What Is Hole in One Insurance?

Everyone loves to watch a spectacular shot. It could be a hole-in-one in golf, a half-court shot in basketball, or a blue-line goal in hockey. But if you're the event organizer or promoter, you may find yourself shelling out some cash for a prize after these awe-inspiring moments. If you have the right hole-in-one insurance, you can celebrate right along with the winner. 

An independent insurance agent can help you compare multiple contest prize insurance companies and specific event coverages to find the insurance that fits your event or contest. They'll get you set up with the right amount of coverage for any event you organize. But first, here's a closer look at hole in one insurance. 

What Is Hole in One Insurance?

Hole-in-one insurance, also known as prize indemnity insurance, provides coverage for sponsored or promotional events that award big prizes to competitors who win a contest, challenge, or game. These prizes can include cash payouts, a new car, vacations, or anything in between. 

Hole-in-one insurance, or rather, the insurance company that you get to underwrite the policy, pays the prize money to the winner, and as the insured, you only pay a fraction of the payout for your insurance premium. 

Having this coverage allows you or your company to sponsor or organize large events that award large prizes without the financial burden. Hole-in-one insurance can offer many other ancillary benefits for your organization as well, such as attracting a non-target audience to your store or business just to check out the event and potentially win a prize. The promise of a high-quality product or trip can entice new prospective customers to look into your business.

How Does Hole in One Insurance Work?

If you offer a grand prize at an event, you may need prize indemnity or indemnification insurance. This coverage, which is often referred to as hole-in-one insurance for golf events, pays an indemnity to the insurer of a contest if a participant wins a prize. 

For example, if you are the golf contest sponsor and you offer $10,000 for a hole-in-one on the Target Hole, your insurance company reimburses you the $10,000 you have to pay out if a participant makes the shot. This coverage helps ensure your event winner will not go unrewarded and that you will deliver on your promise.

As with any other insurance coverage, prize indemnity insurance provides compensation, or an indemnity, when the insured suffers a loss. In this case, your loss would be the value of the $10,000 cash prize awarded to the prize winner. So, your prize indemnification policy’s coverage limit is the cash value of the prize or prizes your contest offers.

In addition to the cash value of the prize, you and the insurance company have to work out various guidelines for the contest. You need to decide the number of holes included in the contest, how you'll prove the winner made the hole-in-one, and whether to offer a consolation prize if a golfer aces another hole not included in the contest. 

At your event or contest, be sure to include plenty of signage, including specific contest signs that indicate to the players how prizes are awarded and what constitutes a win. 

Examples of Hole in One Insurance

Hole-in-one insurance began growing in popularity in the 1980s when golf tournaments started awarding cash or other prizes to contestants who made a hole-in-one. Since then, this marketing idea has expanded to other sports. Basketball events added half-court shot contests, hockey events sponsored blue-line goal contests, and golf event coordinators added long putt contests. 

Most sponsors or promoters of these events don't pay these winnings from savings they've set aside for the contest. Instead, they purchase prize indemnity insurance or putting contest insurance to cover the possibility that they will need to award these prizes.

Examples of who might need contest prize insurance:

• A professional basketball team that promotes a free throw shooting contest
• A minor league baseball team that has a home run hitting contest
• A high school football team that has a field goal-kicking contest
• A company that sponsors a contest for picking the Final Four during March Madness
• A television game show that wants protection from paying prizes in excess of a specific amount
• A local radio station that awards a prize for guessing the name of a series of songs

If you're unsure whether your upcoming event or contest could benefit from the coverage of prize indemnity insurance, ask an independent insurance agent for advice.

Do Winners Get Extra Money for a Hole in One?

If you purchase hole-in-one insurance, the policy covers the prize value promised in the contest. This does not typically include additional amounts beyond the insured prize. 

You'll make it clear upfront how much money will be awarded for a hole-in-one, such as $10,000, and that's the amount of coverage you'll purchase in your policy. Any winners will receive this exact amount when they get their prize. 

However, for your contest, you may also choose to offer more than one grand prize or extra incentives. Contestants might be rewarded extra compensation based on yardage or scoring hole-in-ones after they tee on a hole with a higher par. Just be aware that you or your business will need to cover these additional prizes or extra compensation. 

How Much Does Hole-in-One Insurance Cost?

Prizes come in all sizes, as do sporting, spectator, and participant events and the organizations that promote them. For this reason, the price of prize insurance policies varies widely. 

However, coverage tends to start at about $180, and policies tend to average below $400. There are so many considerations for each event, but some of the things insurers will examine include:

• The difficulty of your contest
• The ability of the participants
• The number of contestants
• The value of the prizes or cash award

Another variable is that prize insurance companies each have their own methods for determining premium costs. Be sure to work with an independent insurance agent who can help you compare hole in one prize insurance rates from several insurers.

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What Are the Odds of Making a Hole-in-One?

Hole-in-one prize insurance might seem ridiculously affordable considering the potentially large payouts it's designed to cover. However, the low cost of these policies can make more sense when you consider the actual odds of a player scoring a hole-in-one:

• Odds of a professional golfer making a hole-in-one on a par 3 hole: 1 in 2,500
• Odds of a hole-in-one being scored in a single day on a PGA Tour: 1 in 4.5
• Odds of an amateur golfer making a hole-in-one: 1 in 12,500

It's much more likely that any participants in an event you host will be amateur players, with considerably lower odds of winning the grand prize offered. This low risk allows insurance companies to provide affordable hole-in-one insurance.

Here's How an Independent Insurance Agent Can Help

A contest prize insurance policy makes a lot of sense if you offer a large amount of cash for a contest where the odds are in your favor. You can create attention for your event by offering a high-value prize and insuring it with a prize indemnity insurance policy that costs much less. 

Contact an independent insurance agent to find hole-in-one insurance to insure your unique contest for a fraction of the cost of the prize. These agents can shop and compare quotes from multiple insurance companies to score you the best deal available.