A Guide to Insurance Betting in Blackjack

Blackjack is one of the oldest and most popular casino games. The game is very easy to learn and the proper use of strategy can greatly reduce the house edge. Many blackjack variants give players the chance to take out insurance against the dealer having blackjack in certain situations. There is a great deal of debate over the insurance side bet and when it should be used. Read on to learn all you need to know about it.

Blackjack Basics – How to Play

Before exploring the insurance bet, it is necessary to ensure you understand the basics of the game. The aim of blackjack is to build a hand that is closer to 21 than the dealer’s hand. If the hand exceeds 21, it goes bust, which means it automatically loses. The hand that is closer to 21, without exceeding it, wins the round.

Many blackjack variants can be found online. To play blackjack, at least one deck of cards must be used, however, there are variants that are played with four, six or eight decks. When building a hand, all numbered cards are worth their face value while picture cards (Jack, Queen, King) are worth 10. Aces in blackjack can count as 1 or 11, depending on the other cards in the hand.

In blackjack, the strongest possible hand is 21 that is formed from two cards. This is called a Blackjack. To form a Blackjack, players must have a 10-value card and an Ace. Blackjack beats all other hands, and it is this hand that the insurance bet protects against.

If the player’s hand defeats the dealer’s hand with a non-Blackjack, the payout is 1:1. When a player wins holding Blackjack, the payout is 3:2. If the player and dealer’s hands are tied, the bet is returned as a push. This is also the case when the player and dealer are both holding Blackjack.

A round of blackjack begins when you place your bet and the dealer deals the cards. The dealer deals two face-up cards to the player and takes a face-up card themselves. In some blackjack variants, the dealer will also take a face-down card. In other variants, the dealer will only take their second card once the player has completed their turn.

Once the player has received their first two cards, they will have the chance to take one of the following actions:

  • Hit – this means to take an additional card. The player can hit as many times as they like, but they must be wary not to go bust.
  • Stand – this means the player does not receive any further cards. Instead, they leave their hand as it is and the round continues to the next position.
  • Double Down – this means to receive a single card and immediately stand. When Doubling, the player doubles their stake.

If the player has received a pair of cards, they will also be able to split their hand. When doing so, the player splits the two paired cards and plays them as two separate hands, doubling their bet in the process.

These are the basic rules of blackjack. Once the player completes their turn, the dealer reveals their second card and plays their turn. In most blackjack variants, the dealer will hit on 16 or lower and stand on 17 or higher. Once the dealer stands or busts, a comparison is made between the hands and a payout is made accordingly.

What is the Insurance Bet?

Most blackjack variants will offer players the chance to place an Insurance Bet before they start to play their hand. An Insurance Bet can be placed when the dealer is showing an Ace.

An Insurance Bet costs half of the player’s initial stake and, if it wins, it pays 2:1. It wins if the dealer has Blackjack. However, the Insurance Bet is only offered if the dealer’s face-up card is an Ace, not a 10-value card.

If the dealer has an Ace, and you have placed a $2 stake, an insurance bet will cost you $1. There is no way to alter how much you wish to bet on insurance; it is a fixed rate of half of your initial stake.

If your $1 insurance bet wins, you will win $2 if the dealer has Blackjack. This means that you will not lose money on that hand. However, although it might initially to be a good idea to always place an Insurance Bet, the truth is it is not always a good idea.

The Statistics Behind Insurance Bets

To understand the statistics behind the insurance bet and why it may not be the best bet to place, let us break it down with some simple maths. In this example, we will assume that you are playing a single deck blackjack game and that you are the only player at the table.

  1. In a standard deck of 52 cards, there are 16 cards with a value of 10 (the four 10s, Jacks, Queens, and Kings) and 36 other cards.
  2. The probability of the dealer’s hole card being a 10-value card is therefore 16/49 (since the Ace is already visible, there are only 49 unseen cards left in the deck).
  3. The insurance bet typically pays 2:1. This means that if you place a $5 insurance bet and win, you'll receive $10 in return (plus your original $5 stake).
  4. To calculate the expected value of the insurance bet, we need to consider both the probability of winning and the associated payout. In this case, the expected value is (16/49 * $10) - (33/49 * $5). In other words, Expected Value = (Probability of Winning * Payout) - (Probability of Losing * Loss)
  5. This equation shows that the expected value of the insurance bet is approximately –$0.17 (rounded to the nearest cent). This negative value indicates that, on average, players will lose money when placing insurance bets.

The house edge on the insurance bet is derived from this negative expected value. In this case, the house edge is around 7.69% (calculated by dividing the expected loss by the original bet: -$0.17/$5 * 100%). This percentage represents the advantage the casino has over the player for this particular side bet.

In comparison to the main game of blackjack, which has a house edge of approximately 0.5% when using basic strategy, the insurance bet is significantly less favourable for players. This high house edge is the primary reason why taking the insurance bet is generally considered a bad idea. Over time, the more often a player places insurance bets, the more likely they are to incur losses.

When to Place an Insurance Bet

As demonstrated above, in general it is never a good idea to place the insurance side bet. However, there may be some specific situations where it is to your advantage.

  1. Card counting: If you're an experienced card counter and know that there's a high concentration of 10-value cards left in the shoe, taking insurance might be a profitable move. However, card counting is generally frowned upon by casinos and, in some cases, is considered illegal. Furthermore, it is easy to make mistakes when card counting, and this could prove costly.
  2. Informed decisions with a positive expected value: If you have reliable information about the remaining cards in the deck, and this information suggests that the probability of the dealer having a 10-value card in the hole is higher than the odds offered by the insurance bet, then it could be a good time to take insurance. However, acquiring such information without card counting is very difficult, and players will rarely find themselves in this situation.

For the vast majority of players, it is generally better to avoid the insurance side bet, as it increases the house edge and, over time, leads to losses. Instead, players are better off carefully following blackjack basic strategy to reduce the house edge and give themselves the best chance of winning as many hands as possible.

Be Careful with Insurance

You are unlikely to burn through your bankroll using the insurance bet. To begin with, you can’t place it with every round. However, it can eat into your funds and it is unlikely to provide great returns. Ultimately, it is up to you whether you place the bet or not; however, if you choose to use it, proceed with caution.

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