The Casino Answer Man

I once attended a seminar in Las Vegas where Vic Taucer, a casino consultant I've used as a source many times since, was explaining the insurance bet to a crowd of blackjack beginners.

"See where it is on the layout?" he asked. "Insurance pays 3-2. Right up front, big and bold where it's easy to see. It's like they're advertising the bet. Usually, the bigger the bet is on the table, the worse it is for you."

He went on to point out that it's not a perfect rule, that the come bet in craps, which has a low house edge, also is there big and bold. But it's something for blackjack players to think about. When favorable options such as permitting doubling down after splitting pairs or allowing late surrender are relegated to small letters on a placard on one corner of the table, is an option that's advertised big and bold for all to see on the table layout likely to favor the player?

To make the answer short, no.

Insurance is a bet that the dealer has a blackjack. It is offered only when the dealer has an Ace as a face up card.

When that happens, the dealer will look at all players at the table and ask if anyone wants insurance. Players may accept by placing a second wager equal to half their initial bet. When all players have either accepted or declined, the dealer will announce that insurance is closed, and check the face down card. If it is a 10, Jack, Queen or King, the dealer has blackjack, and insurance bets are paid at 2-1 odds. If it is anything else, the dealer leaves the card face down, collects the losing insurance bets and the hand is played out as normal.

Since insurance pays 2-1 and the insurance wager is half the size of the original bet, winnings on insurance balance out losses on most hands. Let's say you've wagered $10 and you're dealt a 20. The dealer has an Ace up, and you decide to wager $5 on insurance. If the dealer has a blackjack, you lose $10 on your regular wager, but your $5 insurance bet wins $10, leaving you even for the hand.

The situation is a little different when the player has a blackjack. Most casinos will allow a player who wants to insure a blackjack to simply call out, "Even money." The original wager then is paid at even money. The player forgoes a potential 3-2 payoff on blackjack to insure an even-money payoff even if the dealer also has a blackjack.

Let's walk through that one. You have a $10 bet up, and you're dealt a blackjack. The dealer has an Ace up. If you make a $5 insurance wager, there are two possible outcomes. If the dealer has blackjack, your blackjack simply pushes and gets no payoff, but your insurance wager wins $10. If the dealer does not have blackjack, you lose your $5 on insurance, but your blackjack nets you a 3-2 payoff on your $10 bet, or $15. Subtract the $5 loss from the $15 win, and you win $10 overall. So as soon as you accept insurance when you have blackjack, you're locked into a win the size of your bet.

Is insurance a good deal?

No. Insurance would be a break-even bet if one-third of the cards in the deck were 10-values. Let's use a $5 insurance bet as an example. If a third of the cards were 10-values, we'd lose two of every three insurance wagers, which in our example would give us $10 in losses. On the one of every three bets we won, the 2-1 payoff would give us $10 in winnings. That would balance out the losses, and everything would be even.

Things don't work out that neatly for us. Only 30.8 percent of cards are 10-values. Let's use a 1,000-hand example so that we're working with whole numbers. Given $5 insurance bets, of every 1,000 hands we lose 692, leaving us with $3,460 in losses. We win 308 hands, collecting $10 on each, for $3,080 in winnings. That's a net loss per 1,000 hands of $380.

Yuck.

Does the situation change if the player has blackjack? No, even though dealers constantly advise players otherwise. I can't count the number of dealers who have told me that insuring a blackjack is the only sure thing in the house, the only bet that guarantees the player wins.

Problem is, it insures that the player wins less than he should.

Let's use a sample of 1,000 hands in which we have blackjack and the dealer has a Ace face up. Assuming we're making $10 wagers, if we take insurance we lock up a win of $10 per hand, or $10,000 overall. What if we don't take insurance? On the average, we'll win nothing on 308 of those hands as we push dealer blackjacks. But on the 692 hands we win, we're paid 3-2, or $15 per hand, for total winnings of $10,380. If we take insurance, we cost ourselves $380 per 1,000 hands, same as in the non-blackjack example.

The bottom line: Why throw away money? Never take insurance unless you're a card counter who knows that more than a third of the remaining cards are 10-values.

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