Custody Insurance

Custody insurance is a policy a custodian buys to cover the loss of assets it holds, and reading one properly means asking what it covers rather than whether it exists. Cover is usually written against theft of the keys or of the assets themselves, physical damage to storage media, and dishonesty by employees; it is normally much larger for assets held offline than for the operational balance kept online, because the insurer prices the exposure it can assess. What it typically does not cover is the thing customers most fear: the platform becoming insolvent, a market loss, or a customer whose own credentials were phished. Two further points decide what a headline figure is worth. The policy insures the custodian, not you, so a claim is paid to the firm and reaches customers only through whatever process applies to its assets; and cover is a total, not a per-customer amount, which means it can be exhausted by one event affecting many accounts.