What is Prize Indemnity Insurance?
Running a promotion with a major prize giveaway is a great way to promote your business, but the problem is, most businesses don’t have the resources to actually cover the cost of a major prize like a million-dollar giveaway or a free car. That’s where prize indemnity insurance can help you. Businesses hosting tournaments or offering major giveaways use prize indemnity insurance to transfer the risk of a prize giveaway to an insurer rather than having to assume the risk themselves.
There are many different forms of prize indemnity insurance, the most common being Hole-in-One insurance.
Hole-In-One Insurance - This is the most common type of prize indemnity insurance. As the name implies, hole-in-one insurance is used specifically to cover hole-in-one prizes in golf tournaments.
Often, when businesses or charities host golf tournaments, they will partner with a sponsor such as a car company to offer a special prize, like a free car, to anyone who hits a hole in one on a particular hole or set of holes. Instead of requiring the car company to assume the cost of giving away a new vehicle, the tournament organizer will purchase hole-in-one insurance to transfer the risk of a hole-in-one, along with the associated cost of the free vehicle, to an insurance company. This allows the tournament organizers to attract major sponsors and advertise major prizes without the risk of a major payout.
Other Uses - In addition to golf tournaments, prize indemnity insurance can also be purchased for other sporting competitions to cover events such as baseball home runs, hockey blueline goals, basketball half-court shots, long-distance field goals in football, and other low probability events.
How Does Prize Indemnity Insurance Work?
Prize indemnity insurance is part of the contingency category of insurance; rather than setting up a contingency fund themselves when they host up a contest, a business or organization can purchase contest prize insurance, which transfers the responsibility for the contingency fund to the insurer.
The cost of prize indemnity insurance is calculated based on a number of variables, including the cost of the prize and the statistical odds of a contestant actually winning that prize. Other variables could include factors such as the skill level of contestants (in a sports or athletic event) and the number of contestants involved.
Do I Need Prize Indemnity Insurance?
If you’d like to increase the value of the prizes you can give away in any sort of competition, prize indemnity insurance can be a lifesaver for your organization. In addition to sporting events, prize indemnity insurance can be used for a variety of giveaways and competitions including:
- Ticket draws
- Weather promotions
- Crack the code promotions
- Scratch and win games
- Casino-based promotions
- and more…
Want to know more about how prize indemnity insurance can help you with your next event? Talk to one of our insurance advisors today or fill out the form below for your free prize indemnity insurance quote.