Prize Indemnity Insurance enables businesses of any size to offer promotional events with high-value prizes, such as cash payouts, cars or even homes, without the financial risk.

So, if your business, not-for-profit, charity or organisation wishes to offer a high-value prize, here are five reasons to talk to your risk and insurance adviser about prize indemnity insurance.

Picture of a car with a gold ribbon depicting a high value prize that could need prize indemnity insurance.

5 reasons to talk to your adviser about prize indemnity insurance

1. Prize Indemnity Insurance is a Risk Transfer tool

As with any insurance cover, insurance is a risk transfer tool for your business. Depending on the type of insurance policy you buy, the policy will cover specified risks to your business.

In this case, prize indemnity insurance enables you to transfer the financial risk of paying for a high-value prize to the insurer should someone win. Therefore, the insurer will pay should someone win, ensuring the participant receives their prize.

2. Applying for prize indemnity insurance provides a Reality Check

When calculating your premiums for prize indemnity insurance, the insurer will look at the value of the prize and the likelihood of someone winning.

It’s worth noting, that if the chances of winning are very good, the insurer may not offer cover. The reason is that the insurer may be out of business if they must pay multiple high-value prizes.

If an insurer is unwilling to provide cover, it could be a sign that you need to rethink your prize strategy to protect your business from significant financial losses.

3. Offering High Value Prizes can increase sales and revenue

When done well, high-value prizes can be a great marketing tool for your business. That’s because they are known to drive loyalty, brand awareness, sales revenue and more for your business or charity.

Prize indemnity insurance can help protect your business from the financial risks of offering the prize(s) should someone win. It may also mean you don’t need to buy the award upfront.

4. It can help you gain clarity on your Terms & Conditions

Prize indemnity insurance comes with strict terms and conditions that can help you gain clarity on how you run the competition and the rules for participation.

Should the prize be won, and you make a claim, you must show that you upheld the competition rules. The insurer can deny claims if a participant has an unfair advantage.

5. Applying for prize indemnity insurance can help you gain clarity on your competition type

Insurers tend to prefer probability-type competitions to skills-based competitions because they can make a more straightforward calculation on their expected loss and the cost to you in the form of a premium.

For games of skill, insurers tend to have matrices of the number of times the likelihood of someone completing the challenge, such as a hole-in-one, may occur. The risk to you and the insurer may be higher if the chances are high.

It’s vital to consider the type of competition you run and the chances of someone winning. It will impact your insurance premiums, and your pocket should you decide to self-insure.

Good Advice on Prize Indemnity Insurance

If you would like to talk to an experienced risk and insurance adviser about prize indemnity insurance and how it can work for your business, contact Clear Insurance today.

Clear Insurance is here to help.

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

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