Imagine how companies are able to offer their customers the chance to win very expensive prizes.
Such prizes may include cash prize, cars, expensive vacations, which are won through raffle draw, contests etc.
But not all companies are able to afford such large prizes. So how do they do it?
This is where the insurance comes in.
Insurance companies present promoters a unique opportunity to cover the cost of such events if it happens.
Instead of keeping cash reserves to cover large prizes, the promoter pays a premium to an insurance company.
The insurance company reimburses the insured in the event a prize be given away.
This gives the companies the ability to offer special contest and promotions with attractive prizes,
Such as cars, vacation, and fat checks, while transferring the risk to a financially bound insurer.
The premium calculated on the value of the prize and odds of someone winning it.
This insurance policy is generally referred to as “Prize Indemnity Insurance”.
It is a duty of the insurer to make good any loss, damage or liability incurred by the insured.
The policy’s coverage limit is equal to the insured’s potential loss, which is the financial value of the prize.
Tokio Marine vice president, Robin Lang explained that “It is a risk transfer”.
Insurance companies will not take on every prize risk, especially if the odds of winning are against them.
Why are they needed?
It is wise to find a way to protect yourself from potential loss or unforeseen situations.
Getting a secured insurance for a promotion or contest offers security for the promoter and participants.
This policy makes it easier for companies to afford to offer high-value prize in a promotion.
Such contests help to create excitement and increased company brand awareness.
They can be a powerful marketing tool.
Prize indemnity also grabs attention to you brand by ensuring you keep your promises to the winner of the prize.
Who needs them?
The Promoter
For anyone running a promotion where brand equity is at stake, it is best to seek prize indemnity.
This is necessary as your customer needs to have confidence in your ability your payout these prizes.
In a case where the prize is at stake, the indemnity covers the full prize value for a lower value than the prize value.
But if the prize isn’t won, you have not had to buy a prize that goes unused.
In the event of either case you still have improved brand awareness and added value to your brand.
This can be a very good defensive game plan for your business.
The insurer gives the promoter full charge over the running of the competition.
The Participant
Who does not love to win a prize, whether it’s at the local supermarket or managing to win a lottery?
And we all love to get attention and show our emotion at being a winner and feeling the pride within us.
Whether a prize is available through a raffle, competition, it is of value.
Prizes come in all forms from cars, holidays, and cash prizes. Whatever it may be, winning is something everyone loves.
Prize indemnity protects the prize winner by ensuring they actually receive their prizes.
This improves customer-business relationship through the transparency and fulfillment by the company.
In some cases, the participant can exchange the prize (car) won for cash if he or she can’t pay for the taxes.
One of the prize give away that can be used to drive attention to your brand is a car.
The cost of buying a car and putting it up for a sales promotion can be very risky if the odds turn against you.
But, there are ways of insuring a car as a giveaway prize.
Prize indemnity is the ultimate way to insure that car as a giveaway prize if you are looking to save cost.
Insurance companies offer various products that can cover the cost of giving away a car as a prize.
These products may include:
- Hole in one insurance
- Game of chance insurance
- Athlete Incentives
- Sport conditional Rebates
- Digital/Online games
- Crack the vault car giveaway
- Scratch cards
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Hole in one insurance
This is one of the most common types of prize insurance. This coverage is for a golf tournament host or promoter.
It pays organizers for the cost of a hole-in-one prize, should one of the golfers hit a hole-in-one during a tournament.
You can make every golfer’s dream of a hole-in-one even more exciting.
By offering a big car prize for a player who achieves that much coveted feat at your event.
When you use the hole in one insurance product, you pay a small premium fee.
The premium fee is generated based on the number of golfers partaking in the golf tournament.
Golfers will have the chance to win the fabulous prize if they sink a hole in one.
And what makes it more exciting is that most insurers offer certain bonuses to compliment every golfer.
A key example is interactive promotions insurance company.
They offer the following coverage to compliment the efforts of all participants in the tournament:
- Hole in one coverage by an “A” rated carrier
- Bonuses prizes for the other par 3 holes
- Complimentary gifts for every golfer in your event.
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Game of Chance Contest
This contest boils down to luck. This contest can be carried out in various ways.
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Lucky envelope/Money bag
If you are looking to generate buzz and a crowd at your promotion event, then this contest is best.
This contest can be done in any event creating an exciting time for your audience.
When you narrow down the promotion to a few participants, you can create an incentive.
Give those contestants the chance to win big by selecting the winning envelope. You can add any creative concept that can attract your customers to your brand.
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Lucky Key Grab
This promotion is ideal for a car giveaway prize and can be a success at your promotion event.
See if your audience can unlock a new car to take home as an awesome prize.
Have your contestants to choose from a container of keys numbered 1 to 100 and if the lucky key matches the winning key, they take the prize home.
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VIN to Win
If you own a dealership or a store you could bring more traffic with a VIN to Win promotion.
Before the contest, select a vehicle whose VIN (vehicle identification number) will serve as the winning number. Have customers try to match their driver’s license to the car’s winning number.
If an exact match is found, the lucky customer takes home the prize new car.
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Spin and Win
Introduce a prize wheel to your event to give guest an ultimate experience. If your contestant spins the wheel and lands on the prize, they become the winner.
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Lucky Lotto
This a common contest of luck. Win or lose, everyone deserves a second chance. This promotion lets you offer a set of winning numbers after a drawing has been done.
If a lucky individual can present a lottery ticket from the previous day that match the new set of winning numbers.
The individual with the winning number earns the grand prize.
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Athlete Incentives
If you are a sport lover and you are looking to promote your business, you could sponsor the local team in your area.
Outstanding result deserves a reward.
Insurance companies allow you to commend an athlete or team when they meet a certain performance goal.
Whenever sponsored teams or individuals win, your business receives customer’s awareness.
Your business could leverage on sporting events for high profiled athletes.
Insurers can help you put together a program that suits your project.
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Sport Conditional Rebates
This promotion was made for sport fanatics, who spend all weekend watching sport game.
If the team you choose can win the big title or any condition you set is met then your customer wins the grand prize.
This contest is perfect for your store grand opening or next blow out sale.
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Digital/Online Games
You can drive traffic with fun filled promotions. These contests are perfect for all kinds of events.
You can offer varieties of different games type through your insurer. All which are playable and can be custom-design to compliment your brand.
All possible design, features, themes, customization, game play for the contest are all to be decided by you.
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Scratch cards
Scratch cards is a perfect way to engage your customers at your company next event. Give your customers the chance to win a brand new car at no cost.
Scratch cards comes in many themes and can be custom designed to match your brand.
To win players must scratch six boxes, and if all six symbols match, they win.
But before they can take part, they have to register under your company. Each card should contain a registration section to help build your customer base.
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Crack the vault car giveaway
Crack the vault car giveaway is perfect for showrooms, trade shows and all kinds of event.
Participants try to guess the perfect combination that would open the vault and reveal the grand prize.
All game feature, customization and game play are all to be decided by you.
But, winning a car and not being able to use it can be a heartbreaking. you change plans during the contest.
Cash options let you enjoy your success, even if you can’t use the prize.
What are cash options?
Cash options are a feature that some promoters offer their winners. If for some reason, the winner can’t use the prize, they can choose to take cash prize instead.
Sometimes, the cash amount same as the prize’s approximate retail value.
In other cases, the cash option may be less than the value of the prize.
How Can You Get a Cash Option for Your Prize?
In most cases, if there is a cash option deal, it would be listed in the contest rules.
If a cash option is listed in the rules, you have to say that the prize you want to accept.
But, if the cash option is not listed, your chances of getting on aren’t that high.
Do Giveaways Have to Offer Cash Options?
As a promoter, you might be wondering “it is necessary to offer cash options in your rules of contest?”
It is not of necessity to include cash options in your rules as participants play by rules set by you.
But, it is not common for sponsor to offer cash options.
As a winner of a giveaway prize, it is not guaranteed that a cash option will be available.
Many people assume that they can receive cash in exchange for prizes. Sponsors do not usually offer cash options and they don’t.
Most times, the sponsor isn’t handing over the AVR for the prize. They might have partnered with other companies to put together a prize package.
In other situations, the sponsor has already bought the prize: so they don’t have it available as cash option.
But, the winner may request a cash prize or a change in the prize rules. Sponsors can prepare for this situation in advance by;
including provisions in the official rules that cover the possibility that this may occur.
These provisions may include:
- Stating the prizes to be won so there will be no confusion about what’s included in the prize.
- Award the prize to the winner exactly as stated in the rules.
- Replace the prize as requested by the winner.
- Disqualify the winner for not accepting the prize and select another winner.
Yet, the giveaway law is not well developed. For that reason, sponsors who face these situations should contact legal help.
What Can You Do If There’s No Cash Option?
So if there is no cash option and the sponsor does not agree to cash option. You can take it that way or decline the prize.
