You yourself said contracts were insured for 2-3 year periods. That would have expired now for the Hughes extension. So even if he was insured at one point, he likely isn't any more, unless you believe the Twins went beyond industry standards for insurance. Also, what is the threshold for "high dollar contracts"? Hughes last year made $13.2 mil, which ranked no better than 87th in MLB per B-Ref. And that's due to backloading, he ranked no better than 131st at the beginning of his deal. It's not clear from your information that insurance is "universal" among that level of contract, especially with an injury history like that of Hughes (missed half of 2011 with shoulder issues, among other issues from his Yankee years) which could result in prohibitively high premiums. Here's an article that references a lack of insurance on Sandoval's contract, and also includes a telling example from Brandon Webb: https://sports.vice.com/en_us/article/4xzx83/why-is-mlb-still-without-league-wide-contract-insurance