Posted by Dr Fro 10:47 AM
I got a better understanding of insurance. Before I go further, let me define a few terms:

best of it - when a gambling situation favors you. For instance, if we flip a coin and heads-I pay you $100 but tails-you pay me $110, then I have the "best of it"

worst of it - in the above example, you have the worst of it. You may win, but if the bet is repeated many times, you have no chance of staying a winner

fair bet - when you have neither the worst of it nor the best of it.

At Top Hat, Whenever you are all-in and you are favored against one opponent, you can take out insurance. First, the opposing player has the option to back the insurance. If he refuses, another player can, and if they all refuse, then the house will always back it. The payout IS NOT EQUAL to the actual odds, so the house can have an advantage. Therefore, when you opt to take insurance, you have the worst of it. Ergo, don't take insurance. However, if you are the underdog in the hand and the favorite wants insurance, you should back it. That house advantage would be yours and you would have the best of it.

This all assumes you go by the posted rates. According to Mr. Greene, you can negotiate a better deal with a player if you wish. I will post later the results of a spreadsheet I created that calculates fair odds. Anytime you can negotiate to fair odds, you could consider taking insurance to reduce volatility. But what you should strive for in negotiation is to get the best of it. Example, you are a 2:1 favorite, and the posted odds are 1.75:1. Negotiate to 2.25:1 and take the insurance for the full amount.

This all ignores the value of reducing volatility, but if you have sufficient bankroll, there should not be much value in that.

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