KEU Underwriting Managers | Prize Indemnity Insurance

By: Keu  11-11-2011
Keywords: Insurance

Competitions are increasingly being used at events to encourage public participation and sponsorship involvement. The promise of attractive prizes is so appealing that often these competitions become events in their own right,   most often as advertising campaigns for specific products.   

Competitions reward sporting achievements, a display of dexterity or pure good luck. Prizes vary from sums of money to articles of value, which are covered by prize indemnity insurance. This form of cover reimburses the sum of money or value of the prize to competition organizers in the event that the prize is won.

The cover falls into two main categories, in line with the two types of competitions that are run: active participation in a sports contest and chance wins by non-participants. 

Sports contests

Hole-in-one insurance
Hole-in-one insurance is offered to organizers of golf tournaments to cover prizes in the event of any participant succeeding in hitting a golf ball from the tee into a predetermined hole, in one stroke.
The prize is only awarded once per tournament as a rule, with the prize normally going to the first player who achieves a hole-in-one.

Premier rates for hole-in-one insurance cover take into account:

  • The distance between the tee and the hole
  • The number of golf rounds
  • The number of participants in the tournament
  • The skill of the participants - amateurs/professionals, men/women.

Record covers
Athletes who manage to break existing records or exceed a standard laid down for a particular discipline are covered by Incentive bonus insurance. The most common form of this insurance covers new South African or world records during athletics contests.

Performance bonus covers
Many sponsors also contribute to the performance bonuses of sports teams or individual athletes. This type of insurance covers sponsors in the event that their team wins a championship or cup. In the case of tennis or golf, it provides cover in the event that their athletes achieve top place or ranking in their particulars sport.

Chance wins
This type of insurance could take on many forms depending on the advertising campaign being launched. Most often the competition will be based on an actuarially calculated formula, for instance:

  • Participants are required to guess the correct sequence of numbers that are required to open a safe containing the prize or,
  • A person must correctly guess the correct sequence of a number plate to win a vehicle or,
  • A person must select one "lucky" box from a number of boxes to win the prize.

Other types of prize indemnities are:

Soccer/rugby goal contests
In such contests, participants need to score three goals by kicking a ball three times through each of two holes on a board representing a football goal.

Tag fish competitions
Fish weighing in excess of a prescribed weight.

The following rules apply:

  • The policy holder must record the participants' attempts on video
  • The policy holder must ensure that all shots, attempts and lists of participants agree carefully registered
  • Any practice shots by participants will result in their disqualification
  • The policy holder needs to guarantee that the event will be carefully controlled and supervised
  • An assessor is engaged for safe combination and contents competitions.
  • Only the assessor may be in possession of the correct number or combination.

Keywords: Insurance

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KEU Underwriting Managers | Exhibition / Equipment All Risk

Defined events Physical loss or damage, by accident or misfortune otherwise not excluded, to the whole or part of the property, while anywhere within the territorial limits, property, all as described in the schedule of the policy. The agreed value for replacement shall mean the amount stated in the schedule in respect of the property as described in the schedule, which shall be the value agreed between the insured and the insurer.