Insurance is one of those sly plays that casinos have snuck into blackjack games. The option to take insurance has been around for a long, long time, but many novice blackjack players miss what insurance actually is.
Insurance is a side bet on whether the dealer’s hole card a 10.
Insurance is only offered when the dealer is showing an Ace. Since an Ace is a must for a natural blackjack and is less numerous in the deck than 10 valued cards. So if the dealer has an Ace showing his chances of having a natural blackjack are higher than if he had a 10 card showing. So insurance is offered to ‘insure’ your bet.
When you insure your bet you pay half of your original bet; so if you had bet $10 insurance would be $5. And if the dealer does in fact have a 10 for a hole card you would be paid 2-1.
The problem with insurance is that, with an Ace, the dealer can still have a strong hand without having blackjack. In those instances you would lose the round and your original bet. But since the hole card is not a 10 you would also lose your insurance bet too.
And that is what makes insurance a bad idea. It has been proven that over time a blackjack player will lose more money by taking insurance than if he just played blackjack without taking it.
The best way for a novice blackjack player to play is according to basic strategy so that he has a strong starting point for blackjack strategy. Card counting can always be added later. But if you look at a basic strategy chart, you will notice that nowhere on the chart does it tell you to take insurance.
This is because, while following basic strategy can lower the house edge (the whole point of having a blackjack strategy), insurance will raise the house edge. Since taking insurance raises the house edge it is not advised on a basic strategy chart. And since basic strategy offers the best statistical plays, it follows that insurance is not a good statistical play.
Because it raises the house edge and will cost blackjack players more over time it is best to avoid insurance and never take it.