Why does Paul get kicked off the Lake Windsor Middle School soccer team?

Essentially, Paul gets kicked off the Lake Windsor Middle School soccer team because his disability prevents him from being covered under the school's accident insurance plan.
Insurers often won't cover disabled students without charging higher premiums for such players. Meanwhile, other insurers may decline to insure a school sports team altogether, if any number of students on the team have egregious disabilities.
To explain, many schools must purchase sports insurance today, and some even purchase catastrophic accident insurance. Both pay for injuries sustained during the playing of a sport; however, the second pays for medicals costs above a certain amount, usually in the millions of dollars.
So, why is sports insurance necessary? The answer is that sports insurance protects schools from expensive lawsuits, in the event that a student is injured. Injured students may sustain economic and non-economic damages, such as physical injuries, permanent impairment, and emotional suffering. To recuperate their costs, they may sue the school.
In Paul's case, Lake Windsor Middle School simply does not want to risk being declined for insurance. Depending on the disability, sports insurers may decline to insure a student or even the entire team. In their opinion, Paul's disability (visual impairment) is a liability, potentially exposing him to more injuries than the typical student.
So, despite Paul's ability to play (and play well), his supposed visual handicap status on the IEP (which Paul's mom filled out) is a significant mark against him.

Paul is visually impaired and, as such, is on an IEP at Lake Windsor Middle School. One day, Paul gets all excited because he thinks that Coach Walski's called him over to tell him how impressed he was with his goalkeeping abilities. Unfortunately, the coach has some bad news for Paul—he's not allowed to play soccer for the school; he's no longer eligible. The problem is that every child on the program has to be insured; it's a legal requirement. As Paul has such a serious visual impairment, there's no way that the insurance company would provide coverage. And just one child without insurance coverage would be enough to end the program altogether. Paul's devastated at the news. As far as he's concerned, he can see well enough to be a good goalie. But it's no use; the rules are the rules and nothing can be done to change them. So Paul's off the team.