What is Contest Indemnification?
What is contest indemnification and why do you need it? The dictionary definition of “indemnification” is defined as the noun for form of indemnify, and “indemnify” means that you compensate (someone) for harm or loss or secure (someone) against legal responsibility for their actions. In the contest world, indemnification can take two forms, prize indemnification and general contest indemnification.
Prize indemnification is when you offer a large prize in your promotion, such as a million dollar cash prize, but the chances of someone actually winning it are very low because the bar is so high and the odds are astronomically against having a winner. Examples of this would be a hole in one at a certain hole at a golf course during a tournament, or being able to pick an exact winning bracket in the college basketball tournament of 64 teams. If you are offering this type of prize, you would pay a prize indemnification company a fraction of the prize money to indemnify the prize so it would become their responsibility. If someone actually overcomes the odds and wins, then the indemnification company would be responsible for paying out the full prize money. The company doing the indemnification is willing to take the risk as odds are low that someone could actually win.
Prize indemnification companies deal specifically with odds-based payouts and typically are not the same as promotional marketing companies that run promotions.
Contest indemnification, or sweepstakes indemnification, is when a promotional marketing company, like Marden-Kane, includes indemnification of your promotion as part of their services. This type of indemnification of a promotion means that they would take the legal responsibility for anything that could go wrong. In other words, the indemnifying company would take on responsibility for the legal risk and if there was an issue, they would take the legal responsibility.
Contest indemnification comes in handy if a lawsuit is filed against your brand for any alleged wrongdoing. Even if the lawsuit ends in your favor, the time and cost to fight it may end up costing thousands of dollars that you don’t have. This is a big reason large companies utilize the services of a true promotional marketing company to help protect them.
Please note: Contest indemnification by a promotional marketing company is NOT always included in contest services. Some companies do not offer it at all, others offer it as an added service for a fee, and some include it for most promotions that are low risk. Always ask if your sweepstakes or contest company carries insurance to cover unforeseen legal issues that might arise and if they are willing to indemnify promotions. If they are not familiar with indemnification, be forewarned that you may not have any legal protection from lawsuits or other issues. If they do offer indemnification, make sure that it is included in your contract or work statement.
If you want to know more about sweepstakes or contest indemnification for your next contest, or if you need help finding a prize indemnification company, contact us.
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