BitGo has partnered up with Innovation Insurance Group and XL Group to offer customers a new service of insuring their online and offline funds.

 

The security of bitcoin funds is one of the major, long-standing obstacles to the mass adoption of bitcoin, as BitGo CEO Will O'Brien noted at the North American Bitcoin conference in January 2015. BitGO specialises in security services and has recently raised more than $14 million in venture capital  investment. The company has developed the cryptocurrency security standards (CCSS) in collaboration with The CryptoCurrency Certification Consortium (C4).

The insurance from theft of up to $250,000 is now offered to clients who wish to secure their BitGo wallets from internal or external theft and technology failure. Users can activate the new service just by signing up with BitGo and, additionally, can increase the covered amount for a 1% annual fee. Both web wallets and cold storage are eligible.

The insurance product is designed along the lines of the Federal Deposit Insurance Corporation (FDIC) reimbursement. If the company fails to return bitcoin deposits to its customers, they will be fully covered by the insurance up to $250,000.

The new policy was developed by Ty Sagalow, security specialist and president of Innovation Insurance Group, LLC together with XL Group.  The partners claim that the announced product is the first of its kind.

“We have seen early attempts at insurance in the bitcoin market, such as those based on a captive model funded with cash reserves or ‘crime’ policies that solely cover employee theft of cold storage keys,” said Ty Sagalow. “While this was suitable for Bitcoin’s formative years, it does not scale to the requirements of today’s ecosystem. BitGo’s multi-signature technology alters the threat profile to the point that a properly balanced insurance product can for the first time be brought to market at a price in line with typical cyber risk.”

Among other bitcoin services that cover the loss of bitcoins in case of theft are the bitcoin cold storage Elliptic, the payment operators Circle and Coinbase, as well as Xapo.

BitGo has integrated the theft insurance in two new services: BitGo Enterprise™, a bitcoin online wallet for business customers, and BitGo Platform API™, a set of tools for developers of Bitcoin startups.