When playing blackjack, insurance is offered by the house to the player as a side bet away from the main game.
If the dealer is showing an ace face up then players will have the chance to take insurance. This is a bet on the dealer making blackjack by hitting a card worth 10 next. You can typically place up to half your stake on insurance and it pays at odds of 2/1.
If you take insurance and the dealer hits their natural, you will lose your original stake (assuming you didn’t also have blackjack) but you will win your side bet. This will lead to the following outcome:
- Main stake £10 loses – minus £10
- Insurance side bet £5 wins at 2/1 – plus £10
- Overall outcome of hand – break even
If the dealer does not draw a face card or 10 and thus does not have blackjack, they win your £5 bet on insurance and the rest of the hand plays out naturally. The last option is that you decline their seemingly kind offer of insurance and hope for the best, sticking to your existing £10 stake and seeing how the hand pans out. Odds of 2/1 for them to hit any 10, Jack, Queen or King certainly sounds like a good deal, but is it? Is insurance worth taking?
Insurance Is A Shocking Bet
Blackjack is a game where players rely on luck, but skill and maths are also required to give yourself the best chance of success. Optimal play is a method of play that tells you the “right” decision to make in any given situation you will face at the blackjack table. Unless you are card counting, this technique, also known as basic strategy, is irrefutable, mathematically proven and entirely flawless and minimises the house edge, which is the casino’s inbuilt advantage over the player. And the theory of optimal play is very clear about insurance: do not take it.
The overall house edge in blackjack is around 0.7%, with the precise figure varying according to rule and game differences such as the number of decks used, whether the dealer must stand on soft 17 and so on. That is a very low advantage and makes blackjack one of the most player-friendly games around. In theory, that means that on average a blackjack fan staking £10,000 over the course of 1,000 hands would expect to lose just £70.
So what is the house edge when it comes to a standalone bet on insurance? Well, rather than 0.7%, it is a whopping, wallet-walloping 7.4%, more than 10 times the standard advantage. The exact number depends on how many decks are being used, whether you take into account the cards that you can see elsewhere on the table (including your own) and a few other factors but in general a figure of 7% or more can be assumed for multi-deck games.
That means that for the vast majority of players taking insurance really is a very bad option. It increases the casino’s advantage and in the long term will yield significantly worse results than if you politely decline the dealer’s offer. We say “the vast majority” because, as already mentioned, those who are card counting may know that it is actually a good bet.
Blackjack is more or less unique among casino games in that what has gone before has an impact on what will happen next. If a roulette wheel lands on black 10 times in a row the odds for the next spin landing on black are still the same. However, in blackjack, if there has been a huge number of low cards dealt, someone who is counting cards or even just someone who is paying attention, will know that the remaining deck is heavily stacked with higher cards, including those that will complete a natural blackjack.
In such a situation an insurance bet would potentially be excellent value but this would only be the case if you know there are sufficient 10s remaining in the pack to make the numbers work. The average player won’t, and therefore insurance remains an option that should be disregarded.
Proof That Insurance Doesn’t Pay
We can illustrate with some relatively simple maths that insurance is bad value by considering the equation with just a single 52-card deck in play. Insurance is not as bad in single deck games but the house edge is still seriously big at just under 6%.
Let us assume you have two cards showing, neither of which are worth 10 and the dealer has their shiny ace. There are 49 unknown cards in the deck, of which 16 (four 10s, four jacks, four queens and four kings) will complete the dealer’s natural and land an insurance bet, should you be foolish enough to have made one.
That means that you would expect to win the bet on insurance around 33% of the time, just under in fact at 32.65%. You would win 16 games out of 49 and lose 33. Each win would yield a net win of £2 (based on a flat £1 stake) whilst each loss would lose £1, meaning an overall loss of £1 as below.
- 16 wins at 2/1 = £32 net win
- 33 losses = £33 loss
- Overall result = £1 loss
Although only losing £1, or one unit (of whatever your stake was) may not seem a lot, it is still a loss. Had you not made those bets, you would have more money in your pocket and would therefore have put less in the casino’s coffers. And remember, these are side bets, entirely separate from your own individual hand which would play out the same way whether you accept insurance or not.
What’s more, the situation we are describing above is the most favourable starting point for an insurance bet. It was a single-hand game where all 16 available 10s remained in the pack. A cruel irony of betting on insurance is that people often feel most compelled to accept it when they least should.
For example, a player who has 20 with two cards, showing two kings for example, may feel insurance is a good bet because they really don’t want to lose with 20. 21, or a natural, is the only way they can lose and so they accept the insurance. However the very presence in their hand of two cards worth 10 means there are two less in the pack for the dealer to hit. That means they are betting on something with just a 14/49 chance of winning, their chances of success having dropped from 32.65% down to just 28.57%!
Odds of 2/1 imply a probability of success of 33.33% so if the probability of the event occurring is less than that, the bet is a bad one. Therefore, unless you are confident that more than a third of the remaining cards in the deck are 10s or face cards, insurance is absolutely not worth taking and is a bad bet.