Question from BitcoinTalk: “Is there insurance for crypto? Can I get my money back if I’m hacked?”
Short answer: Yes, but it’s limited. Some exchanges offer insurance (Coinbase has a $255M policy). Some DeFi insurance protocols cover smart contract risks. But most crypto losses — lost seed phrases, personal hacks, and scams — are not insurable.
Exchange Insurance
| Exchange | Coverage | What It Covers |
|---|---|---|
| Coinbase | $255M (Lloyd’s) | Hacks of Coinbase infrastructure (NOT your account) |
| Gemini | $200M | Custody insurance for stored assets |
| Kraken | Self-insured | Has never been hacked, strong reserves |
| Binance | $1B SAFU fund | Losses from hacks of Binance platform |
Important: Exchange insurance covers the exchange’s infrastructure being hacked. It does NOT cover:
- Your account being hacked (phishing, SIM swap)
- You sending crypto to the wrong address
- You losing your password or seed phrase
- Market losses
DeFi Insurance
| Protocol | What It Covers | Cost |
|---|---|---|
| Nexus Mutual | Smart contract hacks | 1-5% of coverage per year |
| Unslashed | Smart contracts, custody, stablecoin | 2-10% per year |
| InsurAce | Smart contracts, bridge hacks | 1-3% per year |
How it works: You buy coverage for a specific protocol (e.g., $10K coverage on Aave). If Aave’s smart contract is hacked and your funds are lost, you file a claim.
Limitations:
- Only covers smart contract code — not your personal mistakes
- Claims process requires community voting (can take weeks)
- Coverage caps are limited
What IS Insurable
- Exchange platform hack — If the exchange itself is hacked (exchange insurance)
- Smart contract exploit — If a protocol’s code is exploited (DeFi insurance)
- Custody loss — Some institutional custodians have coverage
What Is NOT Insurable (No Options)
- Lost seed phrase — Your responsibility
- Phishing attack — You gave away your info
- Scam investment — You sent crypto to a scammer
- Market decline — Normal investment risk
- Wrong address — You made a mistake
- SIM swap — Your phone was compromised
How to Self-Insure
Since most crypto losses aren’t insurable, “self-insure” by:
- Diversify custodian risk — Don’t put all crypto on one exchange or in one wallet
- Keep a cash reserve — So you don’t have to sell crypto at a loss in emergencies
- Use multiple wallets — If one is compromised, you don’t lose everything
- Seed phrase backups — 2-3 copies in separate secure locations
- Hardware wallet — Most secure way to hold large amounts
Insurance Calculator
| Holding | Self-Insurance Strategy |
|---|---|
| <$1,000 | No insurance needed — loss is manageable |
| $1K-$10K | Hot wallet + 2FA + good security practices |
| $10K-$100K | Hardware wallet + multiple backup locations |
| $100K-$1M | Multi-sig wallet or multiple hardware wallets |
| >$1M | Institutional custody + specialized insurance |
Verdict
Crypto insurance is limited and covers specific scenarios (exchange hacks, smart contract exploits). Most common crypto losses (phishing, scams, lost seed phrases) are not insurable. The best protection is good security practices, not insurance.
Related: How to Create a Strong Security Plan | How to Keep Crypto Safe Complete Guide | What Happens If an Exchange Collapses?