How Does Contest Insurance Work?
The basic concept behind contest insurance is simple: take a game of chance, offer a valuable prize, buy insurance for the contest, and should a participant win the game of chance, the insurance company pays for the valuable prize. It's as simple as that. So for your next golf outing, your game of chance could be a hole in one on a particular par 3 hole on the course, and your prize could be $25,000 cash. If you buy hole in one insurance, then in the event that someone makes a hole in one on that par 3, the insurance company cuts the check for $25,000, not you. The great thing about contest insurance is that the cost of the insurance policy is always considerably less than the cost of the prize. So in the event that someone wins the contest, you aren't stuck with the bill, the insurance company is.
Jim Nam, a promotional contest insurance provider, notes, "Hole In One insurance is just one of many types of contest coverage. You can buy insurance for half-court shots in basketball, 7-10 splits in bowling, 45-yard field goals in football, just about anything. If it's a game, it can probably be insured." However when it comes to golf, Hole In One contests are by far the most popular.