Blackjack Rules: Part 4 – Insurance and Surrender

Insurance

Insurance in blackjack is often misunderstood by players, and is a big money-maker for casinos. Naming this side-bet “insurance” was a brilliant marketing ploy, and some otherwise solid players will frequently make this bad bet to “insure” when they have a good hand. But actually, insurance is not always a bad bet. For players who can recognize when the remaining deck is rich in ten-valued cards, this can actually be a profitable side-bet.

So, what exactly is “insurance” in blackjack anyway?

Insurance is a proposition bet that is available only when the dealer’s upcard is an Ace.

When the dealer turns up an Ace, he will offer “Insurance” to the players. Insurance bets can be made by betting up to half your original bet amount in the insurance betting stripe in front of your bet.

The dealer will check to see if he has a 10-value card underneath his Ace, and if he does have Blackjack, your winning Insurance bet will be paid at odds of 2:1. You will still lose your original bet (unless you also have a Blackjack), so the net effect is that you break even (assuming you bet the full half bet for insurance.) This is why the bet is described as “insurance”, since it seems to protect your original bet against a dealer blackjack. Of course, if the dealer does not have blackjack, you’ll lose the insurance bet, and still have to play the original bet out.

Insurance is simply a side-bet offering 2:1 odds that the dealer has a 10-valued card underneath their Ace. Not surprisingly, the casino has a substantial edge on this bet. In a single deck game, there are 16 ten-valued cards. Assuming that you don’t see any other cards, including your own, the tens compose 16 out of 51 remaining cards after the dealer’s Ace was removed. For the insurance bet to be a break-even bet, the hole card would have to be a ten 1 out of 3 times, but 16/51 is only 1 in 3.1875.

That creates a 5.88% house edge on the insurance bet in single deck. It’s even worse in six decks with a 7.40% house edge.

Card counters can still beat the insurance bet, by only making the bet when they know that more than one-third of the remaining cards are tens.

Unless you are card counter and know the deck is skewed sufficiently, just ignore the insurance bet. It doesn’t matter whether you have a good hand or a bad hand.

Taking “Even Money” on Blackjack

If you have a blackjack when the dealer turns up an Ace, he is likely to offer you “even money” instead of the insurance bet. If you accept, the dealer will pay you the amount of your original bet and discard your hand of blackjack, before he even checks under his Ace to see if he has a blackjack as well.

Many players think this sounds like a good deal, guaranteeing a profit even if the dealer has a blackjack. But that guaranteed profit comes at a price. You will win more money in the long run by holding out for the full $15 payout when the dealer does not have blackjack, even though you will sometimes end up empty-handed.

“Even money” is nothing but an insurance bet on your blackjack, nothing more and nothing less. Let me show you how it works:

Let’s say you bet $10, and have a Blackjack. You would normally collect $15 for this, unless the dealer also has a blackjack in which case you push or tie. Let’s assume that the dealer has an Ace up, and you decide to take insurance for the full amount allowed of $5.

Now, two things can happen:
1) The dealer has a Blackjack. You tie with the $10, but collect 2:1 on the $5 insurance bet for a total profit of $10.
2) The dealer does not have Blackjack. You lose the $5 insurance bet, but collect $15 for your blackjack. Your total profit is again $10.

In either case, once you make the insurance bet you are guaranteed a profit of $10, which is an even money payout for your original bet. So, casinos allow you to eliminate the insurance bet altogether, and simply declare that you want “even money” for your blackjack when the dealer has an Ace showing.

The problem is that you are still making a bad bet on insurance, which costs you money. If you ignore the offer of even money, sometimes you get $15, and sometimes you get $0. But on average, you will collect slightly more than the $10 you are offered for even money.

A player who does not count cards should simply never take the insurance bet, even the “even money” variety.

Surrender

Some games offer the player a chance to fold their hand, and forfeit half of their bet. This surrender option must be done as the very first action the player takes on the hand. In other words, you can’t draw a card and then decide to bail out!

Even when surrender is available, it is rarely used by players. Often, the rules posted at the table won’t mention it even if the casino allows it. And many players just don’t like the idea of surrendering a hand. But for a smart player, it is a useful option, and reduces the house advantage by about 0.08%.

When surrender is available, make sure you know the correct strategy for using it. Most players who use the option surrender too many hands. If your game offers surrender, I recommend reading my complete explanation of blackjack surrender.

In the most common variety (known as “late” surrender), a player cannot surrender until after the dealer has checked for blackjack. If the dealer has blackjack, you will lose your entire bet with no chance of surrendering for half the cost.

← Part 3 – Player Choices

Part 5 – Rule Variations →