It’s a headline you’ve undoubtedly seen at some point in your life:
“[SUPER FAMOUS CELEBRITY] insures her [MOST FAMOUS BODY PART] for [SOME RIDICULOUS AMOUNT OF MONEY]”
If you’re like me, you’ve probably wondered whether it’s all just a publicity stunt.
You’d be mostly right.
When Playboy starlet Holly Madison insured her breasts for $1 million last year, she and her press team likely did it knowing every entertainment reporter would leap on it. It makes for a good story (and for you underwriters out there, it gives the somewhat lackluster topic of insurance some time in the sun).
That makes sense in theory. Madison’s body is very much a part of her livelihood, and to have any part of it in less-than-stellar condition could be detrimental to her career.
The thing is, a million dollars probably isn’t much to Madison or any celebrity who has taken out similar policies – and that very fact underscores the absurdity of the insurance itself, says Amy Danise of Insure.com.
“If you look at the purpose of insurance, it’s to rescue you financially in the event of disaster. It’s meant to save a person who would otherwise literally go under if they had that damage or that loss,” she says. “For celebrities, it’s really unnecessary because they’re generally not being insured for amounts they couldn’t cover.”
As you might have guessed, insuring a specific body part isn’t the kind of coverage that’s common or even financially feasible. It’s done by surplus lines insurers, which handle unusual risks not covered by standard insurance companies whom have to submit their rates to the state.
Lloyd’s of London, the most prominent provider in this category of insurance, has been offering body-part specific policies since the 1940s, when its underwriters were “innovative enough to respond to a need perceived by the U.S. entertainment industry,” says Jonathan Thomas, a health underwriter at Watkin’s Syndicate for Lloyd’s. Lloyd’s has insured everything from actress America Ferrera’s smile to musician Keith Richards’ fingers.
Thomas says premiums for this sort of insurance cannot be compared with any other sort of insurance.
“Obviously an exclusion buyback policy on a pitcher’s elbow is going to be hugely expensive precisely because most other insurers don’t have the experience or knowledge to cover it,” he says.
When it comes to crafting a policy, a wide range of factors are considered. Some of the valuation is project-specific – for example, it’s important to consider that actress Gwyneth Paltrow is “hugely leg-dependent” in Ironman, but not so in Country Strong, says Thomas. The policies do not protect against consequences of the aging process, nor do they cover “wear and tear” or “slippage,” he says.
For the typical person, Thomas says this sort of insurance isn’t recommended due to the high premiums.
But don’t feel too bad.
As Danise at Insure.com says: “I’ve seen a lot of celebrities insuring body parts, but I’ve never seen a payout.”