LeBron's Getty Fire Evacuation Sparks Reconsideration of Players’ Insurance

LeBron James and his family were among those forced to evacuate their homes after a wildfire broke out in Los Angeles.
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Kirby Lee-USA TODAY Sports

Kirby Lee-USA TODAY Sports

LeBron James and his family were forced to evacuate their home in the Los Angeles neighborhood of Brentwood early Monday due to a brush fire that now threatens more than 10,000 structures in the area. James tweeted that he and his family were driving around in search of a hotel room after an emergency evacuation. He later tweeted that he found a place to accommodate them. James also expressed that he was praying for other California residents who were impacted by the fires and asked them to get to safety as soon as possible.

A fire could impact any home, but wildfires present a more unique risk to homeowners in certain locations. This is clearly true in parts of California, where the magnitude of wildfires and the length of fire season have increased in recent years. According to the California Department of Forestry & Fire Protection, the state “experienced the deadliest and most destructive wildfires in its history in 2017 and 2018.”

California fires have grown in size and intensity due to a calamitous combination of warmer spring and summer temperatures, more drought, reduced snowpack, extreme winds and a massive buildup of dry vegetation. The effects of the fires have been devastating. More than 100 people and an unknown number of animals have died, numerous homes and other buildings have been either destroyed or damaged, and residents have been exposed to unhealthy air. Thus far in 2019, more than 162,693 acres in California have burned. Such acreage is about 1/5 the size of Rhode Island.

The fire impacting James and his Brentwood neighbors is being called the Getty Fire. The fire was spotted early Monday near the Getty Center, a picturesque property in Brentwood that includes the J. Paul Getty Museum, gardens and sculptures. As of this writing, the Getty Fire has grown to more than 400 acres, burned down several homes and threatens approximately 10,000 structures in the adjoining neighborhoods. It has led to the partial closure of the 405 freeway and other restrictions on travel.

Through a limited liability company, James and his wife, Savannah Brinson, reportedly own two mansions in Brentwood—one purchased in 2015 for $21 million and another purchased in 2017 for $23 million.

It’s unknown to what extent these homes are protected by insurance. However, much has been written about both the high costs of insurance policies for homeowners in certain parts of California and the unexpected deficiencies in those polices when homes are destroyed or damaged by fires.

In recent years, deductibles—the amount of money a homeowner must pay before insurance coverage kicks in—have risen sharply. The same is true of policy premiums, with increases reportedly as high as 500% in recent years. Some insurance companies have even stopped selling and renewing policies in high risk areas, leaving homeowners with fewer options, less competition for their business and, consequently, much higher prices. These same issues impact renters, as renters’ insurance policies have become more expensive in certain locations due to elevated risks of wildfires.

To mitigate these problems somewhat, California homeowners and renters can purchase insurance under the FAIR Plan. The Fair Plan is a private association of all insurance providers licensed to offer policies in California. It openly describes itself as the insurance policy “of last resort.”

Along those lines, the Fair Plan offers homeowners basic insurance but stresses numerous limitations, including that the max homeowner insurances policy is $1.5 million. This amount covers the structure and all of its contents. $1.5 million is obviously a ton of money, but even modestly sized California homes can be incredibly expensive, and that doesn’t include the value of items in those homes.

Even if a homeowner secures a policy that would cover the full market value of a home and its contents in the event of a fire, a homeowner may find the resulting costs of cleanup, labor and rebuild materials to be much more expensive than their policy covers—particularly when the same types of resources are simultaneously sought by other homeowners impacted by fires. Meanwhile, insurance policies for homes that are not destroyed but are damaged by nearby fires often fail to fully cover ash, smoke and related damage. Homeowners usually end up paying some of those costs out-of-pocket.

James is clearly in a more fortunate than almost anyone else. His extraordinary wealth ensures that he would be able to withstand any gaps in insurance coverage. Forbes estimates James’s net worth to be about $450 million; other estimates peg it closer to $500 million. The 34-year-old also signed a lifetime contract with Nike that has an estimated value of more than $1 billion.

However, James is not a representative sample of NBA players or of pro athletes in general. He is the most dominant player in the NBA since Michael Jordan and the most marketable player, too. His ability to withstand a potential financial disruption is not a test for how such a disruption would impact other pro athletes.

Along those lines, the possibility of wildfires impacting the home ownership (and rental properties) of less financially secure NBA players, G League Players and other pro athletes could pose more significant worries for those athletes, their families, their agents and their respective players’ associations. Collective bargaining agreements for NBA players and other unionized athletes contemplate benefits related to various forms of insurance, including policies for health, prescription drug, long-term disability and life. They also contemplate pension benefits as well as tuition-assistance and post-basketball career programs. Yet they tend to be more silent on home insurance policies or housing costs.

The CBA for NBA players touches on housing costs in Article III. Among other things, Article III ensures that players traded to another team shall have the cost of their “living quarters (either rent or mortgage expense) in the city from which he is assigned” reimbursed for three months. Article III also obligates players to “minimize potential liability of NBA teams” for players’ housing expenses. To that end, it instructs that a player who doesn’t establish a permanent or year-round residence in the vicinity of his team must use “best efforts” to obtain a short-term lease in a nearby residence.

Article III does not address destruction of homes caused by weather and climate issues. The current CBA runs through the 2023-24 season (with a mutual opt-out clause after the 2022-23 season). There will be many topics for negotiation in the next CBA, including the age eligibility rule and perhaps other NBA draft reforms. While the absence of CBA language on home issues makes sense in that home ownership and homeowners’ insurance are generally beyond the scope of one’s employment, an increased risk of wildfires and other conditions related to climate change might lead to reconsideration of that approach.

Michael McCann is SI’s Legal Analyst. He is also an attorney and the Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.