Re: How does poker insurance work?
In a large NL game the player with a large edge hand in an all-in pot may be offered insurance by another player, or even a player watching the game. An example follows:
Two players are in a hand where one of them is all-in (could be preflop or on flop or on turn) and the total pot is $1000.
Player A shows AA and player B shows KK
on the flop we see: 4 T Q
and player A is happy
on the turn comes a jack and player "B" picks up an open-ended straight draw - now player A is nervous -
Player "C" says, I'll give you insurance against losing to that straight. They count the outs that beat player "A" as four nines and two aces. Six cards win for "B" and 36 cards win for "A". Odds are 1 in 7 that "A" will lose. Player "C" says your cost to cover the $1000 pot is $166. (Instead of the actual cost of covering a 1-7 bet of $143, he offers 1-6 and makes a profit himself of $23 every time he offers this type of bet) Player "C" may also know something about the "real" odds, because if he had an ace or 9, then the chance of player "B" hitting his straight is even lower)
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