What is the Insurance Bet?
Blackjack players use the Insurance bet when the dealer has an Ace as a face up card and could have a blackjack. The player can choose to either use or ignore the Insurance bet. To accept an Insurance bet, the player places a separate second wager on the hand, equal to half of their initial bet.
The dealer will then check their face down card and if it is a 10, Jack, Queen or King the dealer has a blackjack and the Insurance bet pays the player 2-1 odds. If the second card is not a 10-value card, the dealer leaves it face down and collects the player's losing insurance bet. Essentially, what you are winning with the Insurance bet is your initial bet back and risking half of that original bet. Winning on insurance balances out the losses on most hands however in the long run it is considered unfavourable as the odds do not match the payout amount.
Does the Insurance Bet Work?
In a single deck game, there are 16 ten-valued cards and if you were not to see any other cards apart from the dealer's Ace, the 10-value cards compose 16 of 51 cards. Statistically in each suit, there are only 9 cards which do not make Blackjack for a dealer and 4 cards which do. Therefore the casino is paying out 8:4 (2:1) on a game which should be worth 9:4 and consequently the player will lose money over time.
The Insurance bet would work if the 10-value cards made up one third of the deck and as a result, the player would win their money back if they won every one of three wagers. After losing the first $5 insurance bets, the third winning bet would give a 2-1 payoff of $10 and the losses would be balanced out. However, the 10-value cards only makeup 30.8% of the deck, just under one third. So after each Insurance bet, we would be losing a small percentage of our money and we would not have an edge over the casino.
Insuring A Blackjack
When insurance is placed on the player's blackjack, the bet is called 'even money'. However many professionals including John Grochowski have stated that you actually win less money than you should in order to win back the bet.
For example, say the player has a blackjack and they take $5 insurance, there are four possibilities to this hand. The dealer could have a blackjack and so there is a tie with $10 and the player collects 2:1 odds on the $5 Insurance bet with a total profit of $10. Otherwise, the dealer could have no blackjack so the player wins $15 from their blackjack net however they lose the $5 Insurance bet to end with a total profit again of $10. Either way the player is guaranteed to win back their original bet. If the player decides not to take insurance and the dealer also has a blackjack, then the hand will push. Lastly, if the player does not take insurance and the dealer does not have a blackjack, the player will win $15. As a result it is unnecessary to insure your own blackjack although many people would rather insure their blackjack than risk a push.