Rules and Strategy

# Is it necessary to take out insurance in blackjack?

In one of our previous articles we listed the different actions that can be utilised in blackjack. Among these actions was ‘Insurance’. But what is insurance? When do you need it? We will answer these questions and more in this article specifically aimed at explaining how insurance works in blackjack.

What does ‘insurance’ actually mean?

In Blackjack the term ‘Insurance’ refers to a game option which provides the player with immunity against a victory by the Dealer, particularly against Ace-Jack (a natural blackjack) which is the strongest hand in the game. It isn’t free however, in other words you are required to pay for the privilege and immunity isn’t cheap. Essentially you are putting a side bet worth half of your original bet on the probability that the dealer has a natural blackjack. An insurance bet will typically pay out odds of 2-1 if you are correct in your assumption.

How ‘insurance’ works

Insurance is limited and as such cannot be used at your own request or on random hands. It‘s an option which can only be used in a particular situation i.e. when the dealer draws a Jack or an Ace. At this point the dealer will offer you ‘insurance’. To take out insurance you must pay half of your initial bet to indicate this fact to the dealer. Taking out insurance can involve considerable costs.

If for example you end up with a blackjack (21) yourself and actually beat the dealer, you will lose your insurance bet, however you still win your initial wager. On the other hand if the dealer does not have a blackjack but still manages to beat your hand, you will lose both your insurance wager and your initial bet. This is the worst scenario overall since you lose everything you’ve placed on the table.

Let’s do the math

Insurance might sound tempting but it’s worth noting that there is only a 1 in 10 chance of the dealer drawing a complementary card, even if they are already in possession of an Ace or Jack.

It is important to consider the value of cards in blackjack. In all, 16 cards have a value of 10 (10, J, Q, K of each suit) while the remaining 36 cards all have a value other than 10. That means that there is a 30.77% chance of drawing a 10.

So in layman’s terms, according to statistics, there is a 30.77% chance of you winning an Insurance bet. That means there is a 69.23% chance that the bet will be lost. For example, out of 100 attempts you actually risk losing more than you would win in the long term. To illustrate this point have a look at the table below, the example is based on an insurance bet of \$5.

OperationNet Winnings
Winnings 30.77 x (\$5 x2)+\$307.70
Losses 69.23 x (\$5)-\$346.15
Net Profit (-\$356.15) – (\$307.70)-\$38.45

## Insurance or no insurance, that is the question!

It is important to thoroughly reflect on these figures before making a decision on whether or not to take out insurance. It’s not just because it’s a risky bet, it’s because statistically it makes more sense not to. The title of ‘insurance’ gives a false sense of security, leading you to believe it’s in your own best interest. However statistically speaking, you’re more likely to lose and our example illustrates this clearly. The reality is that by taking out insurance you risk losing more money in the long term than you actually recoup.