2012 to Lloyds of London and, in turn, expected the insurer to cover the $688,000 paid to its coaches following an 11-1 season that ended in a Fiesta Bowl victory and a top five final ranking.

Lloyds refused, arguing its policy only covered the top bonuses laid out in the coaches' contracts (winning the Pac-12, an undefeated regular season, appearing in the BCS National Championship). Oregon then sued its insurance broker, who then turned around and sued a different insurance broker and now, nearly four years later, Oregon has been awarded a $242,000 payment. So in the end Oregon was out $928,000 and, clearly, would have been better off not seeking out an insurance policy in the first place.

This under-publicized tactic -- I'll raise my hand and admit I didn't know schools did this -- on the surface seems like a smart way for schools without oversized war chests to pay their coaches competitively. Like the insurance each of us buys on our cars, our homes and our families' health, a school would pay a set figure to protect itself against the uncertain possibility of a larger liability down the road.

At least, that was Oregon's idea -- to pay 60 cents on the dollar for an elite-level bonus structure -- and something worth pursuing for other non-bluebloods that don't already do the same. Just make sure your representation is better than what the Ducks got.