Prize Insurance

Written by Gregg Ruais
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The purchase of prize insurance has become a popular fundraising and profit-seeking venture for many organizations. Competitions and challenges for special awards can be very exciting. When I went to the University of Maryland, the event organizers for basketball games held half-court shooting contests. Students who made baskets from half-court received brand new cars. The challenge held everyone's attention, just like the actual games that everyone paid to watch. Whenever someone made the shot, the crowd erupted in congratulations to the sharp shooter.

Insurance companies make event planners follow specific rules. As long as regulations are adhered to, prize insurers make payments to the winners. Insurers will not allow more people to participate in a contest than the number initially agreed upon. For some contests, video footage must be provided to claim prizes.

Customizing Prize Insurance

Some insurers will cover dart-throwing contests, putting challenges, pitching games, and quarterback contests. They make profit off these insurance products by studying sports probabilities. The amount of statistical information available to these businesses is staggering. They know, for example, how many adults out of 1,000 can throw three consecutive strikes from 60 feet away. Risk managers use stats to compute how much they must charge in order to insure certain prizes and still earn profits.

Some companies allow clients to come up with their own ideas for contests. After reading emails from potential customers, these businesses let people know if they can accommodate their requests. In these emails, they give price quotes. After hearing back from insurance companies, people can begin promoting their events and the grand prizes that will be offered.

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