Bitcoin insurance?

[Elwar]

I wonder if there would be a way to offer Bitcoin insurance.

You pay the insurance and if something bad happens to your Bitcoins and you lose them all...then the insurance company reimburses you. Then the company can go after whomever stole it.

This could be a whole industry of Bitcoin detectives working for insurance companies.

[1713266788]

1713266788

[Are-you-a-wizard?]

So many people with defraud the insurance companies that the price would have to be insane.

[Rassah]

Yes, it's very possible, and the insurance can also provide the service of setting up and monitoring your security, since the more secure you are, the less they'll have to pay out. The biggest obstacle is initial funding. Insurance is basically the cost of one person's account being paid in little bits by other people. So, 10 people owning 10BTC each, with a risk of 1 person losing everything once a year, means every person has to pay 1BTC a year to make sure whoever loses their 10BTC is covered. If you're an insurance company just starting out, you may have just two people with 10BTC, and instead of charging them 5BTC each, you will have to charge competitive rates (1BTC), and provide the rest of the funding yourself (cover the remaining 9BTC out of your own pocket, until the number of people you insure gets big enough). Now, imagine that 10BTC is actually $500,000 or so, and that you may lose most of it, without your insurance business taking off.

[TheBitMan]

You would pay a monthly fee and the insurance company could hold them or keep track of yours.

[commlinx]

How many regular insurance companies cover loss of fiat notes? How do they know the "bad" thing wasn't you transferring them to a friend?

[bitlotto]

Insurance fraud would be super simple.

I can see insurance working if:
-the company holds your BTC like an Ewallet
-two factor authentication using cellphone

And they would pay if your BTC was stolen UNLESS it was stolen and your cellphone was used. Otherwise, the person would claim their phone was stolen or something.

[Elwar]

How many regular insurance companies cover loss of fiat notes? How do they know the "bad" thing wasn't you transferring them to a friend?

Insurance companies insured bank money for years.

[Elwar]

So many people with defraud the insurance companies that the price would have to be insane.

Defrauding with Bitcoins is just as easy as defrauding with car insurance or home insurance. You purposefully crash your car or burn down your home for the money. Then the insurance company comes in with investigators and find out that you defrauded them. Not only do they not have to pay out your claim but you also go to jail. They keep everything you paid in.

Plus they can run the numbers against people based on the likelihood of fraud. Your transaction history and the amount you would insure would come into play.

[Rassah]

Once you file your claim, the insurance company would confiscate your bitcoin server and try to figure out how the intrusion happened. If they just see a command to send bitcoin from your bitcoin wallet, with no network security leaks, trojans, or whatever, then it would be on you to prove that you were hacked, or the security they required you to use was compromised.
So, really, in a way, you would be paying for security service. The insurance will just be a bit of extra.

[the founder]

How many regular insurance companies cover loss of fiat notes? How do they know the "bad" thing wasn't you transferring them to a friend?

Insurance companies insured bank money for years.

they laughed at our faces when we asked.

[mrowxlived]

I brought up this idea:

https://bitcointalk.org/index.php?topic=482980.msg5314689#msg5314689

then found your thread, and thought, wow, I might have your solution...

[Foxpup]

Elliptic Vault already does this. Their insurance is underwritten by Lloyd's of London.