Cryptocurrency has revolutionized the way we handle money, but with innovation comes new risks. From exchange hacks to wallet breaches and lost private keys, digital assets are vulnerable in ways traditional investments aren’t. That’s why more investors are looking to buy crypto insurance—a specialized form of protection for your digital wealth.
In this comprehensive guide, we’ll explain what crypto insurance is, why you need it, how it works, and where you can purchase a policy, especially if you’re based in the UK or USA.
What is Crypto Insurance?
Crypto insurance is a policy that provides coverage against specific risks associated with cryptocurrencies. These include:
- Hacks and cyberattacks
- Theft or fraud
- Loss of private keys
- Exchange insolvency
- Custodial service failures
Unlike traditional bank accounts, crypto wallets don’t have government protection (like FDIC in the US), making third-party insurance crucial for serious investors.
Why Buy Crypto Insurance?
1. Protection Against Exchange Hacks
Even top exchanges like Binance and Mt. Gox have been hacked. Insurance helps you recover stolen assets.
2. Wallet Security
If your cold wallet or software wallet is compromised, some policies will reimburse losses.
3. Peace of Mind
Institutional investors and serious holders want to protect their digital portfolios just like real estate or stocks.
4. Business Requirement
Crypto-related companies often need insurance to build credibility and comply with regulations.
Types of Crypto Insurance Policies
1. Custodial Wallet Insurance
Covers loss of crypto while held by a third-party wallet provider.
2. Smart Contract Coverage
Protects against bugs or exploits in DeFi smart contracts.
3. Exchange Insurance
Offered by some exchanges to protect against internal theft or hacks.
4. Personal Wallet Insurance
Policies available for individual investors using hot or cold storage.
Best Crypto Insurance Providers (UK & USA)
USA-Based:
- Coincover – Offers wallet protection and recovery solutions. Visit Coincover
- Evertas – Specializes in underwriting crypto insurance for institutions. Visit Evertas
- BitGo – Offers up to $100M in coverage for crypto held in its custody. Visit BitGo
UK-Based:
- Coincover UK – Covers theft, fraud, and lost access. FCA-registered.
- Nexus Mutual – A decentralized insurance provider for DeFi risks. Visit Nexus Mutual
- Elliptic – Focuses on anti-money laundering and risk mitigation for crypto companies. Visit Elliptic
What Does Crypto Insurance Cost?
The cost depends on:
- Type of policy (individual vs. business)
- Level of coverage
- Provider
- Risk exposure
Typically, premiums range from 0.5% to 3% of the insured value annually. Institutional policies can cost more depending on assets and storage type.
How to Buy Crypto Insurance
- Assess Your Risk – How much crypto do you hold? Is it stored with a third party?
- Compare Policies – Use platforms like Coincover or consult insurance brokers.
- Check Reputation – Look for underwriters like Lloyd’s of London backing the policy.
- Get a Quote – Many providers allow online quote generation.
- Read the Fine Print – Understand exclusions, claim process, and payout limits.
Common Exclusions to Be Aware Of
- Losses due to personal negligence
- Unverified smart contracts
- Assets not covered in the policy
- Self-custody wallet breaches (some providers exclude hot wallets)
Real-World Example
In 2022, a small business in Texas lost $80,000 worth of crypto in a phishing attack. Thanks to a Coincover policy, the business recovered 90% of its losses within 45 days. This case shows how buying crypto insurance can be a lifeline.
FAQs About Crypto Insurance
Q1. Can individuals buy crypto insurance?
Yes. Platforms like Coincover offer personal wallet protection.
Q2. Is crypto insurance regulated?
Not directly. However, many providers work with licensed insurers like Lloyd’s of London.
Q3. Do crypto exchanges carry their own insurance?
Some do. Always check their terms or FAQs.
Q4. Is it worth buying insurance for small crypto holdings?
If you’re holding less than $1,000, it may not be cost-effective. For higher amounts, it adds peace of mind.
Final Thoughts
As crypto continues to grow in adoption and value, protecting your assets becomes critical. Buying crypto insurance is a smart step for both individual investors and businesses in the USA and UK.
While the market is still developing, several credible options now exist to help you hedge your risks. Take time to research, compare policies, and choose the best provider for your digital asset protection.
