Marketing and retail promotions
Envelope draws, spin the wheel, crack the safe, pick the key and number matching promotions run by brands, shopping centres and media.
EVENT INSURANCE
Prize Indemnity Insurance for Promotions, Challenges and Prize Draws
A $50,000 prize for a half-court shot or a car for the right key makes a promotion. Prize indemnity means the promoter pays a premium instead of carrying the full cost of the prize if someone wins.
PremiumPaid instead of the prize cost
OddsThe main rating factor
BeforeCover bound before the promotion runs
RulesSet before the insurer quotes
Premiums and outcomes described are specific to this client and indicative only. Your own terms will depend on your circumstances and the insurer.
THE SHORT ANSWER
What is prize indemnity insurance and how does it work?
Prize indemnity insurance lets a promoter offer a large prize while paying a premium instead of carrying the full cost of the prize. If a qualifying entrant wins under the agreed rules, the insurer pays the prize value up to the limit. It is used for marketing promotions, sporting prize challenges such as kick or shot competitions, casino and venue promotions, raffle-style fundraising challenges and hole-in-one prizes. The premium is driven mainly by the odds of a win and the prize value, and insurers need the rules, entry mechanics and verification arrangements before they quote.
Prize cover is written by specialist contingency markets. Conditions vary by insurer, so the terms of the promotion and the policy need to line up before the promotion runs.
- What you pay
- A premium, not the prize
- Main rating factors
- Odds and prize value
- Insurers need
- Rules, mechanics, verification
- Timing
- Bound and paid before it runs
Our events specialist
Shaneel Gounden
Account Executive
Before joining Tank, Shaneel placed prize indemnity and hole-in-one cover for golf clubs and promotions, in the Entertainment and Sports team at Marsh. The buyers are typically golf clubs, casinos and venues running prize draws, and promoters running competitions.
Previously in the Entertainment and Sports team at Marsh, placing event liability, cancellation and prize cover, then in events at Aon.
General information only. It does not take into account your objectives, financial situation or needs. Consider the relevant PDS and TMD before deciding, and cover is subject to the policy terms.
Without cover, a promoter offering a $100,000 prize has to be able to pay $100,000 if someone wins. With prize indemnity, the promoter pays the premium and the costs of running the promotion, and the insurer pays the prize if a qualifying win happens under the agreed conditions.
The insurer is pricing a probability. It needs to understand exactly how a win can happen, how many chances there are, and how the result will be verified. That is why the rules come first and the quote comes second.
The policy only responds to a win that meets its conditions. An entrant who is excluded under the rules, a win that was not properly supervised, or a promotion that changed after the insurer agreed terms can all leave the promoter paying the prize.
Sporting prize challenges
Kick for cash, half-court or half-way shots, target challenges and similar skill attempts run at half time or between events.
Casino, club and venue promotions
Prize challenges and draws run by casinos, clubs and hospitality venues where a large prize is offered to patrons.
Hole-in-one prizes
A familiar form of prize cover. Golf clubs and charity golf days put a car or cash prize on a par 3. See hole-in-one insurance.
Raffle-style challenges
Charities and clubs offering a big-ticket prize for a skill or chance challenge, where the prize would be out of reach without cover.
Performance bonuses
Some specialist markets also write contractual bonuses, where a sponsor or club owes a payment if a team or player hits a target.
| Information | Why it matters |
|---|---|
| The prize and its value | The sum insured. Cash, a car, travel or goods, and whether the value is fixed or retail. |
| The odds | How the win is determined, how many attempts or entries there are, and any history of wins on the same challenge. |
| The rules and terms | The full terms of the promotion, including who is eligible and who is excluded, such as staff and their families. |
| Entry mechanics | How entrants are selected, how many attempts each gets, and how the draw or challenge is run on the day. |
| Verification and supervision | Who supervises and verifies a win. For larger prizes insurers may want someone unconnected to the promoter, and some ask for video. |
| Dates and location | When and where the promotion or challenge runs, and how many rounds or events it covers. |
You can also complete our prize indemnity and hole-in-one proposal form online. It asks only about the prize. If the event also needs public liability cover, use the event proposal form or tell us when you enquire.
Promotions and competitions can also carry their own legal requirements, which vary by state and by the type of promotion. Those should be settled with the promoter's own advisers before the terms go to the insurer, because the insurer prices the promotion exactly as it will run.
The odds. The harder the challenge or the more entries a draw needs to produce a winner, the lower the premium relative to the prize. More attempts per entrant, more entrants, or an easier target all push it up.
The prize value. A larger prize means a larger potential payout, and above certain values insurers tend to ask for tighter supervision and evidence.
The evidence. Clear rules, a supervisor unconnected to the promoter and, where asked, video of each attempt make a risk easier to write.
History. Insurers may ask how often the challenge has been won before, at that venue or in that format.
Prize cover sits alongside the event's own insurance. If the promotion is part of a larger event, the event still needs its own public liability, and the organiser may want event cancellation cover as well.
FREQUENTLY ASKED QUESTIONS
Prize Indemnity Insurance FAQs
The promoter pays a premium to an insurer, and if a qualifying entrant wins the insured prize, the insurer pays the prize value up to the agreed limit. The promoter carries the cost of the premium and the promotion, not the prize. The win has to happen under the rules and conditions agreed with the insurer.
The premium is driven mainly by the odds of a win and the value of the prize. A hard challenge with a modest prize prices very differently to an easy one with a large prize. We need the rules, the prize value and the entry mechanics before an insurer will quote.
Yes, sporting prize challenges are a common use of prize indemnity. Insurers will want to know the distance or target, how many attempts each entrant gets, how entrants are chosen and who verifies the result.
Read the terms carefully. Some prize wordings pay for one prize only and exclude a second or subsequent winner, so the number of prizes and winners needs to be agreed with the insurer before the promotion runs.
Problems that can stop a claim include a win that breaks the agreed rules, an ineligible winner, a lack of the required supervision or evidence, and fraud or collusion. Changing the promotion after cover is agreed can also be an issue, so any change needs to go back to the insurer first.
As early as you can once the rules are settled. Insurers generally need the premium paid before the promotion or challenge takes place, and some need supervisors or verification arrangements approved ahead of time.
QUOTE REQUEST
Get a prize indemnity insurance quote
Send us the prize and its value, the rules of the promotion or challenge, how entrants are chosen, how many attempts they get, who will verify a win, and the date.
Specialist broker review Australian business insurance
Offer the Big Prize Without Carrying It
Send us the rules and the prize. We approach specialist markets that write prize cover and will come back to you with the options available and the conditions you would need to meet.