Indemnification insurance for a prize promotion
Prize indemnity insurance is
premium
to an insurance company, which then reimburses the insured should a prize be given away.
Hole-in-one insurance
One of the earliest and most common forms of prize indemnity insurance is hole-in-one insurance. Hole-in-one insurance, often purchased by a golf
hole-in-one
during the tournament.
According to the newspaper
golf tournaments
to offer expensive prizes to golfers able to hit a hole-in-one during tournament play. In order to be able to afford such expensive prizes, tournament hosts can purchase prize indemnity coverage to protect themselves from having to pay for the prize from their own funds.
Companies that provide hole-in-one insurance may provide signs or other accessories to help the tournament host promote the hole-in-one prize. The insurance contract between the golf tournament and insurance company will detail rules such as: which holes on the course the prize will be insured on, how to verify the hole-in-one was achieved legitimately, and what to do if a contestant hits a hole-in-one on a hole other than the insured hole. Variables that affect the cost of the hole-in-one insurance include: the number of participants in the tournament, the skill of the participants (amateur vs. professional golfers), the length of the insured hole, and the value of the prize being offered.
Motor racing
Prize indemnity is also used in motor sport to help offset the high costs of running a team. The highest recorded payout for such a policy was $250,000 on 8th August 1992, when Robin Donovan secured a 6th place[2] result in an Interserie[3] sports car race at the Zolder Circuit in Belgium.
Other uses
In addition to hole-in-one insurance for golf events, prize indemnity insurance companies typically offer coverages for other types of contests as well. For example, contest coverage can frequently be purchased for contests such as
half-court shots in basketball, field-goal kicks in football, home runs in baseball, blue-line goals in hockey, and even
retail and
casino-based promotions as well.
For example, in the
field goal
of 50 yards or more. Prize indemnity insurance was purchased to cover all these events. However, none of the events occurred in the game.
Most television
The Price Is Right $1,000,000 Spectacular produced three millionaires in the six episodes produced that season under the new rules imposed for the season. To win the $1,000,000 prize, the contestants had to give a winning bid within $1,000 of the final showcase's retail price. The insurance company demanded that this threshold be reduced to $500, and that one of the million-dollar pricing games be removed. After the four episodes aired with the new rules, RTL and CBS have not produced any further "million dollar" episodes in years since, possibly due to the insurance concerns. Since 2013, "Big Money Week" with $100,000 or greater prizes has aired in daytime close to the television sweeps
[4] and prime-time episodes have aired sporadically since then, but using the daytime budget. The most common Big Money Week million-dollar game is Plinko, by simply replacing the $10,000 slot with a $200,000 slot.
References
