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Reviewed by Nov 11, 2021| Updated on
Prize indemnity insurance is referred to as whole-in-one insurance. It is indemnification insurance for the purpose of promotion under which participants are entitled to win prizes. Prize indemnity insurance policies enable organisations to conduct promotional events with lucrative prizes, such as vacations, a huge sum of money, and vehicles as rewards for winning competitions organised by them, without taking a significant risk or needing to pay for the prize.
The premium for a prize indemnity insurance policy depends on the value of the prize and the possibilities that a participant would win it. Prize indemnity insurance will also ensure that the winner is going to receive the prize as the insurer has committed to take up the burden of paying for it.
The coverage of these policies would be restricted to the possible losses suffered by the insurer, meaning the actual value of the prize money up for grabs.
The existence of prize indemnity insurance policies has enabled companies to lure customers with high-value prizes in order to attract them and sell their products. This has also paved the way for companies to treat their loyal customers by offering prizes on winning a contest. Competitions and prizes like these would create a sense of excitement among customers and increase the brand value of companies.
The insurance offering the prize indemnity insurance would help the companies in setting the guidelines of the contest. These guidelines would be straightforward, and the sponsor will have to agree to them before the claim can be filed with the insurer.
For instance, if the contest rules state that there have to be a certain number of evidence of having met the guidelines, then the insured must provide such evidence. Furthermore, if the insurer gets to know about any unfair advantage given to the winner of the contest, then the insurance company has all the rights to void the insurance.