Hole In One Insurance

Written by Gregg Ruais
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People who host golf outings have to find the right balance between financial prudence and elaborateness. Everyone enjoys high-stakes contests, gourmet food, and open bars, but what price are golfers willing to pay? The most exclusive country clubs can afford to offer these things without hesitation. However, most golf courses and players do not share their freedom with expenses, which is why hole-in-one insurance has become very popular among golf outing organizers.

Hole-in-one insurance makes it possible for people and organizations with tight budgets to offer outstanding prizes to players who make holes in one. Hole-in-one coverage works similarly to auto or health insurance. Customers pay set fees in exchange for indemnity in the event that exorbitant expenses must be paid. Drivers have insurance to get their cars fixed after collisions, patients pay health premiums just in case they need expensive medical assistance, and golf courses buy insurance just in case someone makes an advertised million-dollar hole in one.

This insurance product enables organizers to offer contests similar to those held by billion-dollar corporations, making even the smallest golf tournaments seem like PGA sponsored events. Despite the significant odds against holes in one, ordinary people cannot afford to take on the risk of offering $5,000 prizes. Five grand is actually on the cheaper side for a hole in one.

Costs of Hole-in-One Insurance

Some golf insurance companies have been in business for a few decades now. The business has survived because the rates truly are affordable. Holes in one are extremely unlikely for amateur players, making it possible for these companies to offer prizes in excess of 40 times the value of the cost of insurance for 144 players. In other words, when speaking in terms of cost of insurance per person versus the rewards that a single player can win, we are talking about ratios in excess of one to 5,760.

Different contests yield varying earnings ratios. For example, if an insurance company has a $1 million dollar liability that will be paid out in full after someone makes the shot, they will offer less favorable odds than if they took on smaller liabilities. As with all insurance companies, hole-in-one insurers base their rates on the laws of probability, which means these companies will always make money in the long run regardless of whether or not someone at a particular tournament wins a large prize.

Paying Insurance to Make Money

As with all business or non-profit ventures, money must be spent on golf outings and tournaments in order for these events to make sufficient profit. Spending money on prize insurance can increase the excitement surrounding a tournament, enabling the golf course to charge more money per player. Because the cost of hole-in-one insurance per golfer is rather miniscule compared to the awards people can win, it's very easy to turn an investment in indemnity into profit.

Expensive awards add to the overall prestige of golf outings. People see the prizes they can win and immediately believe these tournaments are high quality, worthwhile, and prestigious. If they know they can win thousands of dollars, people might be willing to pay an extra $20 to $50, much more than the cost of insurance per person.

A hole in one, everyone knows, is unlikely to occur, so many outing organizers offer other games for prizes as well. Some golfers are attracted to putting contests. Many people like the idea of having more than one chance to make a hole in one. With the right marketing campaign, insurance for any number of games and prizes can lead to increased revenue and overall enjoyment of events.

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