Prize indemnity insurance is designed to deal with marketing and advertising promotions where there’s a chance people will win prizes, for example sporting events. Instead of keeping cash reserves to cover large prizes, the insurance company reimburses the cost when a prize is awarded. You are insured if someone wins your competition, as long as the chance of someone winning isn’t a certainty.
What’s covered?
When the probability of a loss is solely down to a mathematical formula, when there’s enough data so the probability of loss can be safely calculated, or where the probability is subjective, this insurance covers:
- Payment of the value of a prize if somebody wins