Insurance Strategy for Blackjack

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Most blackjack players in Canada are naturally interested in minimizing the dealer’s edge. While the insurance strategy might initially appear an attractive prospect, the method usually benefits the dealer and reduces your long-term profits. This is why the insurance option is excluded from the optimal blackjack strategy, also known as the basic strategy.

Within this article, we here at Mr Green Casino will examine the insurance strategy and how it is used in practice. Through examples, we’ll highlight why the insurance strategy is a bad choice in most cases since you end up reducing your long-term earnings.

The logic behind the insurance option

First and foremost: what is the insurance option? It is, in essence, a side stake option that is potentially available every time the house shows an ace. The overall goal of insurance is to insure the player against the risk that the dealer has blackjack. In practice, it means that the player has the option of placing a stake corresponding to half the original bet, on the prospect that the house has blackjack. Notice that the side stake pays three times your bet. In net terms, the insurance option means that the player will neither win nor lose anything on the hand if the dealer has a blackjack hand.

Let us illustrate it with a concrete example. The player bets four CAD (Canadian dollars) and gets the combination 10 – 7 while the dealer’s first card is an ace. The player might in such a scenario pick the insurance strategy to get insured against the risk that the dealer has 21. The insurance side bet equals half the original stake.

If the original stake is four CAD (Canadian dollars), the player will bet two CAD on the insurance side bet that the dealer has blackjack. The player will win three times the side stake if the dealer indeed has 21. This would produce a profit of six CAD (two CAD x 3).

Blackjack insurance use

However, the player will simultaneously lose four CAD on the original bet as well as two CAD staked on the side bet. In other words, the result is that both the profit and the loss equal six CAD and the net outcome is neither profit nor loss.

On the other hand, if the dealer does not have blackjack and busts the hand, the player will gain four CAD on the original bet and lose two CAD on the side stake. While this outcome will produce a two CAD profit, it will still be two CAD less than if the player had resisted and not picked the insurance strategy.

Blackjack insurance funtionality

Why is the insurance option not an optimal choice?

Why is the insurance option not an optimal choice?

Some players might be tempted to choose the insurance option to insure the hand against the risk of the dealer having blackjack. Nonetheless, in practice, insurance means that the player places a side bet that the house’s second card will be 10. It is, however, important to realize that this side bet will not influence the prospects of winning on the original stake. The insurance option is bad because the odds will almost always be stacked against the player.
Are you still not convinced? We will illustrate this important conclusion with a concrete example. Let us assume that you play a blackjack game with only one card deck. This means that out of the total 52 cards, 16 will have the value of 10 (four queens, four kings, four jacks, four 10s). The scenario also assumes that none of these 16 cards is featured in your current hand. This means that all these 16 cards will be among the 49 unseen cards on the deck. Why 49? Well, it is because you have two cards, the dealer has one and the deck has a total of 52 cards (52-3 cards).

If you stake one CAD on the side bet, you will gain three CAD every time the dealer gets a face card or a 10. This will produce a net profit of two CAD (three CAD – one CAD) for each of the 16 times these cards are displayed. The total profit will amount to 32 CAD (16 x two CAD). However, we need to keep in mind that the remaining 33 cards (49-16) will result in a loss of the one CAD side stake. In other words, the total loss will be 33 CAD (33 x one).

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Many blackjack players in Canada and around the world might be tempted to play safe by choosing the insurance strategy, either when they are playing online blackjack or live blackjack. This option is usually considered when the player has a strong hand and wants to be insured against the risk that the dealer has blackjack. However, in practice, the insurance option is not good because it strengthens the house’s already existing edge. In addition, the insurance side bet does not influence your winning chances for your original bet. By picking this option, you are simply betting that the dealer will get blackjack.

Ultimately, the insurance option will reduce your long-term earnings in most cases. The exception is a situation where the player is not certain that more than a third of the unseen cards are face cards or 10. As a player, you will thus undermine your long-term gains by picking this option. This distinct disadvantage is the reason why the insurance strategy should be avoided in almost all cases.

The valuable lesson from the deceptive insurance option is that many things that appear attractive from a distance are much less attractive when examined from a closer range. The overall goal for a blackjack player should be choosing a strategy that maximizes profits and minimizes losses in the long term. Unfortunately, the insurance option ends up doing more harm than use and should therefore be discarded by strategically minded blackjack players.