BitGo, a bitcoin security platform, has acquired insurance coverage for bitcoin theft from XL Group. The product was structured in collaboration with XL Group and Innovation Insurance Group, LLC. According to BitGo, the policy is the first comprehensive coverage issued by a major underwriter to a bitcoin company.

All of BitGo's paying customers are eligible for protection under the XL policy for up to $250,000 in covered theft claims, just by signing up for BitGo services. BitGo customers can increase the amount of protection available to them for a one percent annual fee.

BitGo customers who opt-in to the program are protected from acts, errors, or omissions of BitGo technology, processes, and employees, including external hacking incidents and employee theft. Both hot wallets and cold storage are eligible for coverage in the policy. In the event of a covered loss, the policy would reimburse BitGo's customer, as a direct loss payee, for the value of the lost or stolen bitcoins, subject to the terms and conditions of the insurance policy with XL Group. In addition, the policy provides BitGo with the ability to work directly with its customers in the management and resolution of such incidents.

“In collaborating with BitGo and Innovation Insurance Group, we tailored a first-of-its-kind insurance product to help protect the rapidly growing bitcoin industry,” said John Coletti, the chief underwriting officer of cyber and technology insurance at XL Group. “BitGo's multi-signature architecture delivers a significant level of security, realizing how seriously they take cyber security; we confidently developed a comprehensive insurance solution that offers BitGo and their customers another layer of protection.”

BitGo teamed with Ty Sagalow, the president of Innovation Insurance Group, LLC, and chief executive officer of Bitcoin Financial Group, LLC. Mr. Sagalow, a former chief underwriting officer and chief innovation officer at AIG, developed and negotiated this new insurance product with XL Group.

“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 Mr. 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.”

“We are proud to partner with XL Group and Innovation Insurance Group on this game-changing insurance product,” said Will O'Brien, the CEO and co-founder of BitGo. “The entrance of an underwriter of XL Group's size and reputation signals that the technologies and standards for bitcoin security, like multi-sig, have reached a threshold of viability to take the industry to the next level. For our large enterprise customers, an insurance-backed guarantee is the final missing ingredient for peace of mind in a robust security software offering.”