The resplendent mane of the Pittsburgh Steelers' Troy Polamalu now comes with a price tag. Head & Shoulders, the Procter & Gamble
While the payout for any damage to Polamalu's hair -- or, perish the thought, the menace of male pattern baldness! -- is sizable, the premium Procter pays probably isn't. Remember that insurance is all about putting a price on odds.
Insurance giant Berkshire Hathaway
If the odds are very small that anyone will win the billion-dollar jackpot, or that Polamalu will suffer any sort of hair loss, then the cost of the insurance premium will likely be low. If you live in a place where an earthquake is very unlikely, you can probably add earthquake insurance to your home insurance policy for very little.
Whether a company wants to protect an endorser's valuable asset, or safeguard its funds for a buzz-creating contest, using insurance or other risk-cutting arrangements can be a smart move, as long as the price is right. The copious free publicity Procter & Gamble will gain from its outlandish policy on Polamalu probably doesn't hurt, either.
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Longtime Fool contributor Selena Maranjian owns shares of Berkshire Hathaway, PepsiCo, and Procter & Gamble. PepsiCo and Procter & Gamble are Motley Fool Income Investor recommendations. The Fool owns shares of and has written covered calls on Procter & Gamble. Motley Fool Options has recommended a diagonal call position on PepsiCo. The Fool owns shares of Berkshire Hathaway, which is a Motley Fool Inside Value selection and a Motley Fool Stock Advisor recommendation. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.