Poker Insurance

This post on providing "insurance" in Texas Hold 'em got me thinking last night. Not only did it get me thinking - it kept me awake thinking. At first the idea appealed to me but once I got to think about it the idea did not seem practical.

What am I talking about? Well do you know how in Blackjack you can buy "insurance" when the dealer shows an Ace? The idea for poker would be similar. When two players are all-in - the players would be able to buy insurance against losing the pot. The cost of the insurance would be based basically the odds of them winning or losing the pot plus a vig for the house.

Jamie uses an example of player 1 all-in with AA and player 2 all-in with KK and the pot size being $1000.

Taking our example and assuming the house wishes to have a 5% 'spread', the dealer would offer a price of $240 to the player with AA and $810 to the player with KK. If both players take the insurance, the house would take in $1050 in revenue and pay out $1000 in insurance to the losing player. But the spread would still apply no matter who takes the insurance.

I am assuming that each player put in approximately $500 into the pot (discounting small and large blinds and any antes for sake of argument). The problem I see is that if player 2 already has $500 in the pot and it costs him $810 to insure the hand - then he's staking $1310 to win $1000. That just doesn't make sense. Player 2 is better off taking his chances with the hand. Player 1, however, does have an incentive to take insurance. If he has $500 invested and the insurance costs him $240 - then he'd be risking $740 to win $1000.

With this in mind - what I'd suggest is the following:

1. Insurance is only available when two players are all-in pre-flop and one of the players has Aces. Insurance would only be available to the player with Aces and the rate would pay 4 to 1 with the player able to insure at an amount up to 25% of the pot (so the most he would get back would be an amount equal to the pot). I'd limit it to Aces instead of any over-pair to simplify things (you don't want the dealer consulting an odds table for every combination).

2. The money paid out in insurance would have to remain on the table and in the game.

I think this would work because if I'm not mistaken Aces will hold up about 75% of the time against a single player. However, people have an awful fear of having their Aces cracked and some would be more than willing to insure on the sure thing. This could be an excellent way for a casino to increase their take from Texas Hold Em and give them incentive to add more tables.