insurance for bitcoin

Insurance for Bitcoin: 3 facts startups need to know

Generic placeholder image
Matt McKenna

Underwriting Manager

Bitcoin has been occupying the news but unless your only interest is today’s this minute’s price, there are still plenty of unanswered questions for startups. Jamie Dimon calls Bitcoin investors “stupid” and John McAfee says the price is going to $1 million by 2020. Meanwhile the grey area in-between is filled with noise.

So we want to hit the pause button, take a step back and look at a very simple question. It’s one that startups ask us all the time:

Can I purchase insurance for Bitcoin?

(Spoiler alert: yup!)


1. You can purchase insurance for Bitcoin theft

It might come as a surprise but insurance companies have been offering this coverage for over three years. They probably wish they accepted premiums in Bitcoin back then but, even still, they’re doing just fine. That’s because insurers are making valuable changes to their old crime insurance policies.

Traditionally, crime insurance would apply to cash, securities or valuable physical objects. If an employee embezzled cash or a burglar stole computers, the crime policy would respond. The addition of computer fraud coverage over the past couple decades then opened the door to new type of assets. Certain carriers are now willing to offer limited coverage when an employee or a hacker steals Bitcoin from your system.


2. Insurance can cover Bitcoin ransom payments

Keep an eye out for the next cyber extortion news story…chances are the ransom will need to be paid in Bitcoin. (Here’s a big example). This is when hackers breach your security and lock you out. Oftentimes they’ll encrypt your data and threaten to delete or publicize it after a certain amount of time if the ransom isn’t paid.

Short on Bitcoin? If you have the right insurance policy, that’s not a problem. The right cyber insurance policy will specifically say they’ll cover ransom payments made in Bitcoin. Considering the volatility we’re seeing in the crypto market, it’s good to know that you don’t need to maintain a hefty wallet in order to properly manage risk. (Important note: your insurance policy is going to be valued in USD for the foreseeable future so FX risk will still exist).


3. Startups with higher cryptocurrency exposure may have higher management liability risk

Speaking of volatility, what happens if the Bitcoin “bubble” bursts? According to some analysts, it’s a matter of when and not if. We’ll leave that kind of theorizing to the crypto experts. What we can tell you: if a company carries a large amount of a certain asset on its balance sheet and (as the “industry experts” had been warning all along) that asset suddenly plummets in value, their investors may sue.

Fortunately we haven’t run into a situation like this yet but it would be a classic case of investors alleging breach of duty of care. This is especially important for hedge funds and other investment vehicles, but any company with crypto investments and shareholders/external investors bears this risk.

The solution to this problem is directors & officers insurance. D&O is designed to cover the legal bill and any judgements or settlements if your investors sue you for failing to uphold certain duties.


(Bonus) Cryptocurrency is going to make insurance better

The insurance industry is going crazy over cryptocurrency. Ethereum, in particular, has major carriers throwing money at it because the blockchain’s utility could extend well beyond simple currency. The development of distributed applications (daaps) and the refining of smart contracts could provide rapid and secure “if-then” solutions across platforms and industries. Already, insurer AXA is using the network to create a flight delay insurance product, fizzy.



Want to know more? Talk to us!  You can contact us at or create an account here in order to get started on a quote. 


Related Articles

December 1 • Directors & Officers

Risk Management Insights: Q3 2021—D&O Insurance Updates

With Q3 2021 wrapped up, let’s review a few critical D&O insurance trends that emerged and what updates public and late-stage companies can expect in Q4.

October 26 • Directors & OfficersInsurance Pro Tips

What’s the Role of a Commercial Insurance Broker?

A commercial insurance broker plays a vital role in finding the best coverage for your company—but what exactly is that role? Let’s discuss.

cyber liability_crime_insurance
October 12 • Crime InsuranceCyber Liability

What’s the Difference Between Crime and Cyber Insurance?

Plenty of overlap occurs between crime and cyber liability insurance. Let’s review the similarities and differences in these policies for startups, or even small business or mid-market company.

October 5 • Directors & OfficersNews

What We Can Learn From Twitter’s $809.5M SEC Settlement

Twitter’s record-breaking SEC settlement raises some critical questions about D&O insurance. Let’s review lessons for high-growth startups.

July 26 • Directors & OfficersEPLIErrors & OmissionsFiduciary LiabilityGeneral LiabilityRepresentations and Warranties Insurance

Post-Acquisition Insurance & M&A Risk Management Guide

Late-stage companies sometimes overlook post-acquisition challenges, but they still pose a problem. Here’s how to navigate these tricky situations.

May 12 • Directors & OfficersGeneral LiabilityRisk Management Tips

Understanding the 5 Steps of a Risk Management Process

Late-stage companies and small businesses need a risk management process — but how do you accomplish this task? Here’s some expert advice on the matter.