In today’s digital world, our assets are evolving. Many people are investing in cryptocurrency and non-fungible tokens (NFTs). What we consider to be valuable has expanded. It is important to note that not all assets are insured under a traditional homeowners policy including cryptocurrency and NFTs.
Understanding Tangible vs. Intangible Property
Homeowners insurance covers tangible property, items you can physically touch and see. This includes your home, furniture, electronics, and personal belongings. These are assets that can be damaged, lost, or stolen in the physical world.
Cryptocurrency and NFTs are intangible assets, items with value but which cannot be touched or felt. These include patents, trademarks, digital currencies, and collectibles. While these digital assets can be incredibly valuable, their intangible nature means they do not fall under the coverage of a standard homeowner’s policy.
The Digital Dilemma: Cryptocurrency
Cryptocurrency, such as Bitcoin or Ethereum, exists purely in the digital realm. The assets are stored in digital wallets and transferred through blockchain technology. While you can invest and hold substantial value in cryptocurrency, it does not have a physical presence that can be insured against typical perils covered by homeowners’ insurance, such as fire, theft, or natural disasters.
The Unique Case of NFTs
NFTs, or non-fungible tokens, are another form of digital asset that has gained popularity in recent years. NFTs represent ownership of unique digital items, such as art, music, or virtual real estate. Like cryptocurrency, NFTs exist on the blockchain and do not have a physical form. Therefore, they cannot be damaged or stolen in a traditional sense that homeowners’ policy would cover.
Protecting Your Digital Investments
There are specialized insurance products and policies designed to protect digital assets. These policies may offer coverage for risks like hacking, fraud, or cyber-attacks, which are more relevant to the nature of digital investments. You may want to address these exposures in conjunction with evaluating cyber liability insurance. These insurance policies are specialized and there are very few options. We could help you review that coverage if you found it in the marketplace. Your best protection is to make sure that your passwords and blockchain access is secure.
At all times, it is important to understand the limitations of traditional insurance policies. Cryptocurrency and NFTs represent a new frontier of value and require innovative approaches to protection and security. If you have digital assets, consider exploring specialized insurance options to safeguard your investments.
Please contact Mark Lowman, Duke Baldridge, or your Dominion Risk Advisors representative to discuss this and other emerging threats to your assets.