How does insurance coverage work for cryptocurrency holdings?

insurance coverage for cryptocurrency holdings
insurance coverage for cryptocurrency holdings

Ever wonder how insurance might work for your cryptocurrency investments? You’ve likely poured money into Bitcoin, Ethereum, or other digital coins hoping they’ll soar in value. But what happens if there’s a hack, scam, or theft? Traditional insurance doesn’t cover crypto. You need special policies for your crypto holdings. The good news is more companies now offer coverage for digital currency wallets, exchanges, and personal holdings. You can get policies to reimburse you for losses from theft, scams, hacking, and more. Premiums vary depending on how much coverage you want and the type of crypto you own. Do your research to find a reputable firm and check if they cover the full value of your holdings. Crypto insurance gives you peace of mind so you can HODL without worry.


Do Traditional Insurance Policies Cover Cryptocurrency?

Unfortunately, traditional homeowners or renters insurance policies do not cover cryptocurrency holdings. Cryptocurrency is considered a high-risk asset, and most standard policies explicitly exclude digital currencies.


However, some crypto-specific insurance products are emerging. A few options:

  • Crypto custody insurance: Covers the loss of your crypto assets held by an exchange or custodial wallet in the event of theft, hacking, or fraud. The coverage is for the value of your holdings at the time of loss. Several major exchanges like Coinbase, Binance, and Kraken offer this type of insurance.
  • Private wallet insurance: Insures crypto held in your own digital wallet. Only a few providers like Coincover currently offer this coverage. The premiums tend to be higher due to the higher risk.
  • Market insurance: Protects against a major drop in the overall value of your crypto portfolio. For example, if the total value of your Bitcoin holdings drops 50% in a month, this policy would reimburse some of your losses. However, the premiums are typically very high due to the volatility of crypto markets.
  • General liability: Covers legal costs if you are sued in connection with your cryptocurrency transactions or business. For example, if you recommend an crypto investment to someone that loses money, they could potentially file a lawsuit against you. Liability coverage protects against scenarios like this.

The bottom line is that while crypto insurance options are still limited, the industry is evolving quickly. If owning digital currencies, it’s a good idea to explore the policies available to find one that meets your needs and risk tolerance. Crypto may be a risky asset, but insurance can help provide some peace of mind.

What Is Crypto Insurance and How Does It Work?

So what exactly is crypto insurance and how does it work? Crypto insurance provides coverage for cryptocurrency holdings in the event of theft, hacks, or other losses.

Several crypto insurance companies now offer policies to protect digital assets. Here’s how most policies work:

  1. You provide details about the types and amounts of crypto you hold in order to get a quote for coverage. The more crypto you have, the higher the premium.
  2. If approved, you pay an annual premium to the insurance company to maintain coverage. Premiums vary but typically start around 1-3% of the insured amount per year.
  3. Your policy specifies the risks covered and amounts insured for each cryptocurrency. Standard policies usually insure against hacks, thefts, and scams but not market losses.
  4. If one of your insured risks occurs, you file a claim with the details of what happened. The insurance company investigates to verify the loss before paying out the claim based on the limits of your policy.
  5. Claim payouts are usually made in USD at the value of the lost crypto at the time of the loss. Some policies may pay out in the actual cryptocurrency if it can be recovered.

The crypto insurance market is still new but growing fast. As with any insurance, do your research to find a reputable company that offers the right coverage for your needs at an affordable rate. Crypto insurance provides an extra layer of protection so you can invest in digital currencies with more confidence.

Leading Providers of Cryptocurrency Insurance


Coincover is a popular cryptocurrency insurance provider that offers coverage for individuals and businesses. They provide insurance for over 50 major cryptocurrencies including Bitcoin, Ethereum and Litecoin. Coincover uses a proprietary algorithm to provide quotes based on a number of factors like the value of your holdings, the type of storage used and security measures in place. Premiums typically start around 0.5% of the insured amount.


BitGo is a leading cryptocurrency security and insurance provider. They provide $100 million in insurance coverage for digital assets held in their BitGo custody wallets. The insurance policy covers losses from external theft, internal fraud or other malicious hacks. BitGo uses a multi-signature system, KYC procedures and other security controls to minimize risks. The insurance is provided at no additional cost for assets stored in their custodial wallets.



Gemini is a popular U.S.-based cryptocurrency exchange and custodian. They provide insurance coverage for digital assets held in their Gemini custody program. The insurance covers loss of customer funds from theft, unauthorized transfers or other criminal activity. Gemini works with major underwriters like Aon and Marsh to provide $200 million in coverage for its custody clients. While the insurance is not free, Gemini aims to provide coverage at competitive rates for clients.

Kingdom Trust

Kingdom Trust is an alternative asset custodian that provides insurance for a wide range of digital assets including cryptocurrencies, utility tokens and security tokens. They offer customizable coverage amounts up to $50 million for assets held in their cold storage vaults. Kingdom Trust uses a variety of security controls like multi-signature technology, KYC procedures and physical vaults to minimize risks. Premiums for their insurance plans vary depending on the amount of coverage needed and assets being insured.

What Does Cryptocurrency Insurance Typically Cover?

Cryptocurrency insurance typically covers a few major areas. The specific coverage will depend on your insurance provider and policy details, but you can generally expect the following:


Lost or Stolen Digital Assets

If your cryptocurrency holdings are lost, hacked or stolen, insurance may reimburse you for the value of the lost assets. This could include coverage for losses from cyberattacks, unauthorized access to your digital wallets or exchanges, or the loss of private keys.

Transaction Errors

Insurance may cover losses from erroneous cryptocurrency transactions, like sending funds to the wrong wallet address. While the blockchain is immutable, meaning transactions can’t be reversed, insurance can help recover the value of assets sent in error.

Website & Exchange Collapse

If a cryptocurrency exchange or wallet service is hacked or goes out of business, insurance may cover the value of assets lost. This could provide peace of mind when using smaller or lesser-known platforms and services. However, insurance likely won’t cover losses from outright fraud or scams.

  • Do your research to find a reputable insurance provider familiar with cryptocurrency and digital assets.
  • Make sure you understand exactly what types of losses are and are not covered under your policy.
  • Consider coverage limits and costs to find a policy that fits your needs and risk tolerance. Higher coverage will typically mean higher premiums.
  • Disclose details about how and where you store your cryptocurrency holdings to avoid issues with claims being denied for lack of information.
  • Stay up-to-date with your policy as cryptocurrency insurance offerings continue to evolve along with the technology and market.

In summary, cryptocurrency insurance aims to provide coverage for unforeseen circumstances like accidents, errors, and events outside of your control. But as with any insurance, it’s important to go in with realistic expectations about what types of losses may or may not be covered. Doing your due diligence upfront can help ensure you have coverage that truly meets your needs.

How Much Does Crypto Insurance Cost?

The cost of crypto insurance depends on several factors, including the value of your holdings and the level of coverage you want. Rates are often calculated as an annual percentage of the total value insured.

Basic Coverage

For basic “hot wallet” coverage to protect against theft or hacking of digital assets in online storage, you can expect to pay between 0.5% to 2% annually of the value insured. So if you have $50,000 in Bitcoin, for example, basic coverage would cost $250 to $1,000 per year.


Broader Coverage

For more comprehensive coverage that also protects “cold storage” like hardware wallets or paper wallets, as well as physical damage or loss, rates are typically 2-5% of the total value insured each year. Using the same $50,000 Bitcoin example, you’d pay $1,000 to $2,500 annually for robust coverage.

Some providers offer customizable plans so you can pick and choose the types of coverage based on your needs. The more extensive the coverage, the higher the premium. It may be worth it, though, for the peace of mind and financial protection it provides for your digital assets.

Factors Impacting Cost

Several factors determine your exact crypto insurance rate:

  • Value insured – The more your holdings are worth, the higher the premium.
  • Level of coverage – Plans protecting just “hot wallets” are cheaper than those covering “cold wallets” and physical risks.
  • Deductibles – A higher deductible, like $10,000 versus $1,000, can lower your premium.
  • Type of coins insured – Coverage for major coins like Bitcoin is often cheaper than for lesser-known altcoins.
  • Reputation – Rates may be lower from established, specialized crypto insurers versus new companies.
  • Location – Where you and your digital assets are located can also impact costs due to differing regulations and risks.

Crypto insurance is still a nascent industry, so rates and options may change over time. But with increasing threats to digital assets, the cost of coverage today could be far less than the cost of a hack or loss tomorrow without that protection.


So there you have it. Cryptocurrency insurance is an emerging option for protecting your digital assets. While it may not cover every scenario, it can provide some peace of mind if you do your research and find a reputable provider. The key is understanding exactly what’s covered and what’s not before signing on the dotted line. As with any insurance, you want to make sure the coverage and costs align with your needs and risk tolerance. Cryptocurrency is a volatile market, but with some safeguards in place you can invest with more confidence knowing you have a backup plan if anything goes awry. The future of digital currency is still unclear, but with companies working to provide specialized insurance for this new asset class, at least some of the uncertainty can be managed.

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