A question I get asked quite frequently by casino players is whether they should take insurance in blackjack. It seems to be something that confuses a lot of people, even among those that fully
understand basic strategy and the role that math has to play in blackjack.
When I’m asked this question I usually just give a simple answer (no), but I sometimes feel inclined to expand on this and explain why. I recently did this with a player who asked the question,
and for one reason or another he just couldn’t seem to accept what I was saying. He was absolutely convinced that the insurance bet is always the right way to go.
My initial reaction was to wonder why he asked me the question in the first place, as he was so sure he knew the correct answer himself. My second reaction was to think that I should write a blog
post about taking insurance in blackjack. So here it is! I’ll explain exactly what the insurance bet is for any of you who are not familiar with it, and then use some basic math to explain why
it’s a bad bet.
What is Blackjack Insurance?
The insurance bet only becomes available to you after you have been dealt your first two cards, and if the dealer’s exposed card is an ace. You must choose whether or not you want to place it
before deciding how to play your hand.
The rules for how much you can stake on the insurance bet will vary at different casinos. At some places you can stake any amount up to half of your initial stake for the hand,
while at others you must stake exactly half you initial stake for the hand.
You will win an insurance bet if the dealer’s second card is a ten or a picture card, thus giving him a blackjack. If it is any other card you will lose the bet. It pays out at odds of 2:1.
There are six possible scenarios when you have placed an insurance bet. These are as follows.
Neither you nor the dealer has a blackjack, and the dealer goes on to win the hand.
Neither you nor the dealer has a blackjack, and you go on to win the hand.
Neither you nor the dealer has a blackjack, and the hand is a push (tie).
You both have blackjacks.
You have blackjack, but the dealer doesn’t.
The dealer has blackjack, but you don’t.
Now let’s take a look at the net results of these scenarios, assuming that your original stake was $100 and you placed an insurance bet of $50.
You lose your initial stake of $100 and the insurance bet of $50. Net loss is $150.
You win $100 from your initial stake but lose the insurance bet. Net gain is $50.
Your initial stake is returned to you and you lose the insurance bet. Net loss is $50.
Your initial stake is returned to you and you win the insurance bet. Net gain is $100
You win $150 (blackjack pays 3:2) from your initial stake and lose the insurance bet. Net gain is $100.
You lose your initial stake but win the insurance bet. No gains or losses.
As you can see, you only lose money in two out of the six possible scenarios when placing an insurance bet. This might lead you to think that the bet is therefore a good one, but in fact the
opposite is true.
Why Insurance is a Bad Bet
The insurance bet should be seen as independent from your initial stake, as it doesn’t affect what happens to that. As such, there are basically only two possible outcomes to consider; you either
win the insurance bet or you lose it. To win you need the dealer to have a blackjack, which means his second card must be either a ten or a picture card. The chances of this happening are
approximately 30%, which of course means the chances of it not happening are around 70%.
In the long run, therefore, you will win an insurance bet approximately 30% of the time, and lose it approximately 70% of the time. These are rough figures, and they don’t account for what other
cards may have been dealt, but they are accurate enough to show that the insurance bet is a bad one. Let’s look at what you could expect to happen if you placed this bet 100 times, based on a $50
Your total stakes would be $5,000 (100 x $50).
You would win $100 (it pays at 2:1 remember) 30 times.
You would lose $50 70 times.
Your total winnings would be $3,000 (30 x $100)
Your total losses would be $3,500 (70 x $50)
Your net position would be a $500 loss.
I’ve obviously simplified things here somewhat, but the fact remains that taking insurance is (mathematically speaking) a bad bet. That’s why my advice is to avoid it, as it will ultimately cost
you money over time.
Exceptions to the Rule
Although I don’t advise placing the insurance bet, there are two exceptions to this rule. The first applies if you are counting cards and believe the remaining deck is heavy on tens. In this
circumstance the dealer is more likely to have a blackjack, so the insurance bet may be mathematically in your favor.
The second exception has nothing to do with math. In fact, many blackjack experts would disagree with this particular piece of advice. I personally think it’s valid though. If you’ve placed a
larger than usual initial stake and get dealt a blackjack, and then the dealer shows an ace, you might want to at least consider the insurance bet. Although it’s still mathematically a bad bet,
sometimes it’s acceptable to forget about the math and just do what feels right. The “safety net” of guaranteeing a win when you have a large stake at risk can be appealing.
Of course, if you’re practicing strict bankroll management then you shouldn’t really be placing bets that are significantly larger than usual. If you’re anything like me, however, there will be
some occasions when you break the rules. I’m generally quite strict about my bankroll management, but every now and then I like to take a shot and risk just a few bets at higher than normal
stakes. It’s really not the worst thing you can do in a casino providing you don’t do it in excess.