December 18, 2019

What is Cryptocurrency Insurance?

An introduction to theft protection for digital currencies.

Cryptocurrency insurance covers the loss of cryptocurrency from theft resulting from cyber attacks, hacks and scams.

With so many risks associated with cryptocurrencies and so many high-profile thefts you would expect cryptocurrency insurance to be a lot more common than it is. Like most insurance, the price of cryptocurrency insurance is determined by the level of risk.

At its most basic level, insurance is protection from a possible financial loss.

Key elements in pricing cryptocurrency risk are:

1.      Exposure – how much you want to cover

2.      Security – where your funds are held and what security measures are in place

3.      Claims history – how often you or where you hold the cryptocurrency have been targeted

4.      Fraud and credit risk – your history of fraud,crime and creditworthiness.

The insurance industry has been slow to meet the demands of consumers. Insurers are cautious about insuring such a relatively new asset with such a high-risk reputation.

Very little is known about the market and the underlying technology by the majority of insurers. Limited data is available to assess the level of risk and define what is covered and there is no clear regulatory framework.

Until now this has meant cryptocurrency insurance has been very expensive and difficult to find as many insurers have adopted a wait and see approach, preferring not to be first to market. Those insurers that are offering cryptocurrency protection have focused on insuring businesses where they can more easily assess risks are managed and minimum levels of security are in place.

Insurance in the cryptocurrency market

To understand what insurance you are actually getting from your exchange or wallet, you need to look more closely at what is covered.

Nearly all insurance in the market today it is the platform that is being insured and not you, the individual.

An increasing number of high-profile cryptocurrency wallets,exchanges and custodians are announcing that they are insured. This is of course important for customer confidence in these businesses, the technology and the wider cryptocurrency market. In most cases, from Coinbase to Ledger, it is the platform that is being insured and not you, the individual.

  1. Ledger’s recently-announced $150M policy covers third-party theft of private keys in the event of a physical breach of a hardware security module (HSM) in one of its data centres, in the on-boarding process when keys are generated, and insider theft. It does not cover theft via a third-party remote hack or to you as individual.
  2. Coinbase also now has a $255M insurance policy to cover the 2% funds it holds on line. As a Coinbase customer, you are protected in the event of a third-party remote hack on the Coinbase exchange but not in the event of a hack on your own personal account.

Insured exchanges and wallet providers are an essential development in the evolution of cryptocurrency but where does that leave you when your account is hacked?

Insurance shouldn’t be just for the platform it should insure you personally against theft.

Coincover is changing the way you insure your cryptocurrency

Coincover is different. We protect individual and not the platform. Theft Cover is the first and only personal insurance protection for cryptocurrency. If your account is hacked and your funds stolen we will pay out the value of the funds stolen at the time of the theft.

We believe this is the best way to hold your cryptocurrency because we insure you directly so you only pay for the cover you need. In addition you don’t have to share passcodes or keys with anyone so retain direct ownership and can never be denied access to your own funds.

And if the worst does happen, you can be assured we will help turn a bad situation into a better one. Our premiums start from as little as 1% per year with cover levels to suit all needs. We accept payment in Bitcoin, Ethereum and Fiat currencies.

Visit https://www.coincover.com/theftcover to learn more.

Up Next Part 3: Consumer Cryptocurrency Insurance