True Insurance Odds—Worth the Wager? Part I

Chances are you have heard countless times that you should not take insurance in blackjack. Does not matter if you are playing blackjack online or in a brick and mortar casino. It still stands that you do not take insurance in blackjack no matter what. You have been told that you are losing money faster to the house when taking insurance in blackjack.

And yet, there are players who still take insurance in blackjack.

Those of you who do take insurance, are you really aware of the odds on insurance? Do you know that you are not receiving a payout that is equivalent to the odds, which is a further rip-off on the casino’s part?

Here I am going to spell out the odds of insurance and how those odds do not match the payout.

For a wager to be considered ‘fair’ to the person making the wager, the odds need to be equal to the payout. Take a number on a roulette wheel. The chances of one number being the winner is 36 to 1. The payout on one number is 36-1. The odds equal the payout, making it a fair wager, even if it is not the best wager to make in roulette.

Now we will look at insurance. For this explanation, I am going to make the math as easy to understand as possible, so I will be using a single deck. But the same odds apply to multi deck games.

For this example this is also going to be the first hand of the game so that only three cards have been dealt If it is just you and the dealer in a single deck game, there are three cards whose values are known: the dealer’s Ace and your two cards.

We are going to assume that you do not have a 10 value card in your two cards. This means that are 16 10 value cards still in the deck and 33 non 10 value cards. That makes for 33-16 odds that the dealer will have a 10 value card as a hole card. Those 33-16 odds work out to 2.0625 to 1. And that means for the insurance wager to be fair, the payout should be $20.63 on a $10 bet, not $20.

As you can see the odds are not equivalent to the payout. And that is with all 10 value cards available. In my next post I will show you this 2.0625 to 1 is a best case scenario.