Most homeowner’s policies have a small sublimit for currency and coins stored in a home, typically around $500. However, that coverage does not extend to cryptocurrency or cyber tokens for physical goods. There are a few special circumstances that a homeowner’s policy will cover personal property outside of the home, but that is the exception, not the rule. Individuals looking for coverage for theft of crypto or cyber tokens will need to get a personal cyber policy or crypto insurance. Your policy contract will specific the coverage amounts and covered perils. It’s important to note that personal cyber policies covering cryptocurrencies is uncharted territory for most insurers, investors and courts, meaning that a favorable decision on a claim can be risky. Be sure you fully understand the coverage your policy offers by reading the declarations page in your policy.
Though currently difficult to find, crypto insurance for individual investors typically focuses on protecting assets held in online wallets. It usually includes events outside investors' control, such as theft, cyberattacks and transaction errors. Most individual investors purchase coverage directly from custodians or exchanges, not traditional insurance companies.
For individuals seeking insurance for self-custody wallets outside of what custodians and exchanges offer, there are very few options. It may be possible to find an insurer that sells “custody insurance,” which can insure against theft, hacks and errors.
These policies may also include coverage for investor failures, such as forgetting a seed phrase or password, according to the crypto price-tracking website CryptoMarketCap.com. The types of cryptocurrencies eligible for self-custody insurance might also be restricted. For these types of policies, you would need to use an insurance agent.
Because the crypto market is undeveloped in terms of claims data and regulation, the insurance industry doesn’t offer many products. And those that do exist can be expensive, especially for self-custodied assets. Nonetheless, if you have extensive holdings or use cryptocurrency as a retirement asset, you should consider insurance of some kind.
As the market and investment options develop, you will likely have more options. But for now, the risk of loss remains difficult to insure. Contact your insurance agent for guidance.
