Have you ever wondered how companies can afford to give away millions of dollars to contest winners for a half-court shot, hole in one or in store promotion? Not all companies are able to take money out of their bottomline to cover a $1,000,000 prize. So how do companies cover the prize?
The answer is Prize Indemnity Insurance (or indemnification insurance). But unlike other insurances that cover you from things going wrong, prize insurance covers the client financially in the event that things actually go right. A business should be ecstatic when a customer or fan wins a contest, and prize insurance gives them the opportunity to share in their winners joy knowing that the prize value won’t come out of their own pockets.
How Companies Benefit From Prize Indemnity Insurance
One of the more obvious reasons why businesses get prize insurance is for financial security. For an average company to pay for a prize of $50,000 or even a high-end vehicle, is unrealistic. Not every business has that kind of capital lying around. So to secure companies from essentially going in debt from a promotion, the promoter pays a premium to an insurance company, which then reimburses the insured should a prize be given away.
To give you an example of how effective prize insurance can be, we, at Interactive Promotions Group recently covered an event with DPD Catholic Charities to throw a Dunk for Disabilities Charity Event. One lucky contestant by the name of Justin Brennan conquered our Progressive Shot Challenge; hitting a layup, free throw, three pointer and half court shot within 30 seconds!
The prize value for this promotion was $10,000 which would have came out of DPD Catholic Charities pocket if they didn’t have coverage. But since they did have coverage with IPG, Justin was cut a check for $10,000, and actually turned around and made a surprise donation back to DPD. The event lived up to its name and was truly an event full of giving and giving back.
Watch video here: https://www.youtube.com/watch?v=vEgJJMF402A
The financial security is just one of the benefits of purchasing prize insurance. There is just no beating the engagement value of promoting huge prizes. And when it comes to the lack of worry it gives companies, it’s priceless. If you want the same peace of mind for your next event, you’re in luck! There is an insurance company willing and able to shoulder the risk required for these events to happen – Interactive Promotions Group. Give us a call at 888-882-5140 to get started.