Getting hole-in-one contest insurance/coverage, lets the insurance provider assume the risk that goes with offering a valuable prize at the hole-in-one contest. In return, they charge a modest fee. Consequently, if you have a hole-in-one contest winner, the coverage provider becomes fully responsible for paying out the prizes.
In simple terms. ABC Foundation holds a golf outing with 75 golfers. They decide to hold a hole-in-one contest on #6, and any golfer who successfully makes a hole-in-one here will be awarded a prize. Prior to the event, they purchased a contest coverage package for a fraction of the prize amount. When two participants both make an ace at #6 during the event, they are both awarded checks for the prize amount. However, because ABC Foundation purchased hole-in-one coverage, the insurer writes the two checks. ABC Foundation’s total out-of-pocket expense is only the fee they paid for the insurance.