Digital Assets, Crypto & Blockchain insurance

Cyber liability insurance is a type of operational insurance coverage that helps protect businesses from the financial losses and liabilities associated with cyber-related risks and events. Cyber insurance is designed to address the growing threat of cyberattacks, data breaches, and other cyber incidents. 

A cyber policy would not cover theft of private keys  - see Crime or Digital Asset Vault insurance tab

Tech E&O

For a company involved in the cryptocurrency or blockchain sector a key consideration could be technology (tech) errors & omissions (E&O).  Companies tend to rely heavily on technology, coding and AI, an error in your software could result in financial losses to a third party (client) arising out of your negligence or professional error.

Tech E&O transfers the risk of exposure for technology related issues off the company’s balance sheet.

Commercial crime insurance, also known as crime insurance or fidelity insurance, is a type of operational insurance coverage that protects businesses from financial losses resulting from various internal/external fraud incidents, such as theft, fraud, embezzlement, forgery, and employee dishonesty.

Coverage examples

• Employee dishonesty: As a digital asset exposed firm that handles sensitive financial transactions, employee dishonesty can pose a significant risk. Commercial crime insurance can provide coverage in case employees engage in fraudulent activities, such as embezzlement or theft of funds, fiat or crypto.
   
• Computer fraud: The digital assets industry is susceptible to cyber crime threats, including hacking, phishing, and other forms of online fraud. Commercial crime insurance may cover losses resulting from unauthorised access to computer systems, electronic theft, or social engineering attacks.
   
• Social engineering fraud: A cyber incident can have reputational consequences. Cyber insurance may cover the costs of hiring public relations experts and crisis management teams to help mitigate damage to the firm's reputation.
   
• Regulatory and legal costs: If a firm experiences a cyber incident that leads to regulatory fines or legal actions, cyber insurance can help cover the costs of legal defense and regulatory penalties.

For more information, see our crime insurance page

The digital asset vault insurance solution provides coverage for loss of digital assets from internal / external theft, damage, or destruction of private keys, which are stored in physical vaults. This sector of the insurance market, known as the specie market, has been providing solutions for decades, with focus on coverage for rare metals, or valuable items stored in vaults. Therefore, with the rise of digital assets and the continued importance of security, the market has naturally evolved to provide more than GBP1bn capacity to protect these digital assets that operate in cold/warm environments, however, are physically stored in deep cold physical vaults, or in transit.

Benefits of coverage

• Named perils: Coverage is provided for the loss, damage, or destruction of private keys as a result of perils such as fire, flood, windstorm, earthquake and other natural perils.
   
• Internal fraud: Coverage is provided for the loss, damage, or destruction of private keys due to deliberate and/or dishonest acts of the Insured’s employees operating in the role of a designated custodian.
   
• External fraud: Coverage for losses arising out of the copying and/or theft of private keys by third parties physically present at the location(s) where the hardware is utilised by the insured in the generation, storage and retrieval of private keys.

Professional indemnity insurance (PII), also known as professional liability insurance or errors and omissions (E&O) insurance, is a type of operational insurance coverage designed to protect businesses from financial losses arising out of claims relating to wrongful acts committed in the business’s provision of professional / technology services.

For more information, see our professional indemnity page

Blockchain networks using proof-of-stake as a consensus mechanism rely on validator nodes to maintain the security of the network and create / confirm new blocks on the chain. Slashing refers to the penalty mechanism imposed on validators for malicious behaviour or network rule violations. Validators may lose a portion of their staked tokens (cryptocurrency) as a penalty for actions that harm the network, such as attempting double-spending or other forms of misbehaviour.

Slashing insurance provides coverage for the financial losses resulting from penalties imposed on validators by the network for violating the rules of the blockchain. Importantly, the coverage will react in the event of an errors & omissions type incident rather than actions of an intentional bad actor.

Benefits of coverage

• Meet contractual requirements: Digital asset firms often deal with large amounts of sensitive information, including customer data and transaction details. If a firm experiences a data breach where this information is compromised, cyber insurance can help cover the costs associated with managing the aftermath of the breach.
   
• Business interruption: Coverage for when a slashing event results in a suspended node and therefore missed financial returns.
   
• Litigation defence costs: If a third party were to file a lawsuit claiming financial losses due to negligence of node operation, the legal costs associated with defending against such claims could be covered by the insurance policy.

Smart contract  failure insurance provides financial protection against losses resulting from failures or vulnerabilities in smart contracts. Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They are often used in blockchain-based applications and cryptocurrency transactions.

For example, an organisation that holds tokens deposited in a smart contract might, for example, purchase insurance cover to protect against those assets being drained through an error in the code.

Property insurance for crypto miners is a type of insurance coverage designed to protect the physical assets and property of businesses engaged in cryptocurrency mining activities. It aims to provide financial protection in case these assets are damaged, destroyed, or lost due to covered perils.

Benefits of coverage

• Equipment coverage: Coverage for the physical mining equipment, such as ASIC miners, GPUs (Graphics Processing Units), cooling systems, and other hardware used in the mining operation.
   
• Business interruption: If a covered event leads to the temporary shutdown of the mining operation, resulting in financial losses, this coverage can help compensate for lost income during the restoration period.
   
• Theft or burglary: Coverage is typically provided for losses due to theft or burglary of mining equipment. This can include coverage for stolen equipment and any property damage caused during the theft.
   
• Natural disasters: Coverage may extend to damage to mining equipment caused by natural disasters such as earthquakes, floods, or other catastrophic events.
   
• Power surges and electrical damage: Coverage may extend to losses resulting from power surges, electrical fires, or other electrical damage to mining equipment.
   
• Transit coverage: If mining equipment needs to be transported for maintenance or relocation, insurance may provide coverage for potential damage or loss during transit.