Explaining Hole-in-One Insurance in Golf

So your organization is staging a golf tournament to raise funds for charity, and you want to do something big. How about a million-dollar prize for the first golfer to make a hole-in-one? That's big! Only problem: You better have a million bucks stashed away just in case someone wins that big prize! And that's what hole-in-one insurance is for.

Hole-in-one insurance, often called, shorthand, HIO insurance, is a hedge against any golfers winning large prizes in hole-in-one contests.

Let's say a charity is raising money by staging a hole-in-one contest. Golfers buy chances to try to make an ace on the designated hole, and if anyone does make an ace, that person wins a prize. Usually that prize is something nice donated by a local business (free dinner, for example) or from the golf course's pro shop (gift certificate, for example).

But hole-in-one contests sometimes offer very large prizes — new cars, $50,000, even a million dollars. But if a charitable organization has to pay out such a prize, doesn't that defeat the purpose of trying to raise money? Could that charitable organization even be bankrupted by having to pay out a million-dollar prize?

Yes, and that's why golf courses, tournaments, organizations, companies and charities that stage hole-in-one contests that offer large prizes buy insurance against the possibility of a golfer winning such a big prize.

Back in the day, there were some hole-in-one contests held whose organizers weren't insured against a huge payout. They just figured nobody would win the prize. After all, odds against making an ace are about 12,000-to-one for a golfer of average skill (much higher for those of below-average skill). Nobody's going to win that car or that big cash payout, right?

Wrong. Most big hole-in-one prizes do go unclaimed because of the long odds of making an ace. But as soon as an organization staged a fund-raising ace contest and then couldn't pay out the big prize, the hole-in-one insurance industry was born.

And it has become an industry. Today, hole-in-one insurance is offered by many insurance companies, and some companies do nothing but provide hole-in-one insurance. Do a Web search on "hole-in-one insurance" and you'll find many such providers.

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