Should You Take Insurance In Blackjack
- Should You Use Insurance In Blackjack
- Should You Take Insurance In Blackjack
- When Should You Take Insurance In Blackjack
Most players mistakenly assume that insurance is meant to protect their hand in the event that the dealer has a blackjack. But the reality is that insurance is merely a wager on the dealer having a natural blackjack. Michael Shackleford: Hi guys, this is Mike and the purpose of today's Wizard of Odds Academy lesson will be to explain why you should never take insurance in Blackjack. What insurance is, is a side bet that the dealer has a 10 point card in the hole. When to take insurance in blackjack Insurance can seem like an attractive option for the player if the dealer’s up-card is an ace, as there is a close to a one-in-three chance their other card has.
When playing blackjack, insurance is offered by the house to the player as a side bet away from the main game.
If the dealer is showing an ace face up then players will have the chance to take insurance. This is a bet on the dealer making blackjack by hitting a card worth 10 next. You can typically place up to half your stake on insurance and it pays at odds of 2/1.
If you take insurance and the dealer hits their natural, you will lose your original stake (assuming you didn’t also have blackjack) but you will win your side bet. This will lead to the following outcome:
- Main stake £10 loses – minus £10
- Insurance side bet £5 wins at 2/1 – plus £10
- Overall outcome of hand – break even
If the dealer does not draw a face card or 10 and thus does not have blackjack, they win your £5 bet on insurance and the rest of the hand plays out naturally. The last option is that you decline their seemingly kind offer of insurance and hope for the best, sticking to your existing £10 stake and seeing how the hand pans out. Odds of 2/1 for them to hit any 10, Jack, Queen or King certainly sounds like a good deal, but is it? Is insurance worth taking?
Insurance Is A Shocking Bet
Blackjack is a game where players rely on luck, but skill and maths are also required to give yourself the best chance of success. Optimal play is a method of play that tells you the “right” decision to make in any given situation you will face at the blackjack table. Unless you are card counting, this technique, also known as basic strategy, is irrefutable, mathematically proven and entirely flawless and minimises the house edge, which is the casino’s inbuilt advantage over the player. And the theory of optimal play is very clear about insurance: do not take it.
The overall house edge in blackjack is around 0.7%, with the precise figure varying according to rule and game differences such as the number of decks used, whether the dealer must stand on soft 17 and so on. That is a very low advantage and makes blackjack one of the most player-friendly games around. In theory, that means that on average a blackjack fan staking £10,000 over the course of 1,000 hands would expect to lose just £70.
So what is the house edge when it comes to a standalone bet on insurance? Well, rather than 0.7%, it is a whopping, wallet-walloping 7.4%, more than 10 times the standard advantage. The exact number depends on how many decks are being used, whether you take into account the cards that you can see elsewhere on the table (including your own) and a few other factors but in general a figure of 7% or more can be assumed for multi-deck games.
That means that for the vast majority of players taking insurance really is a very bad option. It increases the casino’s advantage and in the long term will yield significantly worse results than if you politely decline the dealer’s offer. We say “the vast majority” because, as already mentioned, those who are card counting may know that it is actually a good bet.
Blackjack is more or less unique among casino games in that what has gone before has an impact on what will happen next. If a roulette wheel lands on black 10 times in a row the odds for the next spin landing on black are still the same. However, in blackjack, if there has been a huge number of low cards dealt, someone who is counting cards or even just someone who is paying attention, will know that the remaining deck is heavily stacked with higher cards, including those that will complete a natural blackjack.
In such a situation an insurance bet would potentially be excellent value but this would only be the case if you know there are sufficient 10s remaining in the pack to make the numbers work. The average player won’t, and therefore insurance remains an option that should be disregarded.
Proof That Insurance Doesn’t Pay
Should You Use Insurance In Blackjack
We can illustrate with some relatively simple maths that insurance is bad value by considering the equation with just a single 52-card deck in play. Insurance is not as bad in single deck games but the house edge is still seriously big at just under 6%.
Let us assume you have two cards showing, neither of which are worth 10 and the dealer has their shiny ace. There are 49 unknown cards in the deck, of which 16 (four 10s, four jacks, four queens and four kings) will complete the dealer’s natural and land an insurance bet, should you be foolish enough to have made one.
That means that you would expect to win the bet on insurance around 33% of the time, just under in fact at 32.65%. You would win 16 games out of 49 and lose 33. Each win would yield a profit of £2 (based on a flat £1 stake) whilst each loss would lose £1, meaning an overall loss of £1 as below.
- 16 wins at 2/1 = £32 profit
- 33 losses = £33 loss
- Overall result = £1 loss
Should You Take Insurance In Blackjack
Although only losing £1, or one unit (of whatever your stake was) may not seem a lot, it is still a loss. Had you not made those bets, you would have more money in your pocket and would therefore have put less in the casino’s coffers. And remember, these are side bets, entirely separate from your own individual hand which would play out the same way whether you accept insurance or not.
What’s more, the situation we are describing above is the most favourable starting point for an insurance bet. It was a single-hand game where all 16 available 10s remained in the pack. A cruel irony of betting on insurance is that people often feel most compelled to accept it when they least should.
For example, a player who has 20 with two cards, showing two kings for example, may feel insurance is a good bet because they really don’t want to lose with 20. 21, or a natural, is the only way they can lose and so they accept the insurance. However the very presence in their hand of two cards worth 10 means there are two less in the pack for the dealer to hit. That means they are betting on something with just a 14/49 chance of winning, their chances of success having dropped from 32.65% down to just 28.57%!
Odds of 2/1 imply a probability of success of 33.33% so if the probability of the event occurring is less than that, the bet is a bad one. Therefore, unless you are confident that more than a third of the remaining cards in the deck are 10s or face cards, insurance is absolutely not worth taking and is a bad bet.
I’ve written a few articles in the past that included advice that said you should never take insurance when you play blackjack. I stand by this advice because, for over 90% of the players who read my articles, the advice is 100% correct.
But I also need to present the other side of the argument to give you a complete understanding of insurance. The truth is that insurance is the correct play in a few specific situations. Most of these situations only become apparent to professional card counters, and because counting pros spend most of their time beating the casinos and not reading my articles, my advice of never taking insurance is correct for everyone else.
So why am I writing an article about taking insurance?
As you’re getting ready to learn, there are a few situations while playing blackjack when clearly it seems that taking insurance is a good bet. The odds are good that these situations are going to surprise you because they’re not why most players take insurance.
The Argument Against Insurance
The reason why taking insurance is a bad decision most of the time can be explained using simple math. But, as you’re going to see in the next section, this same simple math is used to show in a few situations that insurance is a good bet.
When the dealer has an ace, he or she offers insurance to the payers at the table. Insurance costs half of your original wager and pays 2 to 1 when the dealer has a natural blackjack. The only way the dealer has a natural blackjack is when his or her down card is worth 10 points.
The odds of the face down card being worth 10 points are 9 to 4 against. This is a percentage chance of 30.77% that the dealer has a blackjack. The reason why the odds are 9 to 4 is because of the 13 total card ranks, four of them are worth 10 points, and the other nine aren’t. The four 10-point value ranks are the face cards and the 10s.
When you compare 9 to 4 against the payout of 2 to 1, the casino has an edge. For the bet to be fair, the chances of the dealer having a blackjack need to be the same as the payout. The payout of 2 to 1 means that the percentage chance of the dealer having a blackjack needs to be 33.33%.
In any situation where the chance the dealer has a blackjack is over 33.33%, the insurance wager is a good bet.
The problem is that most of the time, the dealer doesn’t have a 33.33% or higher chance to have a blackjack. This goes back to how you compute the dealer’s percentage, or odds, based on the normal makeup of a deck of cards.
Determining the odds or percentages based on a normal distribution of cards in the deck sounds correct, but it assumes you don’t know the value of any cards. This is the safe way to do it, especially in a shoe game because a single card doesn’t change the odds or percentages much.
But what happens if you take the knowledge of cards played and remaining available in the deck or shoe into account?
Is there a way to use this information to determine when taking insurance is a good bet?
When You Should Take Insurance
Now that you understand how the math behind the insurance bet works, let’s look at a specific example where the bet changes from bad to good.
You’re playing in a single deck blackjack game.
- On the first round of hands, you see the value of 14 cards. Only one of them is worth 10 points, so the remaining cards have 15 cards valued at 10. With 14 cards played, the deck has a total of 38 cards.
- The second round of hands is dealt, and the dealer has an ace face up. You haven’t seen the value of the other player’s cards at this point, and you have a king in your hand. Now you’ve seen the values of 17 cards when you include the two in your hand and the dealer’s ace.
- The remaining unseen cards total 35 and 14 of them are worth 10 points. This means that the odds of the dealer having a 10-point value down card are 21 to 14 or 3 to 2 against. In other words, 40% of the time the dealer is going to have a natural blackjack.
A winning insurance wager pays 2 to 1, so the odds are better than that in this hand. The 2 to 1 payout means that the chance of a dealer blackjack needs to be at least 33.3%, and in this example, the chance is 40%.
While this example is an extreme one to show when insurance is a good bet, you can also learn something from it. Now that you know that the chances of the dealer having a natural blackjack need to be 33.3% or higher, you can use this information in any single deck blackjack game. You can even use it in a double deck game if you do a good job of tracking cards.
This is much like card counting in that you don’t have to memorize every single card that’s been played. All you need to do is keep track of the ratio of total cards played to 10-point value cards. This even works in shoe games, but the truth is if you’re able to keep track of this ratio in shoe games, you should be counting cards.
How Important Is This Knowledge?
While it’s important to recognize and use every small advantage you can find, the truth is that the opportunity to take insurance with an edge is rare. If you play in single and double deck games often, it’s something that you should watch for.
But you should only concern yourself with profitable insurance opportunities after you do a few other things to lower the house edge. The first thing you should do is find blackjack games with good rules. The next thing every blackjack player should do is use basic strategy. It’s a waste of time and energy to worry about insurance before you do these two things.
Once you learn about the rules and learn how to use perfect strategy, then you can start looking for opportunities to take advantage of insurance. But even in this situation, I recommend looking for insurance opportunities as an introduction to learning more about counting cards.
When you start tracking card ratios, which is at the heart of determining when taking insurance is a good bet, you’re starting to use the same techniques card counters use. And the fact is that most popular card counting systems include a breakpoint where players start taking insurance.
If you’re looking for every possible edge at the blackjack table, understanding how insurance works and when you should take it is important. But if you don’t want to do the extra work, then stick with good rules and proper strategy. By declining insurance every time, you’re not going to make a mistake often. When you do, it’s only going to cost you a small amount over time.
It’s a much more costly mistake to take insurance when you shouldn’t than to miss an opportunity to take insurance every once in a while, when it’s the correct play.
Conclusion
Taking insurance at the blackjack table is a bad bet most of the time. If you’re a basic strategy player or a seat of your pants player and don’t count cards, your best play is to always decline blackjack insurance. But as you can see from the numbers included in this article, there are certain situations when insurance goes from a bad bet to a good one.
Once you master basic blackjack strategy, start looking for opportunities where insurance is a good bet. When you start recognizing these opportunities, it’s a good sign that you’re ready to investigate card counting. It’s a small step from understanding and using what you learned above to become a successful card counter.
