INSURANCE 101

Business Insurance for Web3 Companies: From "Skip" to "Must Have"

10 MIN READ
Business Insurance for Web3 Companies: From "Skip" to "Must Have"
“With Vouch, we were able to get the exact coverage we needed without weeks of paperwork — and get the peace of mind that comes with being properly covered.”
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For traditional fintech companies, business insurance has always been an essential item on the to-do list. But the Web3 landscape has always played by different rules. Historically, Web3 founders—often flush with funding and focused on rapid innovation—have routinely skipped insurance coverage. Why?

  • Lack of relevant insurance options. Traditional insurers either wouldn't cover Web3 businesses at all or provided policies with extensive exclusions, rendering them essentially meaningless.
  • Appetite for risk. Entrepreneurs naturally accept risk, but Web3 founders tend to embrace it even more, prioritizing upside potential over risk mitigation.
  • A perception of abundance. During periods of rapid growth and easy access to funding, the cost of mistakes seemed manageable—claims could simply be paid out-of-pocket, so why add complexity?

However, market cycles inevitably shift, separating resilient Web3 businesses built on solid foundations from those vulnerable to volatility. In this environment, the role of insurance becomes clear—not merely as protection against loss, but as a crucial component of a credible, sustainable business strategy.

Today, more Web3 companies recognize insurance not as an optional expense but as essential infrastructure, signaling responsibility and stability to customers, partners, and investors alike.

5 Reasons to Insure Your Web3 Company

Today, Web3 companies are attracting significant capital and attention—venture investment reached $2.4B in Q1 2024 alone, a 40% jump from the previous quarter. As funding grows and expectations rise, the need for credibility and risk mitigation is no longer optional.

1. Insurance is now available 

With the introduction of products like Vouch’s Web3 Protection Policy, Web3 founders can now quickly and easily purchase insurance coverage that doesn’t exclude relevant Web3 risks, including smart contract vulnerabilities and theft of digital assets. 

2. Insurance helps companies survive downturns

With tailored policies now available, insurance is a smart hedge against the risks that could derail your roadmap. Small businesses are three times more likely to be attacked by cybercriminals than larger firms, and the average data breach costs $4.88M . That’s more than enough to wipe out runway or force layoffs.

3. Insurance is a credibility signal 

Business insurance is more than a promise to pay for covered losses. It’s a signal to your customers and investors that you take risk management seriously, because insurers like Vouch will not underwrite you without analyzing your risks and risk controls. In effect, your insurance policy is a vote of confidence in your ability to avoid claims, scandals and collapse, and can give you a serious advantage in a skeptical business and investment environment.  

4. Insurance is increasingly a requirement, not a negotiation 

Web3 builders, especially those working with traditional enterprises including Fortune 500 companies, are discovering they cannot close deals without insurance. These are requirements for every business, and Web3 no longer gets a pass.

Why do businesses care that their vendors have insurance? It’s simple: they need confidence that money will be available to remediate problems and disputes, whether your company is solvent or not, because insurance continues to pay out through bankruptcy. Your business partners will request coverage limits (the maximum that your insurance will pay) that align with their assessment of the risks associated with working with you.

5. You can protect yourself from personal bankruptcy 

Some Web3 founders are learning the hard way that the “corporate veil” can be pierced, and that they can be held personally liable for decisions made on behalf of their company. There were 225 securities class action lawsuits filed in 2024 accusing companies of misleading investors, potentially implicating directors and officers personally. ersonal liability risk is no longer theoretical. Directors & Officers coverage exists to protect you in this situation by paying for your defense and settlements. We’re proud to make this coverage available to Web3 companies, which dramatically reduces the personal risk of entrepreneurship.

Vouch Web3 Protection Policy

Vouch’s Web3 Protection policy consists of four coverages, each designed to cover a different category of business risk. Most Web3 companies should buy all four, but they can also be purchased separately. The coverage limit, which is the maximum amount the policy will pay out in the event of claims, can be adjusted based on your risks, customer requirements and budget. 

The coverage descriptions below are general and not comprehensive. In the event of a claim, only the individual policy issued to you will be used to determine if coverage applies.

Directors & Officers

Helps protect your company and the personal assets of founders, officers and board members.

Covers:

  • Damages and Defense Costs from claims of wrongful acts, such as misrepresentation or breach of fiduciary duty, made against Insured Persons or the Company.
  • Digital Asset Regulatory Defense Coverage (optional)
  • DAO Structure Protection for major token holders (optional) 
  • Intellectual Property Defense Coverage (optional)
  • Cap Table Disputes

Doesn’t cover:

  • Damage to your business property
  • Claims from your professional service(s)
  • Bodily injuries.
  • Employment related claims
  • Data breaches.
  • Breach of contract by the Company

Learn about the basics of Directors & Officers insurance.

Errors & Omissions

Helps protect your company in situations where your services cause a financial loss to a customer. 

Covers:

  • Damages and Defense Costs from claims alleging wrongful acts, such as mistakes or negligence, in your performance of professional or technology services
  • Liability for Loss of a Client's Digital Assets (optional)
  • Investment Advice and Activities Errors & Omissions(optional)
  • Lending Activities and Lenders Liability Errors & Omissions (optional)
  • Insurance Services and Agents Errors & Omissions (optional)
  • Real Estate Activities and Agents Errors & Omissions (optional)

Doesn’t cover:

  • Data breach claims
  • Employment related claims
  • Bodily injury or Property damage
  • Promises or guarantees of profits or cost savings
  • Regulatory investigations or proceedings
  • Intellectual property claims

Learn about the basics of Errors & Omissions insurance.

Cyber 

Helps cover the cost of data breaches caused by mistakes, hacking and social engineering.

Covers:

  • Loss of digital assets stolen by cybercrime (optional)
  • Public Relations Costs (in response to Reputational Harm)
  • Breach Response Costs
  • Restoration Costs
  • Forensic Accounting Costs
  • Business Income Loss
  • Damages and Defense Costs from third party liability claims of privacy or security wrongful acts

Doesn’t cover:

  • Errors & Omissions resulting from your Technology Product or Service. 
  • Harassment or discrimination any person

Learn about the basics of Cyber insurance.

Crime

Helps protect your company against employee theft, forgery and fraud.

Covers:

  • Employee Theft
  • Forgery or Alteration
  • Loss or damage to a Client’s Digital Assets from theft, including forgery, committed by an employee (optional)
  • Loss or damage of your Digital Assets from theft, including forgery, committed by an employee (optional)

Doesn’t cover:

  • Costs resulting from a data breach.
  • Loss resulting from seizure or destruction of property by order of governmental authority.
  • Loss resulting from trading.

Learn about the basics of Crime insurance.

In the rapidly evolving Web3 space, there's always the potential for outsized growth—but also outsized risk. Stories about companies collapsing due to negligence, fraud, or mismanagement regularly make headlines, reminding everyone of what's at stake when leaders fail to prioritize proper governance and risk mitigation.

Insurance alone can't prevent misconduct, nor will it pay damages when illegal actions are proven. But comprehensive insurance coverage, particularly Directors & Officers (D&O) insurance, can be a critical resource for legal defense and protection against the crippling personal liability associated with lawsuits—many of which allege mismanagement or negligence.

At Vouch, we recognize that the reputation of the Web3 industry depends on responsible entrepreneurship. That's why our underwriting process rigorously evaluates founders and their businesses. We're committed to partnering with high-integrity teams that demonstrate strong business models, effective leadership, and robust internal controls. By carefully selecting our clients, we not only maintain affordable coverage but also support the broader credibility and sustainability of the Web3 ecosystem.

“With Vouch, we were able to get the exact coverage we needed without weeks of paperwork — and get the peace of mind that comes with being properly covered.”
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Tailored to your stage and vertical
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IMPORTANT FEATURES
  • In the case that your investors sue you, Vouch D&O does not include an Insured v. Insured exclusion.
  • In the case that your investors sue you, Vouch D&O does not include an Insured v. Insured exclusion.
  • In the case that your investors sue you, Vouch D&O does not include an Insured v. Insured exclusion.
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