Prize Indemnity Insurance

Prize indemnity insurance is a purchase that would be considered by someone offering a large prize and thus could stand to lose a considerable sum of money. This form of insurance would mean that they don't actually need to have a huge sum of money ready to pay for the prize, but rather the insurance pays out if a prize is awarded, and so the promoter simply pays the premium: which of course could itself be very hefty.

Typically a large prize is awarded for something that is considered very unlikely: let's say you offer a prize of a hundred thousand pounds at a fete to someone who can roll 6 dice and get a 6 on every dice. The chance of this happening is 6^6, or 1 in 45,656. If you don't have the money in the bank, then you could potentially look into having prize indemnity insurance set up for the eventuality that someone won the prize.

Clearly with this sort of insurance it is all about assessing the chance of someone winning, which depends on the number of people who are eligible to enter for the prize (in the case above, the number of people who take part), their skill level (not relevant here, but very relevant in something like a competition to shoot an arrow and hit a pea). Clearly it is not normally the case that the chance of something happening is precisely known such as with the dice rolling above, so this is where skill at assessing comes into play.

The higher the chance that someone will win the prize, then of course the higher the premium would be to purchase the insurance. If the odds are not sufficiently high, or not assessed to be sufficiently high, then it would be difficult to purchase prize indemnity insurance.

Related Articles...

Home Insurance Home insurance is one of the most common types of insurance product, and anyone who has a home will be familiar with it. Home insurance is usually contrasted with contents insurance, which is a... Saving Money on Car Insurance Like with most types of insurance, the car insurance sector is extremely competitive. There are a lot of providers of this product, but also a lot of different factors that are taken into account to... Income Insurance Income insurance is sometimes referred to as income protection insurance. As the name suggests, this product is focused around what you earn from work. This type of policy is something that will... Bicycle Insurance Bicycle insurance, as with all insurance products, gives you a way to deal with the risk of having something happen to your bicycle - depending on the product you choose - and therefore having the... Health Insurance One of the most common insurance products is health insurance, a broad umbrella category that covers any sort of insurance product that helps an individual mitigate against the expenses that are... Types of Car Insurance There are various different types of car insurance product that are available in the UK. The minimum level of cover that is available to meet legal requirements is a product called third party... Contents Insurance Contents insurance is a type of insurance product that covers the items that you have - the contents - of your home. There are a range of different providers of contents insurance out there on... Property Insurance Property insurance is a product that applies specifically to property, and has various different types of specific that are subsets of the general umbrella term 'property insurance'. Specific... Reinsurance The concept of 'reinsurance' is quite an interesting one. It comes down to the same sort of logic as 'who will guard the guards?' - in this case who will insure the insurers. The answer is, other... GAP Insurance If you have bought a car in recent times, then you will probably have come across GAP insurance as the vendor will have asked you if you want GAP insurance or not. If you are not familiar with...