hi hi i no understand how this functions please can explain with an example?
Lets take a classic example. KristaK have two black aces in her hand, and her opponent have two red kings. They get into a raise-reraise war preflop, until one of them is all in. There is now 10$ in the pot after rake (to make the math easy
).
With 5 community cards yet to come, KristaK have 81.26% chance of scooping the 10$ pot, and her opponent have 18.74% chance. KristaK is already down quite a bit for this session and cannot bear the prospect of losing yet another big pot, if the Villain suck out on her aces. So she say "yes PokerStars insurance please!!!"
PokerStars now reward KristaK 8.13$ less 1% fee for a net win of around 3$. Villain is not interested in insuring his share of 1.87$, so he let the cards roll, but is now playing against PokerStars. If Villain get lucky, then Pokerstars need to pay him 8.13$ out of their own pocket, but if he loose to the aces, they get to keep 1.87$ from the pot. So for a fee of 1% PokerStars take on the risk, that KristaK did not want.
Now obviously paying for insurance is in itself a long term losing play. But if it can help keep you off tilt or reduce the risk, you need to move down due to a run of bad luck, then maybe it can sometimes be worth it.
Ideally we should be emotionless robots with endless
bankroll, but the reality is often somewhat different. And for some people it can really send them off the rails to have their aces cracked. Maybe not so much by KK, but if the Villain is this example had showed up with something retarded like J4 offsuit, then its probably good for the mental health of many poker players to let him play against the house