Protecting your digital assets is more important than ever, but where to start and how to go about it?

The volatile nature of digital assets and cryptocurrencies means that comprehensive insurance coverage is an essential consideration for a portfolio, but also for any business operating in the space.

Various insurance offers have emerged with the increasing popularity of digital assets, but what specifically should you be looking out for in a policy?

Why Is It Important To Have Digital Asset Insurance? The Key Benefits

Theft and hacking:
Unauthorized access to digital wallets, damage and losses resulting from cyberattacks and other forms of theft are all serious considerations to be taken, but ones which can be covered by an insurance policy.

Operational failures:
A range of human errors and system malfunctions that can lead to the compromise of digital assets are also covered by many insurers. Cyber liability for first-party losses and third-party liability associated with breaches of network security, data privacy incidents and other operational issues is critical for any business.

Compliance:
Especially for businesses handling digital assets, a fully comprehensive insurance policy may be required depending on the jurisdiction and regulatory standards in vigor.

Key Considerations To Take Into Account

The digital asset market is still in its early stages, so using a specialized broker or insurance company can help break down any complexity. Consider the following factors when assessing policy options:

Claims handling process:
How fast can an insurer respond and how efficient are their processes in the event of a claim?

Stability of the insurer:
Digital assets require an insurer that not only understands the nuances of this market but which also has a strong financial rating and a proven track record.

Coverage limits and exclusions:
Does the policy you are considering cover all your needs and does it clearly state limitations or exclusions?

The descriptions provided above are all based on publicly available information, and as such cannot be considered as financial advice or encouragement to invest. Sources of information used in this post include the Financial Conduct Authority, HM Treasury, the U.S. SEC, PwC and EY. All transactions involving digital assets involve certain risks, which you should familiarize yourself with prior to any investment.