My phone signal went dead at 4:00 PM. By 4:15 PM, my email password was reset. By 4:30 PM, my MetaMask was drained of $20,000. The hacker had ported my phone number to a new device, intercepted my 2FA SMS codes, and authorized the withdrawals. I filed a claim under my “Identity Theft” insurance. They sent me a check for $500 to cover “legal fees” but refused to reimburse the $20,000.
Key Takeaways
- Identity Theft Insurance != Asset Insurance: Most “ID Theft” policies cover expenses to restore your name (notary fees, lost wages, lawyer costs). They do not cover the stolen funds themselves.
- The “Voluntary” Loophole: Insurers argue that because the 2FA code was technically “provided” (even by the hacker using your number), the transaction was “authorized” by the device.
- Carrier Liability is Zero: Mobile carriers (Verizon, T-Mobile) have successfully defended lawsuits, claiming their terms of service limit liability for Sim Swaps to the cost of the monthly service fee (approx $50).
- SMS 2FA is Negligence: In 2026, using SMS for 2FA is considered “failure to use reasonable care,” which can void certain cyber policies.
The “Why” (The Trap)
The trap is the “Direct Financial Loss” Exclusion.
Standard ID Theft endorsements (often sold by Lifelock or added to Homeowners) explicitly exclude “reimbursement of stolen money, securities, or digital currency.” They are administrative policies, not asset protection policies.
The Investigation (I Called Them)
I stress-tested three “Identity Protection” services.
Aura / Lifelock
- The Promise: “$1 Million Insurance.”
- The Reality: The fine print usually limits “Stolen Funds Reimbursement” to bank accounts and 401ks. Crypto wallets are often excluded or capped at $0 unless the funds were in a traditional bank.
AIG (High Net Worth)
- The Reality: Their “Family Cyber” policy is one of the few that might cover this. They cover “Social Engineering” and “Cyber Extortion.”
- My Analysis: I spoke to an underwriter who said, “If the Sim Swap leads to a direct unauthorized transfer, we cover it up to the sub-limit ($25k or $50k), provided you used an Authenticator app, not just SMS.”
Mobile Carrier Insurance (Asurion)
- The Reality: Covers the phone if it’s lost. Does not cover the data or money accessed via the phone.
Comparison Table
| Service | Covers Legal Fees? | Covers Stolen Crypto? | 2FA Requirement |
| Standard ID Theft (Norton/Lifelock) | Yes | No (Usually) | N/A |
| Homeowners ID Fraud Rider | Yes | No (Expenses only) | N/A |
| Specialty Cyber Policy (AIG/Chubb) | Yes | Yes (Sub-limits apply) | Must use MFA App/Key |
Step-by-Step Action Plan
- Kill SMS 2FA Immediately: Log in to every exchange and switch to Google Authenticator or a hardware key (YubiKey).
- [IMAGE: Screenshot showing the ‘Remove SMS 2FA’ button on a crypto exchange]
- Set a “PIN” with Your Carrier: Call your mobile provider and demand a “Port Freeze” or “High Security PIN.” This prevents someone from porting your number without that verbal code.
- Use a Dedicated Email: Do not use your public email for crypto. Use a protonmail account that is only for your wallet and isn’t linked to your phone number.
- Buy “Family Cyber” Insurance: Ask your agent specifically for a standalone Cyber policy that covers “Digital Asset Theft via Social Engineering.”
FAQ
Can I sue the phone company?
You can try, but you will likely lose. Their user agreements block class actions and limit damages.
Does a YubiKey stop Sim Swaps?
Yes. Even if they steal your phone number, they cannot physically plug the YubiKey into their device to authorize the login.