Offer the Million-Dollar Prize Without Betting the Business on It.
Fixed-cost protection against a big promotional payout
Prize indemnity insurance lets a business advertise a large prize in a contest or promotion without holding the cash to pay it. The promoter pays a fixed premium, and the insurer pays the advertised prize only if the improbable winning event actually occurs. An unpredictable, potentially catastrophic payout becomes a small, budgeted marketing cost.
The promoter keeps the marketing upside — the buzz of a hole-in-one car giveaway or a half-court shot for a jackpot — while the insurer carries the tail risk. But the coverage lives or dies on the contest rules and verification: get the protocol wrong and even a legitimate win goes unpaid.
What Prize Indemnity Insurance Covers
Coverage funds the advertised prize across a wide range of promotions:
Skill & Sports Contests — Covers hole-in-one, half-court and full-court shots, field goals, and putting or target challenges.
Chance-Based Promotions — Covers lucky-number, prize-wheel, dice-roll, and scratch-card giveaways.
Sweepstakes & Grand Prizes — Covers guaranteed grand prizes, including large game-show and mega-prize payouts.
Weather-Contingent Promotions — Covers "everyone wins if it snows" or score-triggered offers tied to a measurable event.
Over-Redemption Coverage — Responds when a money-back, rebate, or instant-win promotion proves too successful and more people win than modeled.
What It Does Not Cover
The exclusions center on rule compliance, which is the whole game:
Non-compliance with the contest rules or verification protocol — the leading denial driver
Ineligible participants, such as pros in an amateur contest, employees, or minors
A contest run differently than declared — wrong distance, wrong ball, extra attempts, or a changed date
Fraud, collusion, and pre-arranged wins
Failure to notify the insurer or to have the required independent observer present
Who Needs Prize Indemnity Insurance
Coverage fits anyone offering a headline prize to drive engagement, including:
Marketers and promotional agencies running consumer sweepstakes
Auto dealerships offering "win a car" and lucky-key promotions
Radio and TV stations running call-in cash contests
Charities and nonprofits with big-ticket raffle or hole-in-one prizes
Sports teams, arenas, retailers, restaurants, and casinos running fan and in-store giveaways
How Coverage Is Structured
Odds drive the price, and the rules drive whether it pays:
The prize value is the insured limit, single or aggregate across attempts, and specialty markets cover very large prizes
Premium is a percentage of prize value set by the probability of a win — longer odds cost less
Contest rules must be drafted and filed with the insurer before the promotion, covering eligibility, difficulty, attempts, and dates
Verification is a condition of payment — independent disinterested witnesses, signed statements, often unedited video, and measurement confirmation
Over-redemption promotions are priced on modeled redemption rates and capped, because the exposure is aggregate rather than a single prize
Real-World Claim Examples
A fan sinks a half-court shot for a jackpot, paid after video and independent-observer confirmation
A golfer aces the insured par-3 for an advertised car, paid once witness statements and distance are verified
A retailer's "free groceries if it snows six inches" promotion triggers when measured snowfall hits the threshold
An instant-win promotion runs above its modeled rate, and over-redemption coverage responds up to the cap
A legitimate hole-in-one goes unpaid because no independent witness was present — the win was real but the protocol wasn't met
Why Proper Placement Matters
Because the coverage hinges on execution, placement turns on:
Ensuring the rules the client actually runs match the rules filed with the insurer
Putting independent observers and documentation in place before the promotion begins
Stating the odds and parameters accurately, since shortening a distance or admitting skilled players changes the risk
Structuring over-redemption exposure correctly when a promotion can produce many winners, not one
Binding coverage and rules before any attempt is made
Regulatory & Contract Context
Prize indemnity insurance covers the financial payout risk, but the underlying promotion must independently comply with contest and sweepstakes law. The FTC requires clear disclosure of prize terms, and a promotion combining prize, chance, and consideration is an illegal lottery — sweepstakes remove the consideration through a free entry method, and skill contests remove chance. Several states, notably New York and Florida, require registration and a surety bond when aggregate prizes exceed a threshold, with recordkeeping and winners-list filings. Host, sponsor, and prize-provider contracts define who actually bears the prize obligation, and that party should be the insured.
Our Approach
At Cory Washington & Co., we place prize indemnity so the promotion pays off both ways — the marketing works, and the coverage actually responds if someone wins. We make sure the filed rules match what you'll run, that independent verification is built in before the event, and that over-redemption promotions are structured for aggregate exposure rather than a single prize. We also help you confirm the promotion is set up to comply with contest law, not just insured. We also insure related exposures, including special event coverage, event cancellation, and general liability.
Our goal is a promotion you can advertise boldly — with the payout risk off your balance sheet and the claim protocol airtight.
All insurance descriptions on this website are provided by Cory Washington & Co. LLC strictly for general informational purposes. They are not intended to be, and should not be relied upon as, legal, financial, or insurance advice. The information presented is general in nature and does not guarantee the availability, terms, conditions, or scope of any insurance coverage. Actual coverage is determined solely by the specific policy language issued by the insurer and remains subject to underwriting approval. Nothing on this website creates or implies an agent-client relationship, binds coverage, or alters any existing policy. Cory Washington & Co. LLC expressly disclaims any liability for actions taken, or not taken, based on the content provided here. For advice regarding your particular situation, please consult directly with a licensed insurance professional at Cory Washington & Co. LLC or another qualified insurance professional, and always review your policy documents in full.
See what to confirm in a prize indemnity policy — what's standard, what's often limited, and what to add if needed — plus the gap most often missed, in the Prize Indemnity Policy Feature Checklist.
Complete the Prize Indemnity Supplemental online in a few guided steps, download the fillable PDF, or browse all applications.
Frequently Asked Questions
How do I get prize indemnity insurance through Cory Washington & Co.?
Request a quote or contact our team. We start with a short conversation about your operations, analyze your exposures, then negotiate prize indemnity insurance across multiple carriers that compete for your account and present options with the trade-offs explained. Cory Washington & Co. LLC is licensed in all 50 states.
What drives the cost of prize indemnity insurance?
It depends on your exposure. Prize indemnity insurance is priced on factors like your industry, size, prior claims, and the limits and deductibles you select — so two businesses rarely pay the same. We shop your account across competing carriers and present the trade-offs in plain English.
Do I need prize indemnity insurance?
Requirements vary. Prize indemnity insurance may be mandated by statute, or required under your contracts, leases, or loan agreements — and in many cases it is simply prudent given the risks involved. We look at your specific obligations and exposures, then recommend the coverage and limits that fit.
What if another agency has already declined or non-renewed my coverage?
Difficult, specialty, and previously-declined placements are a core part of our work. We access excess & surplus (E&S) and specialty markets that many generalist agencies cannot, and we explain the trade-offs clearly so you can decide with confidence.
Available in all 50 states. See how requirements differ in California, Texas, Florida, New York, or choose your state.