Can anyone explain how insurance works in High stakes poker games?

[Karozi615]

I understand the concept of insurance but always got confused when Hellmuth and others would start debating insurance prices. Can anyone give an example?

 

[n3rv]

I'm not sure if this explains the scenario you saw but this is how I understand it:

Basically, say Phil is a 95% favourite, and the pot is $100k, he will offer to pay someone $5k so that the hand will hold up. However, if he loses the hand then they owe him $95k.

Either way, in theory he gets the $95k for his hand and avoids a bad beat regardless if he wins or loses. Nevertheless, the players might not always insure for the full amount or for the exact odds of the hand and it will probably work out as -EV for Phil if someone does offer to insure the hand.

There are a lot of high stakes poker videos on YouTube. Maybe if you post an example of one you are confused about then someone else could help explain better?

 

[JamaicanKid]

great question...........I want to know the answer to this too....a better explanation than the one provided....

 

[fishfood80]

I'm not sure if this explains the scenario you saw but this is how I understand it:

Basically, say Phil is a 95% favourite, and the pot is $100k, he will offer to pay someone $5k so that the hand will hold up. However, if he loses the hand then they owe him $95k.

Either way, in theory he gets the $95k for his hand and avoids a bad beat regardless if he wins or loses. Nevertheless, the players might not always insure for the full amount or for the exact odds of the hand and it will probably work out as -EV for Phil if someone does offer to insure the hand.

There are a lot of high stakes poker videos on YouTube. Maybe if you post an example of one you are confused about then someone else could help explain better?

You explained it perfectly. Although the percentage can vary. A lot of times if you have like 85 percent equity a player might offer you 80 percent or something to get a better deal. On the flip you might ask for 90 percent to get a better deal. Recently Hellmuth was in a big hand against Ausmuth on poker after dark. He held AA against AK with only the river to come. There was a K on the turn and Phil wanted insurance. He asked JRB for 1000 dollars at 30 to 1. Meaning if he won he’d give JRB a grand but if he lost he’d receive 30k the pot was around 73k. JRB wanted it at 25 to 1 they settled on that at 800. Phil won and paid JRB 800. I think his equity was around 93-96% . So it really depends on the deal what you feel the players equity is worth to you. No matter what I think it adds another great element to a cash game.

 

[JOHNNYROD143]

Hey guys, I read your responses. I am dealing a private game and was wondering where the house comes into play in the insurance? I have tried doing research and really don't understand as I can't find materials that pertain to my exact case. How does the house make money of insurance?

 

[Poker_Mike]

Hey guys, I read your responses. I am dealing a private game and was wondering where the house comes into play in the insurance? I have tried doing research and really don't understand as I can't find materials that pertain to my exact case. How does the house make money of insurance?

The house is not involved in the insurance examples the original poster was talking about.

As a poker dealer you may want to pause running out the board while the players arrange and agree upon their insurance.

That's pretty much it - unless you want to personally get in on the action!

 

[YuriDitz]

Thank you all for explaining, I also didn’t quite understand how it works, but now I all clear)

 

[Stringy]

So if the phil didnt win the insurer JBR would loose 25K (or whatever the maths is)? doesnt seem like there's much worth for the insurer?

 

[BigMud40]

So if the phil didnt win the insurer JBR would loose 25K (or whatever the maths is)? doesnt seem like there's much worth for the insurer?

Not quite....if Phil won he would owe JBR the agreed upon deductible. If Phil did not win JBR then LOANS Phil an agreed upon amount plus juice. It's just a quick way for a player to stay in the game without having to leave the table and take the time to buy more chips from the casino which sometimes could take a little time if it's a large amount if you do not have an account at said casino.

Atleast that's my understanding of it. I'm probably wrong though because I've never seen an insurance bet or played high enough stakes where insurance bets are made

 

[Aballinamion]

This is also sometimes called "all-in insurance" and basically mean, that someone else (in this case the house) takes over the risk / variance. In the classic TV-poker show "Big Game" Phil Helmuth occationally purchased all-in insurance from some of the other players. Most online poker sites have this feature in their cash games now, and usually the fee is 1%.

Example: You have QQ, the opponent have AKo, and you are all-in before the flop. Your chance of winning is 55%, and the pot size after rake is 20$. This mean, your equity share is 11$. If you use the all-in cash-out option AKA "insurance" you will be rewarded 11,00-0,11=10,89$ from the pot. If your opponent also opt to cash out, they will be rewarded 9,00-0,09=8,91$, and PokerStars thus earn an extra 0,20$ in rake. Alternatively if your opponent dont cash out, the board will be run out, and he will then either be rewarded the full 20$ pot or nothing with him now essentially gambling with the house like in casino games.

Fundiver199 explains clearly what does it mean.

This quote was extracted from:

Cash Out in Poker Stars

Hello friends, sometimes you go All In before you see the flop, after it and even on the turn. What do you think of the Poker Stars cash out button? Do you have this function activated? Have you used it?

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