Insurance strategy

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If you’re looking to play in an optimal way and reduce the house edge as much as possible, insurance is never an option you should have in mind. Even though the option may look tempting, using it will only increase the house edge and cost you money in the long run. Therefore the insurance option is not a part of basic strategy, which is the optimal blackjack strategy.

In the following article we’ll explain how insurance is used at the table; illustrate and show you why the option is a bad choice by using mathematical calculations, and reveal how much it is you’ll lose in the long run if you’re using the option.

How insurance is used

Insurance is a side bet that you’re able to place every time the dealer is showing an ace. This is to insure your hand in case the dealer has been dealt a blackjack, hence saving yourself money. You’ll have the option to place another bet of half the amount of your original bet, which is a bet placed on if the dealer has blackjack. This bet pays 2:1 (3 times your stake), which means that if it turns out that the dealer is turning over a card value of 10, resulting in 21, you will break even on the hand and therefore not lose anything. Let’s illustrate this with an example:

You decide to place a bet of €4 and are dealt the hand 10 – 7, while the dealer’s first card is showing an ace. To insurance yourself against a possible blackjack you’re choosing to use the insurance option. You therefore place another bet of €2, which is half of your original stake. This bet is placed on if the dealer’s second card will show a value of 10, giving the dealer blackjack.

Should the dealer indeed turn out to have hit 21, you’ll win three times the stake of your insurance bet and lose your original one (provided that you didn’t hit 21 yourself). This will result in a win of €6 (€2 insurance bet * 3) and a loss of €6 as well (€2 insurance bet + €4 original bet). You would in other words break even for the hand instead of losing €4.

Should it be that the dealer didn’t turn out to have 21 and busted so that you would win the hand, you would have lost €2 on your insurance bet, but won your original bet of €4. Your net profit for the hand would then have been €2, which is €2 less than if you didn’t choose the insurance option.

Why insurance is never good

The insurance option is portrayed as a way to insurance the hand against a possible blackjack for the dealer, but in reality it’s nothing but a separate bet that is placed on if the dealer’s second card will have a value of 10. This side bet will never have any affect on your chances of winning your original bet and as you’ll always have the odds against you on such a bet it’s never a good option to choose. Lets illustrate this with an example:

If we assume that you’re sitting at a table where only one deck is being used, 16 of the 52 cards will have a value of 10 (four 10s, four jacks, four queens and four kings). Let’s also assume that the hand you’ve been dealt doesn’t have any of these 16 cards. All of these will then be available in the deck, which has a total of 49 unseen cards as you’ve been given two and the dealer is sitting on an ace. This scenario is the best you could get for insurance, but it still isn’t good enough to be ale to profit from it in the long run.

If you would place an insurance bet of €1, you would win €3 every time the dealer is turning over a 10 or a face card. Should you play out this scenario 49 times, you would on average win 16 of them as there are 16 winning cards and lose the remaining 33 as there are 33 losing cards. Every win would result in a net profit of €2 (€3 win – €1 bet), which on all 49 scenarios on average would win you €32 (16 winning hands * €2 net profit). Every losing hand would be a loss of your €1 bet, which in total would be €33 (33 losing hands * €1 bet).

As your total win turned out to be €32 and your total loss €33, you would end up with a net loss of €1 (€32 – €33). This means that you’ll on average lose €1 for every €49 that you bet on insurance, which is equal to a 2% loss (1/49). In other words, for every hand you’re playing with insurance you’re on average losing 2%, provided that you’re not holding any 10 or face card in your hand. If you did the percentage would be a lot higher.

Let’s assume that the hand you were dealt was 10 – 10 and you chose to insure it. In such a scenario only 14 of the 49 unseen cards would be 10s or face cards. This means that if you play out this scenario 49 times your total win would on average be €28 (14 winning hands * €2) and your total loss €35 (35 losing hands * €1 bet). This scenario would result in an average loss of €7 (€35 – €28) for every €49 that you bet on insurance, which is a loss that’s equal to 14,3% (7/49).

The only way that insurance could be advantageous to use is if you would know that more than a third of the unseen cards are either 10s or face cards. In such a case it would over time in fact always be profitable to use the option as the blackjack odds would be in your favour.

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Last words

In the heat of the action it’s easy to become temped by insurance as it at a first glimpse may look like a good option. Especially so if you’re holding a really good hand that you don’t want to lose from just because the dealer happened to be dealt 21. It’s understandable, but the fact of the matter is that insurance never is a good option unless you would know that more than a third of the unseen cards have a value of 10.

Instead of lowering the house edge, which is to aim for if you would like to be as successful in blackjack as possible, using the insurance option actually increases it. Therefore insurance has no place in the optimal blackjack strategy, known as basic strategy, but it’s always recommended staying away from the option.