How Much Does Hole-in-One Coverage Cost?

By Brian Hill
A hole-in-one brightens any golfer's day.
A hole-in-one brightens any golfer's day.

Ask any golfer how it feels to make a hole-in-one and the answer will be: "Fantastic!" Some tournaments add to that thrill of accomplishment by offering hole-in-one contests with major prizes – usually either cash or big-ticket items – as part of their events. Rather than hoping no one makes the shot so the tournament doesn't have to pay out, event organizers buy insurance to cover the prize.

Amount of Prize Money

A bigger prize obviously costs more in insurance coverage. Prize money can range from a few thousand dollars to $1 million or more. Prize money isn't the only coverage available, though. Some tournaments award new cars, boats or vacation packages. How the prize money is to be paid out also affects the cost of coverage. A lump-sum payment costs more than a $1 million prize paid out over 20 years.

Number of Players

The odds of any one player making a hole-in-one doesn't change based on the number of players participating in a contest; however, the more players who participate, the higher the probability that a hole-in-one will be accomplished. The cost of the coverage, therefore, increases when larger number of players compete in the event.

Distance from Tee to Green

Usually hole-in-one contests are held on a par-3 hole. The distance from the tee to the green must be of a minimum yardage in order for an insurer to provide coverage. The exact yardage depends on the insurance provider. Since it's more difficult to make a hole-in-one on a longer par 3 than a shorter one, the probability of success decreases. An average golfer has a 1-in-80,000 chance of making a hole-in-one on a 150-yard hole and only a 1-in-150,000 chance of holing out on a 200-yard hole. The insurance premiums for the longer hole cost less.

Amateur or Professional

Professionals have more experience making difficult shots under pressure. They are also more skilled players than amateurs. According to "Golf Digest," the odds of a tour player making a hole-in-one on a designated hole is 14,000 to 1. A low-handicap player has odds of 20,000 to 1, and an average golfer has odds of 48,000 to 1. The cost of coverage increases for tournaments involving professionals because the probability is higher that a player will be successful.

Verification

The hole-in-one must be documented from the swing of the club to the ball dropping in the hole. The view must not be obstructed at any point. The witness must sign the insurance provider's form to verify the shot. For big-money prizes, the winning shot may have to be videotaped in addition to being verified.

Range of Cost

Taking all of the factors above into consideration, it is obvious that the cost for hole-in-one insurance coverage can vary widely from event to event, but typically the costs can range from less than $200 for a 72-hole player event with a top prize worth $7,500 to more than $1,500 for coverage for a tournament with 144 players and a top prize, such as a car, worth $60,000. The price is obviously much higher for a tournament with a payout of $1 million for a hole-in-one. One company offering hole-in-one insurance quotes a price as little as $170 per swing – in other words, per player – for a $1 million prize that is paid out in a 40-year annuity. For a tournament with 100 players, the coverage in that example would cost $17,000.

About the Author

Brian Hill is the author of four popular business and finance books: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."

Photo Credits

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