Cryptocurrency is a young, up-and-coming field, and as such it needs specialized insurance coverage.
In the last few years, cryptocurrency has grown from a niche market to an emerging industry in its own right. The market has exploded in value—in 2017 alone the market for cryptocurrencies grew by more than 2,300%, and some estimates suggest it could grow to be worth $1 trillion. With that kind of rapid growth and incredible potential comes a lot of risk. Cryptocurrencies are vulnerable to hacks, frauds and scams that can cost investors millions in one fell swoop (see Mt. Gox).
Contending with this inherent risk is where crypto insurance companies come in: they offer comprehensive solutions to cover losses associated with hacking, theft, fraud and other issues related to cryptocurrency transactions.
But how do you find the right insurance company? Here are some useful tips:
- Know what you’re insuring
Make sure that all the assets you want insured are clearly defined in your contract and review them regularly to make sure they haven’t changed or been added to.
- Do a thorough background research
Good background research is the key to finding the best crypto insurance company. There are a lot of companies in this field, but it’s always important to find out as much information as possible about them before choosing one. Usually, the best way to do that is to look at reviews written by their customers, especially those who have experienced problems and ended up needing help from the company they chose. Look for reviews on reputable websites and forums that are relevant to your industry. You can also ask around in other cryptocurrency-related communities or services.
- Review the fine print
Many crypto insurance policies require customers pay out of pocket first and then submit their request for reimbursement later when their losses can be verified. Also, some policies don’t cover losses due to hacks or internal breaches, so make sure you’re covered in case someone gains unauthorized access to your account or wallet.
- Make sure they know what they’re doing
Crypto insurance has its own special considerations as far as how your assets are stored. If a company isn’t willing to go through all the details with you, then they might not be worth working with. After all, if their agents aren’t educated enough about cryptocurrency, then how can you expect them to do a good job?
- Don’t just look at the price
Crypto insurance is a complicated product, and like anything else, you get what you pay for. A small price can signal one of two things: either that the insurance company doesn’t have much experience or that they’re cutting corners when it comes to their products. The first thing to look for is the length of the company’s track record and how many clients they’ve insured. Next, compare their prices with other reputable companies. If they’re charging less than 1% of your holdings (based on a 30-day average), then you should be wary.
Conclusion
With so much money being invested into this market, it’s not surprising that cryptocurrency insurance companies are starting to crop up almost daily. These companies specialize in protecting your investments against a wide range of risks. To get the most out of your investment, insure your crypto with a reputable insurance company.
