In 2008, there was a rumour going around that singer Tom Jones had insured his chest hair for $8 million. Everyone bought into it at the time, after all, it’s not unusual to see celebrities insuring their trademark assets. And Tom Jones’ chest hair? Well… undeniable.
But chest hair isn’t the only thing worth protecting. Some may say that protecting your cryptocurrencies may be even more important than Tom Jones’ hairy chest. In fact, crypto insurance is a growing sector, and it provides another layer of financial protection for investors venturing into crypto. So here’s why crypto insurance is suddenly worth taking seriously.
Crypto Insurance Explained
At first, cryptocurrency insurance seems like an absurd concept. But once you understand what it is about, it makes complete sense.
So let’s get one thing out of the way before diving deeper. As unfortunate as it is, there’s no insurance policy for “bought the top.” For that, you still need to be a savvy trader with the best risk management strategies.
However, if you are a victim of fraud, hack, theft, smart contract exploits, or even losing access to your digital asset due to a failed custodian, you might be covered—if you’ve got the right crypto insurance policy in place.
Companies offering crypto insurance services can protect you from specific technical or criminal incidents that have become all too common in the Web3 world.
How to Insure Cryptocurrency
Cryptocurrency insurance can be either centralized or decentralized. While both aim to achieve the same goal, to offer insurance to digital assets against hacks, theft, and network failures, they generally operate in different ways:
1. Centralized Insurance:
Centralized crypto insurance functions similarly to traditional insurance in the “real” world. Cryptocurrency exchanges like Coinbase or third-party insurers can cover your assets, protecting them from any potential mishap, in exchange for a fee. These policies are often built into the platform and protect custodial wallets.
2. Decentralized Insurance:
This type of digital asset protection is native to the Web3 ecosystem, operating via smart contracts and often governed by communities or DAOs (decentralized autonomous organizations).
For centralized cryptocurrency insurance, more often than not, simply for being a client, you’re guaranteed insurance from hacks, thefts, or platform malfunctions. Take the FTX collapse, for example: despite the chaos, investors are still legally entitled to repayment, and the bankrupt exchange is actively working to return funds to customers.
On the decentralized side, users take a more active role. You visit a platform like Nexus Mutual or InsurAce, connect your wallet, and choose what you want to insure—whether it’s a DeFi protocol, a stablecoin, or a bridge. You pay for coverage using crypto, and the terms (duration, payout limits, exclusions) are enforced by smart contracts. If something goes wrong, claims are reviewed and voted on by the community.
So, how do you actually insure your crypto?
1. Decide what you want to protect—your exchange account, DeFi exposure, or wallet.
2. Choose a provider—centralized (like Breach Insurance) or decentralized (like Nexus Mutual).
3. Purchase coverage—either automatically through your platform or manually via a Web3 protocol.
4. Understand the exclusions—most policies won’t cover user mistakes or market losses.
5. Know how to file a claim—especially important in decentralized systems where governance votes may be required.
Best Crypto Insurance Providers
Evertas
- Type: Centralized
- Highlights: Backed by Lloyd’s of London; institutional coverage up to $360M
- Focus: Exchanges, custodians, asset managers
Breach Insurance
- Type: Centralized
- Highlights: Regulated U.S. provider; offers Crypto Shield Pro
- Focus: Individual investor protection; hacks, scams, exchange downtime
Nexus Mutual
- Type: Decentralized
- Highlights: DAO-governed; smart contract & custodian coverage
- Focus: DeFi protocols, staking platforms, custody risk
InsurAce
- Type: DeFi
- Highlights: Multi-chain support; stablecoin de-peg protection
- Focus: Smart contracts, bridges, custodian failure
Coincover
- Type: Wallet-focused
- Highlights: Real-time fraud detection, recovery services
- Focus: Individual wallets; key loss, theft mitigation
Digital Wallet Insurance
Digital wallets are the primary tool for holding crypto. While they can be incredibly secure if you implement the best safety measures, wallets can also be prone to external attacks that may leave investors vulnerable. Fortunately, both hot and cold wallets can be insured.
Providers like Coincover and Canopius offer services that protect against unauthorized access, theft, and even help recover lost keys. Coverage varies—some plans are embedded into wallet infrastructure, while others can be purchased separately and tailored to your wallet type and usage. Rather than replacing user error, these services aim to reduce the financial impact when something does go wrong.
With that said, cold wallets are generally easier to insure and attract higher coverage limits, due to them being less prone to attacks. But hot wallet coverage is also available by companies like Coincover, but its focus is usually on fraud detection, transaction monitoring, and recovery services, rather than full reimbursement for every type of loss.
Crypto Theft Protection
There are billions of dollars being stolen every year in the cryptocurrency sector. It is an unfortunate reality of the industry, and it’s one that continues to grow as adoption increases. From phishing scams and SIM swap attacks to malware and insider theft, the methods used to steal crypto are becoming more sophisticated, but fortunately, so are the ways investors can protect themselves from attacks.
And insurance plays a critical role in mitigating these risks. Centralized exchanges like Coinbase maintain crime insurance to protect against breaches of their infrastructure, while wallet-focused providers such as Coincover offer theft reimbursement and fraud detection services for individual users.
Insurance for Bitcoin and Ethereum
As the two top cryptocurrencies in the market, it makes sense that Bitcoin and Ethereum are also the most insured digital assets. Bitcoin, as a proof-of-work asset, is typically held in cold storage and insured against theft, custodial breaches, or key loss.
Ethereum, now proof-of-stake, introduces additional insurable risks such as validator slashing and downtime penalties, especially significant for staking providers and institutions that run nodes in the Ethereum network.
Institutional players like ETF managers, custodians, and other crypto funds often insure large amounts of BTC and ETH. Coverage limits for these assets can range from $10 million to over $300 million per policy, depending on custody setup and risk exposure.
Web3 Insurance Solutions
Web3-native insurance protocols are changing the game when it comes to protecting on-chain users from harm. With the power of the blockchain, leveraging smart contracts and DAOs, these solutions aim to make insurance more transparent, automated, and effective across entire networks.
Decentralized insurance relies on the effectiveness of smart contracts, where every claim is automated, while governance is typically handled by DAOs.
DeFi insurance platforms are often seen as far more transparent, as all policies and claim logic are displayed for everyone. The fact that it is accessible worldwide via the blockchain can also be seen as a benefit, as it ensures everyone can take part.
Key Projects
- Web3Shield: Offers one-click insurance for crypto bridges and restaking platforms. It provides coverage for bridge hacks, transaction delays, and relayer failures, with integration options for dApps and browser extensions.
- Etherisc: A pioneer in decentralized insurance, Etherisc enables the creation of custom insurance products—like flight delay or crop insurance—using open-source smart contracts and community governance.
- Nexus Mutual: Though already mentioned, it’s worth noting again as a foundational Web3 insurance DAO covering smart contracts, custodians, and staking risks.
- Bridge Mutual: Peer-to-peer model for smart contracts, exchanges, and stablecoins; governed by BMI token
- Unslashed Finance: Focused on staking and validator insurance; also covers oracles and exploits
NFT Insurance Coverage
NFTs are shaping up to become far more than just digital collectibles. They are becoming high-value assets under a technology that leverages blockchain to completely redefine the art industry as we know it.
With that in mind, making sure a highly valuable NFT is safe and insured seems like a great idea. Because of that, NFT insurance is emerging to cover risks like theft, loss of access, and metadata corruption, especially for assets stored off-chain or on vulnerable platforms.
Collectors, marketplaces, and creators are all potential beneficiaries. Providers like Evertas and Breach Insurance offer tailored policies, often backed by traditional insurers like Lloyd’s of London. These policies may reimburse NFTs, assist in recovery, or even cover damages to the digital file itself.
Crypto Exchange Insurance Policy
Most centralized exchanges today offer some sort of insurance or guarantee. But it is important to understand what is actually being covered in each platform.
Typically, exchanges will protect users in the event of internal breaches, infrastructure failures, or even platform hacks. If your funds were lost and it wasn’t your fault, chances are that your crypto exchange is legally obligated to refund or come up with a recovery plan.
Binance, the largest crypto exchange in the world, maintains the SAFU fund (Secure Asset Fund for Users). This reserve is built from a portion of the exchange’s trading fees and is used to cover extreme cases like platform hacks. Meanwhile, Coinbase holds a ‘crime insurance policy’ fund worth over $200 million, and it is used to cover any potential breaches to its custodial infrastructure.
Still, these protections have limits. In the FTX collapse, the platform claimed to have insurance, but it didn’t apply to customer deposits, highlighting why self-custody remains the best bet for holding large sums of crypto.
Risk Management for Crypto Holders
The best case scenario is not to need insurance. And only by employing the best possible risk management strategies like portfolio diversification, cold storing the bulk of your funds, using VPNs, and making sure your digital fingerprint is not accessible, you can reduce your exposure to threats before they ever materialize. The goal is to make yourself a harder target; this way, you decrease your chances of having to go through insurance claims.
We have an in-depth guide on risk management right here, so make sure to check it out!
Insurance Against Crypto Hacks
Overall, crypto insurance meets a market that desperately needs more protection and has stepped in to fill a critical void in the Web3 ecosystem. Just in 2024, we’ve seen $10 billion stolen in the crypto industry, but insurance platforms have been able to recover or even refund at least part of these funds.
We have just seen such a case happen in 2025. After a major $81 million attack on the crypto exchange Nobitex, the CEX pledged to completely refund via their insurance fund. Of course, not every hack can be insured. Some incidents fall outside the scope of coverage, especially when user error is involved
At the end of the day, crypto insurance can’t stop new attacks from happening. But they can soften the blow, restore investor confidence, and most importantly, help make the cryptocurrency market a far more resilient and trustworthy environment for everyone involved.
Frequently Asked Questions
1. What is crypto insurance?
It’s coverage that protects digital assets from hacks, theft, and technical failures.
2. Can I insure my Bitcoin, Ethereum, or other cryptocurrencies?
Yes, especially when stored with custodians or insured platforms.
3. How does crypto wallet insurance work?
It protects against theft, lost keys, or unauthorized access, depending on the provider.
4. Are NFT assets insurable?
Yes. High-value NFTs can be covered for theft, access loss, or file damage.
5. What risks does crypto insurance typically cover?
Hacks, smart contract bugs, exchange breaches, and custodian failures.
