Web3 companies operate in an environment where the pace of innovation often outstrips the evolution of regulation. From DAO governance to digital asset custody, these startups face risks that traditional insurance policies weren’t built to address.

That’s why having the right insurance is more than a backstop, it’s a growth enabler. A well-rounded coverage portfolio not only protects against known risks but also instills confidence in investors, partners, and users alike.

Recommended Coverages

While every company has different needs based on structure, geography, and risk appetite, the following policies form the core of a Web3 insurance strategy.

Directors & Officers (D&O)

D&O insurance protects founders, executives, and board members if they’re personally named in lawsuits over decisions made on behalf of the company. In Web3, this can include regulatory investigations, investor disputes over token allocation, or even IP infringement claims related to NFTs. 

Vouch can help you get Web3 D&O coverage that includes specific protections for DAOs and defense costs for IP disputes.

Errors & Omissions (E&O)

Also known as Professional Liability, E&O insurance covers the cost of legal defense and settlements when a client claims your product or service caused them financial harm. 

For Web3 companies, this can include smart contract failures, token distribution errors, or downtime on DeFi platforms. It’s important to look for a policy that explicitly covers smart contract development and digital asset services.

Cyber Insurance

Cyber insurance covers expenses related to data breaches, hacking, and social engineering. In Web3, a cyberattack could drain a hot wallet or compromise a multisig treasury. 

Vouch’s can help you find a Web3 Cyber policy that offers reimbursement for stolen crypto assets due to cybercrime and has no war exclusions—a common gap in other policies.

General Liability

General Liability coverage protects against third-party bodily injury, property damage, and medical expenses. While it may seem less relevant in Web3, companies attending IRL events, leasing office space, or building physical hardware still need this fundamental protection.

Business Property

Business Property insurance covers the value of business equipment and property in the event of theft, fire, or other disasters. If your team uses high-end mining rigs, secure hardware wallets, or on-premise nodes, this policy helps mitigate loss from physical damage or loss.

Employment Practices Liability Insurance (EPLI)

EPLI protects companies against claims of discrimination, harassment, wrongful termination, and other HR-related lawsuits. For Web3 startups scaling quickly with distributed teams, EPLI is a must-have.

Additional Coverages

Depending on a company’s operations and exposure, the following policies may also be critical:

• AI Insurance: Covers risks related to algorithmic bias, hallucinations, or software malfunction in AI models.
• Crime Insurance: Reimburses losses due to employee theft or fraud, including theft of crypto by software contractors.
• Fiduciary Liability: Covers liability from mismanagement of employee benefit plans like 401(k)s.
• Hired & Non-Owned Auto (HNOA): Covers liabilities from employees using personal or rented vehicles for business travel.
• Media Liability: Protects against claims of copyright infringement or defamation related to marketing or NFT content.

Industry-Specific Coverages

Web3 introduces highly specialized risks that standard policies often exclude. Here are some examples of Web3-specific coverage enhancements Vouch can help you secure:

DAO Structure Protection

This optional D&O add-on provides coverage for token holders participating in governance, helping shield them from personal liability if a DAO is treated as a general partnership in court.

Coverage for Digital Assets

Traditionally, Cyber and Crime policies will exclude protection for digital assets such as cryptocurrencies, stablecoins, and NFTs.

Smart Contract Errors

E&O coverage can be extended to include liabilities resulting from coding flaws in smart contracts, including downtime or loss of funds caused by logic bugs.

Regulatory Defense Costs

A comprehensive D&O policy for Web3 should offer an endorsement for defense cost reimbursement in cases of SEC investigations or enforcement actions, which have become more frequent in recent years.

Exclusions

An exclusion is a specific condition or type of risk that an insurance policy does not cover. For example, traditional Cyber and Crime policies often exclude losses involving digital assets or crypto, so look for one that covers those. 

Similarly, most D&O policies exclude prior acts (events that occurred before the policy start date) or major shareholder disputes. Web3 companies should carefully review these exclusions and work with insurers who understand how to close those gaps.

Importance of Scaling Coverage

Web3 companies evolve quickly. A solo founder running a protocol from a laptop can become a venture-backed startup with a global user base in under a year. 

As you launch tokens, hire employees, or expand into new jurisdictions, your risk profile changes. It’s critical to revisit your insurance strategy at every major milestone—fundraising, hiring, international expansion, or launching a new product. Coverage that fit you at Seed stage may leave you exposed at Series B.

Web3 companies face a complex, high-stakes risk landscape that legacy insurance solutions can’t always keep up with. But the right coverage, from the right partner, turns insurance from a sunk cost into a strategic asset. It protects your team, enables partnerships, and builds long-term credibility. In a world of smart contracts and self-custody, smart insurance is how you de-risk the path forward.

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.

Vouch Specialty Insurance Services, LLC (CA - 6004944 - vouch.us/legal/licenses)