# Surrender and Insurance

As I’ve described many times, the concepts of Expert Strategy apply to more than just video poker.  Essentially, they apply to every game in the casino (except slots of course).  You should always know which games to play, what strategy to play them with and what to expect.  Most games in the casino do not require learning very significant strategies to play them properly.  Two that do – video poker and blackjack (and its variants Blackjack Switch and Spanish 21 – require some serious effort to learn them correctly.  The reward for doing so is a payback that is above 99.5%.

In order to achieve the theoretical payback, you have to learn ALL of the strategy including the less well-known parts and even the parts we might find ‘offensive.’  For blackjack this would be the concepts of insurance and surrender.  The idea of ‘surrender’ is the one that you may find to be ‘offensive’, but there are times it is the right play.

First let’s begin with the definition of the Insurance bet.  When the Dealer has an Ace up, he will offer everyone at the table the option to make an Insurance wager (which must be ½ of your base blackjack wager).  In reality, it is nothing more than a proposition bet.  If the Dealer has a blackjack, then you win 2 to 1.  If he doesn’t you lose your Insurance wager.  Assuming you have not been counting cards, then the odds of the Dealer having Blackjack is roughly 4 out of 13 (I’m ignoring his upcard ‘Ace’ and any of the cards you can see).  Paying 2 to 1, gets us back 12 out of every 13 units wagered for a payback of about 92.31%.  Obviously, you can do some light card counting and only make this wager when it is more in your favor, but it will take a lot of non-10s/Faces to turn the deck in your favor.

Sometimes you will hear a Player who has a Blackjack to ask for ‘even money’ when the Dealer has a Blackjack.  This is really the equivalent of the Player making the Insurance wager.  If he makes it and the Dealer does NOT have Blackjack he will win 3 for 2 on his base wager, but would have lost 1/2 unit on Insurance leaving him having won even money.  If the Dealer DOES have blackjack, he pushes his blackjack wager and wins his Insurance wager, which will pay 2 to 1 of the INSURANCE wager which is equal to his base wager – in other words, even money on the base wager.  To keep things moving along, most casinos will just allow the Player to call “even money” and get paid 1 to 1 on his blackjack wager.

In reality, this is no better a decision than making the Insurance wager under any other situation.  However, from an emotional standpoint, many Players hate the idea of a total push when getting a Blackjack.  This would be the outcome if you don’t take the Insurance Wager AND the Dealer has Blackjack.  The proper play is to stay unemotional and never take even money.  This situation should only occur about 1 in 275 hands (approximately) which would mean once every 9 hours of play.  For some strange reason, I seem to get it about 3 times an hour?!

Next up is the Surrender rule.  Many of you may never have heard of it.  The casinos don’t really advertise it much.  You have the right to Surrender your hand before you take any other action by forfeiting half of your initial wager.  Once you hit, split, double down, etc… you can no longer Surrender your hand.  There are two different variations of Surrenders.  The first called Early Surrender is rarely offered.  It allows you to Surrender BEFORE the Dealer checks for a Blackjack when he has a 10/Face or an Ace up.  Thus, even if the Dealer has a Blackjack, you would have forfeited only half of your wager.  This is a big advantage to the Player which explains its rarity.  The other variation is called Late Surrender.  This version has the Dealer checking for Blackjack and only after it is confirmed that he does NOT have one can the Player opt to Surrender.

Unlike the Insurance Wager, this is not a proposition wager better left ignored.  If that were the case, the casino would have it on the felt in big bold letters “PLEASE SURRENDER!”  Instead it is an option you need to take on occasion and you almost have to ask the casino permission to do so.  From a mathematical perspective, the decision is easy.  If you are going to win less than 25% of the time with your starting two cards, you Surrender.  At a 25%, you would win back exactly half of your initial wager which is what you’ll have left after Surrendering.  Hence, that is why this is the decision point.  There are slightly different strategies depending on whether the Dealer hits or sticks on  Soft 17.

You should always Surrender a Hard 16 to a Dealer 9, 10 or Ace.  You should also always Surrender a Hard 15 to a Dealer 10.  If the Dealer hits a Soft 17, you also Surrender a Hard 15 to a Dealer Ace and a Hard 17 (yes, I said 17) to a Dealer Ace.  If the Dealer has a 6 underneath, he gets to keep going and is that much more likely to wind up beating you.   These rules apply to larger shoes of 4-8 decks.

The impact of properly Surrendering is that the payback is increased by 0.07%.  This may not sound like a lot, but looked at differently, it can cut the house edge by about 15%.