Can bitcoin be insured?
Can You Insure Bitcoin? Here’s What You Need to Know.
Investors who own conventional securities, like stocks or bonds, can rely on a level of protective regulation and insurance backing, either through the US government or private policies. However, investors don’t have the same protections.
While there’s been demand for cryptocurrency insurance to cover everything from deposits to theft, the primary concern is underwriting risks. Major insurance companies don’t feel they can accurately assess risk factors due to a lack of cohesive rules and regulation in the crypto insurance industry. Though newer insurers are diving in headfirst, others are merely dipping their toes to test the temperature.
Is my cryptocurrency insured by the US government?
No. The federal government provides insurance for cash and deposits of conventional securities, like stocks and bonds, but not cryptocurrency assets — at least not yet.
A Boston-based company, Breach is licensed and regulated in 10 states, including Massachusetts, California and New York. You must be a resident of one of the listed states in order to purchase a policy. The company will expand into more states later this year, according to Breach Insurance’s CEO Eyhab Aejaz.
Breach Insurance currently covers 20 types of coins — including bitcoin, ethereum and dogecoin — within exchanges such as Coin base, Coin List, Gemini or Binance.US. In other words, Breach doesn’t insure crypto stored in third-party wallets, only those in certain exchanges. Breach’s Crypto Shield is a theft insurance policy, meaning it’ll cover hacks and exploitation of exchange’s wallets, whether your crypto is held in hot or cold storage. Policies run anywhere from $2,000 worth of coverage to $1 million, and you can choose your deductible — either 5%, 10% or 15% of the policy amount.
Other than Breach Insurance, we haven’t found other insurers currently selling policies to consumers.
We reached out to national insurers such as Allstate and State Farm, which both confirmed they don’t offer crypto insurance at this time. Moreover, the big players getting into the crypto insurance industry also don’t appear to sell individual policies for consumers, either, not even the Great American Insurance Group, which was the first insurance carrier to provide crypto insurance. According to O’Connell, the company Etherisc is developing crypto wallet insurance for other insurers to cover crypto assets.
If you sell crypto insurance directly to consumers or know a carrier that does, please reach out to us.
Do wallets protect your crypto assets?
Yes, but the coverage is limited.
Coin cover — an insurance-backed cryptocurrency protection platform — provides protection for many wallets, including Vesto, BitGo and Civic. According to Coin cover’s CEO David Janczewski, it offers an insurance-backed guarantee underwritten by Lloyd’s of London for lost or stolen funds. This means you’ll be protected (by virtue of using those wallets) from all theft and loss including brute force attacks, cyberattacks, device theft and hacking. And if your crypto is stolen because Coin cover’s technology fails to perform, Coin cover will pay you back up to the amount you’re eligible for (this amount depends on the level of protection the wallet you purchased offers).
However, not all wallets come with Coin cover protection nor are all wallets insured. You’ll want to check the fine print for any wallet you use to understand what protections are offered.
Do exchanges also offer crypto protection?
That coverage kicks in if Coin base suffers a platform-wide cybersecurity breach. But if a hacker accesses your personal account and steals your crypto, Coin base’s insurance won’t cover that. And in the event of a platform-wide cyberattack, you still may not get all of your assets back. Coin base’s website explains that if “total losses … exceed insurance recoveries your funds may still be lost.”