Prize Indemnity Insurance, also known as Hole-in-One insurance, is indemnification insurance for a promotion in which participants can win prizes.  Prize indemnity insurance makes it possible for companies to hold promotional events with attractive prizes such as cars, vacations, or large cash payouts without taking on the substantial financial risk of actually having to pay for the prize.

The Prize Indemnity Insurance policy’s premium depends on the prize value and the statistical odds that someone will win. Prize Indemnity Insurance also protects the prize winner by guaranteeing that they’ll receive the promised prize because the insurer has committed to paying for it. The policy’s coverage limit equals the insured’s potential loss, meaning the value of the prize.

An insured contest’s terms & conditions must be very clear, and the sponsor must abide by them to file a successful claim with the insurer. For example, if the contest rules stipulate there must be two witnesses for a contest and only one witness observes the winning shot, the insurance company will not honour the claim. A policy can also be voided if a participant has an unfair advantage. The contest sponsor must then decide whether to acknowledge its prize promise or refuse to pay. 

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