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...

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... Life Insurance One of the most well-known types of insurance product is life insurance. And this does very much what it says on the tin - it insures against the life of a person. Thus, if the policy holder (the... 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... 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... Vehicle Insurance Vehicle insurance is the category of insurance products that cover, surprisingly enough, vehicles. These can be any sort of vehicle that you can think of, with of course the most common product... 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... What Is Insurance? What exactly is insurance? It sounds like a very basic concept, but it is important to know what insurance is, in order to work out why insurance is so essential to modern-day activities, and why... Agricultural Insurance Agricultural insurance is a niche type of insurance product that is available for those who work in specific areas of agriculture. This type of product could offer piece of mind against various... Van Insurance Most people know about car insurance, but what about van insurance? Clearly if you drive a van then you need to know about van insurance. There are various different types of van insurance which... 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...