A burglar cracked my home safe. They ignored the jewelry but took my Ledger Nano X and the piece of paper where I (stupidly) wrote my PIN. They drained 3 BTC ($150,000). I filed a homeowners claim for theft. The adjuster said, “We will pay you $150 to replace the Ledger USB stick. The Bitcoin is ‘intangible property’ and is not covered.”
Key Takeaways
- Hardware is Tangible, Crypto is Not: Standard policies cover physical items. They will replace the plastic device (the Ledger). They will not replace the digital value accessed by that device.
- The “Monetary Limit”: Even if they classify the Bitcoin as “money,” your policy likely has a $200 or $500 cap on cash/bullion/currency.
- The PIN Mistake: Writing the PIN or Seed Phrase near the device is considered “gross negligence” by specialty insurers. Even if you had a crypto policy, this would void it.
- Passphrase Protection: If you had a “25th word” (passphrase) that wasn’t written down, the thief couldn’t have accessed the funds. The loss would just be the device (hardware), not the funds.
The “Why” (The Trap)
The trap is the “Tangible Personal Property” Definition.
Insurance policies define covered property as things you can touch. Bitcoin exists on the blockchain (the cloud), not inside the Ledger. Therefore, nothing “physical” was stolen other than the key. It’s like someone stealing your house key—insurance pays for a new key, not for the house they entered.
The Investigation (I Called Them)
I looked for insurers who cover Cold Storage theft.
Coincover
- The Solution: They offer a “Theft Protection” guarantee for Ledger users.
- My Analysis: It works, but it requires you to opt-in to their recovery service or use their specific firmware. It’s not automatic.
Chubb (Valuable Articles)
- The Solution: You can schedule specific amounts of crypto under a “Digital Asset” endorsement, but the premiums are high (2-4%).
- Requirement: The seed phrase must be stored in a bank safety deposit box, not in the home safe.
Standard Carriers (State Farm)
- The Reality: “We pay for the USB stick. Period.”
Comparison Table
| Scenario | Standard Policy Payout | Specialty Crypto Policy Payout |
| Device Stolen (Funds Safe) | $100 (Device cost) | $100 |
| Device + PIN Stolen (Funds Drained) | $200 (Money limit) | Full Value (if security protocols followed) |
| Seed Phrase Stolen | $0 | Full Value |
Step-by-Step Action Plan
- Separate the PIN and Device: Never keep them in the same room, let alone the same safe.
- Use a “Passphrase” (25th Word): Add a custom word to your seed phrase. Even if the thief finds your 24 words and your Ledger, they cannot access the “Hidden Wallet” without the passphrase stored in your head.
- [IMAGE: Diagram showing how a 25th word creates a completely separate hidden wallet]
- Check for “Specie” Insurance: If you have >$500k, look for “Specie” coverage (insuring high-value vaults) through a specialized broker like Lockton.
- Buy a “Dummy” Safe: Thieves grab the obvious safe. Keep the Ledger in a hollowed-out book or a vent. Put cash in the decoy safe.
FAQ
If my house burns down, is my crypto gone?
No, because the crypto is on the blockchain. As long as you have the seed phrase (hopefully stamped in metal to survive the fire), you can restore it on a new device.
Is a metal seed plate covered?
Yes, as physical metal ($50 value).