Golf Insurance

Written by Gregg Ruais
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If you have ever read promotional golf tournament signs, you may have noticed some incredibly large cash prizes, such as $10,000 or more for a hole in one. For a long time, I thought the golf courses themselves or the tournament sponsors were offering that money. Regardless of how unlikely a hole in one really is, awards of that amount just seemed too generous to be true. Instead of risking $10,000 (and sometimes much more), outing hosts purchase insurance for a few hundred dollars. If someone actually does make the shot, the insurance company pays.

With proper risk management, insurance companies make considerable profit off these deals. Golf insurance is like any other insurance product. Providers calculate the likelihood that they will have to make payments and adjust their prices accordingly. After thorough mathematical research has been done, they know exactly how much they must charge in order to make money.

A professional golfer has a one out of 3,708 chance of making a hole in one on a given hole, while the average player's odds are approximately one out of 42,952. These odds are what make it profitable to offer substantial rewards. When insurance companies have to pay people for making holes in one, they use the money collected from the hundreds of contests when nobody sunk the shot.

Winning Prizes Honestly

Of course, insurance providers have to protect themselves from scams. With that much money at stake, they cannot rely on the honor system. Depending on the prize money, insurance company employees may have to witness the shots. An insurance provider may also require video evidence. Winners and witnesses might be required to take polygraph tests to prove they had not corroborated in any way.

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