14 Jun, 2022

Policy Types

Category: Insight

Evertas is the first company in the world focused solely on providing insurance coverage for crypto-assets and users of blockchain systems. Click here to learn more about how we work with Insurance Brokers, Insurance Wholesalers, Insurance Carriers, and Individuals. 

Specific policy types where Evertas brings brokerage, underwriting, and policy language expertise include the following: 

Crime: Loss or Theft of Private Keys and Cryptoassets

Custodians as well as owners of cryptocurrency are exposed to financial loss due to theft or loss of the private keys representing the ownership of such assets.  First-party crime insurance policies have been designed to include the necessary specific policy language to address physical theft, cyberattacks/hacks, social engineering, insider threats, or combinations of the above. 

Errors and Omissions 

Errors and omissions (E&O) or Professional Liability insurance protects companies, their employees, and other professionals against claims of deficient work or negligent actions taken in the rendering or failure to render professional services to others. E&O policies often cover defense costs and any settlements and judgments up to the amount specified by the insurance contract. This kind of liability insurance is generally required for professional advice-giving or service-providing businesses. 

In the context of companies operating in the crypto-asset space, most companies needing professional liability insurance would probably need Tech E&O as already described above; however, those who are involved in providing other types of services, such as publishing or accounting, would require an E&O insurance policy designed for their professional activity. 

Technology Errors and Omissions (Tech E&O) 

Insurance is designed for providers of technology services (e.g., data storage, exchanges, custodians), technology products (e.g., hardware manufacturers), media content, or network security breaches, these policies are designed to cover the insured’s legal liability to their clients and other third parties due to alleged negligent rendering of technology products and services. In addition, Tech E&O can often be combined with other coverage including directors and officers liability and even first property loss exposures. Tech E&O is a type of Professional Liability insurance policy.

In the context of companies operating in the crypto asset space, Tech E&O policies can cover erroneous actions that cause a loss such as if a smart contract erroneously causes a loss of assets or an exchange platform goes down, causing a loss.  

Cyber and Privacy 

Insurance is designed to cover legal liability and certain first-party costs in connection with covered network security breaches or threats. For example, these policies can address a range of property and liability losses that may result when a business sells goods or services selling on the Internet and/or collects customer data including a business’s liability for data breaches where its customers’ personal information, such as Social Security or credit card numbers, may have been exposed or stolen by a hacker who has gained access to the firm’s electronic network. These policies can also cover a variety of expenses related to data breaches including but not limited to notification costs, credit monitoring, fines/penalties, and other losses resulting from identity theft. 

For companies operating in the crypto asset space, Cyber and Privacy policies can be highly relevant given a large amount of personal data, proprietary information, and overall cyber exposure (e.g., ransomware attacks, DDOSed, etc).

Cyber and Privacy policies should not be confused with Tech E&O policies. 

Directors and Officers  

Directors and Officers of companies face legal liability to securities holders, regulators, employees, and even their competitors for “wrongful acts” made during the conduct of their business affairs.  Directors and Officers (D&O) insurance cover legal costs, settlement and judgments of covered claims made against them. For privately held companies, the policy is usually extended to cover employment practices liability claims against managers and others for wrongful termination, discrimination and sexual harassment.  In addition, many claims against the corporation itself are frequently covered by the policy. Coverage can often extend to costs arising out of some criminal and regulatory investigations as well. 

For companies operating in the crypto-asset space, there are often requirements from outside directors, customers, and regulators to have D&O coverage due to the emerging nature of the industry and the perception of the higher risk.  Evertas has specialized experience and capabilities in directors and officers liability and is uniquely positioned to be of service in understanding your needs as well as the availability of insurance in the market. 

Property 

Property insurance is designed to reimburse the insured for the loss of tangible property due to damage or loss arising from covered physical peril, e.g. fire or wind.  It also provides coverage for loss of business income during the “period of recovery” after such an event. For small businesses, property coverage is often combined with general liability coverage in a form known as a BOP or Business Owners Policy.

For companies operating in the crypto-asset space with large amounts of tangible property (e.g., mining companies with data centers), property insurance is essential to provide cover for the loss, destruction, or failure of mission-critical equipment.  This coverage may also include some coverage for loss of business or other ongoing costs after an event.  It is often difficult to get due to the perception (incorrect in our view) that a crypto miner’s equipment exposure is somehow more hazardous to an insurer than the same equipment owned by a non-crypto company. Explaining why this is not the case is one of the reasons why miners and other crypt-asset companies come to Evertas.

Kidnap and Ransom (K&R) 

Kidnap & Ransom insurance protects corporations and individuals against financial losses that result from kidnapping, extortion, and ransom demands or its personnel. A policy typically covers ransom payment, loss of income, other related costs (e.g., transportation costs to bring people home and medical /psychiatric care), and costs of business interruption, crisis management, and other expenses to help the company protect and repair its image.  Typically, K&R insurance is purchased for companies whose executives travel to certain areas of the world where kidnapping is not uncommon.  It is a fairly unique type of policy not usually purchased by startups.

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