The cryptocurrency market was designed to be unregulated on purpose, but that’s not stopping individuals and corporations alike from demanding that the insurance industry provide options to cover the risks of their investments into digital assets. If your organization has decided to diversify its portfolio and invest in cryptocurrencies like Bitcoin, Ethereum and Monero, it is imperative that you consider purchasing cryptocurrency insurance for your business.
Due to the cryptocurrency market’s high-risk potential, volatility, unregulated nature, and relatively short track record, some insurance companies are hesitant to – or simply will not – provide cryptocurrency coverage for investors and businesses.
However, slowly, the insurance industry is warming up to the cryptocurrency market, and some insurers are beginning to write coverage for cryptocurrency into some business policies.
It is possible for cryptocurrency insurance to be written into standalone policies or to be included in general business insurance (such as Directors and Officers and Errors and Omissions), Crime Insurance, Custody Insurance, and/or Decentralized Finance (DeFi) insurance policies HCP National Insurance Services helps businesses secure correct and high-quality insurance coverage for their cryptocurrency – at the best prices possible.
Whether you have a small business or large corporation, below are some of the coverage types you should consider to help protect your business’s cryptocurrency investments.
Cryptocurrency needs to be stored somewhere, whether in a crypto wallet, on the cryptocurrency exchanges, or in an online platform of some kind. If you lose access to your cryptocurrency (for example, if you somehow lose access to your crypto keys or if the business holding your assets goes out of business), then Custody Insurance may save the day.
It is estimated that around 20% of existing Bitcoin is either lost or stranded in wallets without known passwords (1). As of May 2021, investors’ accumulated lost Bitcoin is equal to roughly $185 billion (USD). It is likely this Bitcoin will never be recovered.
A custody insurance policy for cryptocurrency could include crypto key storage, key recovery, and disaster recovery so that your business does not lose access to its Bitcoin and other digital currency forever.
When there is an act of dishonesty, theft, robbery, destruction, fraud, or cyber fraud, Crime Insurance (or Fidelity Insurance) can cover a businesses’s claims for the loss of money, securities, inventory, and other assets – such as digital assets, like Bitcoin, Ethereum, and other cryptocurrencies.
In the cryptocurrency market, theft and fraud are rife, and businesses are often surprised by how often having a crime policy comes in handy.
It is critical to protect your company and its digital assets against crime and theft by purchasing the correct insurance policy. An experienced commercial insurance broker can help you choose the proper coverage and ensure that your company’s cryptocurrency is safe.
Some common lines of business insurance, such as Directors & Officers (D&O) and Errors & Omissions (E&O) – also known as Professional Indemnity Insurance – can apply to a business’s digital assets and cryptocurrency portfolio.
These coverages are becoming increasingly difficult for businesses to obtain, but they are absolutely necessary; in turn, making hiring an expert insurance broker of utmost importance.
DeFi for cryptocurrency is also known as smart contract insurance because it covers smart contract failure. When it comes to cryptocurrency, smart contracts are essentially programs stored on a blockchain that run when specific conditions are met. Usually, smart contracts automate the execution of agreements, so that transactions are made immediately, securely, and transparently, without any intermediaries or loss of time.
A DeFi insurance policy for cryptocurrency will help make sure that the currency’s software is unhackable and executing trading and all other transactions properly, as per the smart contract conditions.
This type of policy may seem less significant, but in the face of hackers, it is necessary to ensure your business’s digital financial assets are safe.
Engaging an expert commercial insurance broker will ensure that your organization secures the best coverage for its digital assets at the best price possible. If your company has made an investment into crypto – whether large or small – it is in your best interest to ensure its protection through insurance coverage.
Since its founding in 1994, HCP National has been a pioneer in the commercial insurance industry, known for placing difficult coverage and creating new insurance products when the standard insurance market does not meet clients’ unique needs. HCP National can help ensure that your corporation’s digital assets are safe.
Contact HCP National to discuss cryptocurrency insurance for your business and to receive a quote.
Can a business invest in cryptocurrency?
Yes, businesses can invest in cryptocurrency through corporate crypto exchanges. Notable corporations that have recently purchased large sums (amounting to millions, and even billions, of dollars worth) of Bitcoin and other cryptocurrencies include Square, MicroStrategy, and Tesla.
Does anyone insure crypto?
Policies offering insurance for cryptocurrency are relatively new, but there are a few different carriers offering coverage for your business’s crypto assets. There are a few different types of policies your business should consider, including crime, custody, decentralized finance, directors and officers, and errors and omissions policies. HCP National can help you secure the best coverage of your financial assets for the lowest premium.
Which types of coverage protect cryptocurrency investments?
The most common policies protecting corporations’ cryptocurrency assets, such as Bitcoin and Ethereum, include general business policies (like E&O and D&O), crime, custody, and decentralized finance policies.
HCP National Insurance Services, Inc. (HCP) is an independent privately held commercial insurance brokerage founded in 1994 serving clients nationwide.
It is one of the largest brokerages in the country of its kind led and owned by a certified minority (MBE) woman (WBENC), Andrea “Cris” Dyer. As a broker, we know the risk exposures of investing in cryptocurrency and we know how to insure it. The above is a general discussion about how coverages may work. Your insurance policy and all addendum are the only authority of how your coverage works. Do not rely on this webpage as an explanation of your coverage. Have your attorney review your entire policy with you to determine what is and is not covered. This webpage does not alter or change coverage, nor is meant as legal advice.