Web3 companies, from blockchain startups and decentralized autonomous organizations (DAOs), face unique exposures not found in traditional sectors. And with lean teams and fast-moving roadmaps, coverage can’t just fit today’s budget. It has to scale for tomorrow.

The amount of business insurance your company needs depends on a number of factors, from security risk to employee headcount. Learn how you can figure out your coverage needs while still preparing for future growth.

Common Coverage Types and Recommended Limits

Business insurance for Web3 companies typically includes several essential coverage types. Your limits will play a role in the cost of your Web3 insurance. 

Here are examples of recommended coverage limits across various stages of company growth:

These ranges are based on typical early-stage tech startup benchmarks found in Vouch’s coverage recommendation tool. They should be used as a starting point for budgeting, not a substitute for a custom quote.

Types of Coverage Limits

In addition to overall coverage limits, your policy may have sublimits that determine how it’ll pay out. These more granular limits include:

• Per Occurrence: The maximum amount your policy pays for a single claim.
• Aggregate: The maximum total amount your policy pays for all claims within a policy period.
• Sublimits: Limits for specific types of claims within the broader policy limits, like IP infringement or cap table disputes.

Add-ons and Endorsements

Web3-specific endorsements and add-ons can significantly enhance standard coverage, ensuring protection against unique risks. Examples include coverage for DAO structures, reimbursement for stolen digital assets, or defense costs for regulatory and IP-related incidents.

Factors That Impact How Much Insurance You Need

Several factors determine the appropriate insurance coverage levels for Web3 companies. Let's explore these critical elements.

Company Stage and Size

Larger companies or those with substantial capital raised or revenue have more assets at stake and typically require higher coverage limits. For example, a growth-stage blockchain protocol managing significant digital assets will need more extensive coverage than an early-stage NFT startup.

Industry

Web3 companies inherently face elevated risks around cybersecurity, smart contract vulnerabilities, and regulatory compliance. These unique challenges demand more nuanced coverage options:

• Cyber Insurance: Essential for managing data breaches and protecting digital assets.
• Errors and Omissions (E&O): Critical for companies that deploy smart contracts or handle client digital assets.
• Crime Insurance: Vital for safeguarding against internal theft or fraud involving cryptocurrency and other digital assets.

Contractual Requirements

Investors, partners, landlords, and even blockchain protocol partnerships often have specific insurance requirements. Ensuring your insurance meets or exceeds these requirements can prevent contractual disputes and facilitate smoother business operations.

Web3-specific Considerations for Coverage

In addition to general coverage needs, Web3 companies will likely have specific scenarios and coverage options they need to take into account for determining how much insurance they need. These additional types of insurance for Web3 coverage can include:

Smart Contract Vulnerabilities

Errors in smart contract coding can lead to significant financial losses. Web3-specific E&O coverage can protect against claims of negligence or financial damage stemming from coding mistakes.

Digital Asset Protection

Cyber and Crime insurance can be tailored to reimburse losses of cryptocurrency or other digital assets due to hacking, social engineering, or insider theft.

DAO Structure

Companies organized as DAOs require specialized coverage to protect major token holders and governance participants from liabilities unique to decentralized structures.

Tools and Resources to Estimate Coverage Needs

To get precise, tailored recommendations for your Web3 company's insurance needs, consider using tools like Vouch’s Coverage Recommendation Tool. This resource accounts for company size, specific Web3 industry risks, and growth stage, providing an effective starting point. 

For detailed insights and personalized guidance, start a no-commitment application or speak with a Vouch insurance expert to help refine your coverage needs.

Aligning Insurance Limits with Business Goals

Getting insurance coverage right isn't just about mitigating risks; it's about enabling sustainable growth and ensuring your business can confidently navigate uncertainty. Web3 companies face unique and evolving risks—making appropriate coverage vital for protecting your company, reassuring investors, and securing your venture's future in a competitive and dynamic marketplace.

This content is for informational purposes only and does not constitute an offer of insurance. Coverage is subject to underwriting, availability, and the terms, conditions, and exclusions of the applicable policy. Not all products are available in all jurisdictions. Please contact Vouch for more information.

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